1 00:00:00,080 --> 00:00:02,320 Welcome back, everyone. Today on the Jose Carlson Show, 2 00:00:02,560 --> 00:00:05,880 Google stock is surging. It's up 4 1/2 percent on the 3 00:00:05,880 --> 00:00:08,039 day. And this comes, of course, a day 4 00:00:08,039 --> 00:00:09,760 after their developer conference. 5 00:00:10,120 --> 00:00:12,400 That's right. Yesterday, Google showed off all 6 00:00:12,400 --> 00:00:15,360 the many things they're working on and importantly, how they 7 00:00:15,360 --> 00:00:18,280 plan on addressing the attacks from ChatGPT. 8 00:00:18,280 --> 00:00:21,120 Google laid out a game plan, how they're going to address this 9 00:00:21,120 --> 00:00:22,720 challenge. We're going to be going through 10 00:00:22,720 --> 00:00:25,160 it and looking over some of the things that they announced, some 11 00:00:25,160 --> 00:00:27,800 of the new developments and why investors are getting back on 12 00:00:27,800 --> 00:00:30,160 board this stock. And we have a viral interview to 13 00:00:30,160 --> 00:00:33,360 respond to with Elon Musk here giving another update on the 14 00:00:33,360 --> 00:00:35,960 robotaxi rollout that's happening in June. 15 00:00:36,160 --> 00:00:39,400 He responds to many questions about the safety concerns, why 16 00:00:39,400 --> 00:00:42,840 he's not using Lidar, how he considers Tesla in a competitive 17 00:00:42,840 --> 00:00:45,440 position against Waymo. Now, I'm going to be responding 18 00:00:45,440 --> 00:00:47,760 to this interview and highlighting a few things that I 19 00:00:47,760 --> 00:00:50,720 think Elon Musk is leaving out. We're also going to be looking 20 00:00:50,720 --> 00:00:55,200 at FICO, why The stock is down 14% today and it's down a 21 00:00:55,200 --> 00:00:57,960 staggering 23% in just the past week. 22 00:00:58,240 --> 00:00:59,640 What is going on with this company? 23 00:00:59,640 --> 00:01:03,200 In fact, we have another similar company, Equifax, one of my 24 00:01:03,200 --> 00:01:05,720 positions. It's also trading down a little 25 00:01:05,720 --> 00:01:08,160 bit today and yesterday it's down 5%. 26 00:01:08,160 --> 00:01:10,280 Currently, there's something going on. 27 00:01:10,280 --> 00:01:13,040 This one's a bit of a mystery, but we have the answers. 28 00:01:13,080 --> 00:01:16,720 I'll be going over why FICO and Equifax are dropping and what 29 00:01:16,720 --> 00:01:18,760 investors should think of it. And then finally, we have 30 00:01:18,760 --> 00:01:21,880 another fail of the week. This time it is Klarna, which 31 00:01:21,880 --> 00:01:25,760 has had huge losses due to people not repaying loans. 32 00:01:25,800 --> 00:01:28,320 We're, of course, seeing the obvious results of people paying 33 00:01:28,320 --> 00:01:31,680 back their DoorDash delivered burrito in installment payments. 34 00:01:31,720 --> 00:01:33,960 So as always, we have a lot to get into in this episode. 35 00:01:33,960 --> 00:01:36,280 If you like like this type of content, consider trying out the 36 00:01:36,280 --> 00:01:38,720 Patreon membership. It has a free trial and includes 37 00:01:38,720 --> 00:01:40,080 Qualtrim. It's awesome. 38 00:01:40,080 --> 00:01:42,160 So try that out. If you haven't, let's go ahead 39 00:01:42,160 --> 00:01:43,640 and jump into the main story here. 40 00:01:43,960 --> 00:01:47,480 Google yesterday held their Developer IO conference, which 41 00:01:47,480 --> 00:01:50,760 is basically where they show off all the many things they're 42 00:01:50,760 --> 00:01:52,680 working on. And this one was highly 43 00:01:52,680 --> 00:01:56,160 anticipated, probably more than most, because Google's in a 44 00:01:56,160 --> 00:01:59,560 transitional period. Investors are intently trying to 45 00:01:59,560 --> 00:02:02,480 figure out whether or not this company is a value trap. 46 00:02:02,560 --> 00:02:04,880 There's people like Gene Muster that have referred to Google as 47 00:02:04,880 --> 00:02:07,640 the new eBay, a company that's a has been. 48 00:02:07,800 --> 00:02:10,639 It's no longer at the forefront of technology, it's no longer 49 00:02:10,639 --> 00:02:13,520 leading the way. It's simply going to slowly 50 00:02:13,520 --> 00:02:16,240 decay into a relevancy. And that is, of course, because 51 00:02:16,240 --> 00:02:20,200 of the concern of artificial intelligence, LLMS and ChatGPT. 52 00:02:20,640 --> 00:02:24,200 So investors are looking at this developer conference with the 53 00:02:24,200 --> 00:02:27,400 viewpoint of trying to figure out if Google can remain 54 00:02:27,600 --> 00:02:29,400 relevant. Now, Google did answer that 55 00:02:29,400 --> 00:02:32,240 question, but not by just saying that they'll stick around and 56 00:02:32,240 --> 00:02:34,440 remain relevant amongst many competitors. 57 00:02:34,880 --> 00:02:37,920 No, Google made it quite clear that they want to lead the way 58 00:02:37,920 --> 00:02:41,160 that they are at the forefront of many verticals and many 59 00:02:41,160 --> 00:02:43,440 different efforts. Let's go ahead and just take a 60 00:02:43,440 --> 00:02:45,880 look and walk through some of the things that they're now 61 00:02:45,880 --> 00:02:49,520 doing that is ground breaking, truly incredible things. 62 00:02:49,640 --> 00:02:51,120 The first here is the Gemini app. 63 00:02:51,440 --> 00:02:54,280 This has come a long ways. It used to be way behind Chachi 64 00:02:54,280 --> 00:02:57,560 PT, but now Google announced that they're rolling out free 65 00:02:57,560 --> 00:03:02,360 features like live video, which you can simply look at the 66 00:03:02,360 --> 00:03:06,080 camera, point it at things, and it will give you AI commentary, 67 00:03:06,400 --> 00:03:09,760 answer questions based on what you're looking at live. 68 00:03:10,480 --> 00:03:14,680 Should I be nervous about this? It looks like your SRS. 69 00:03:14,680 --> 00:03:16,800 Airbag light is on. That means there's an. 70 00:03:16,800 --> 00:03:19,320 Issue with your airbag system. It's best to get that. 71 00:03:19,320 --> 00:03:21,560 Checked out by a mechanic as soon as possible to make sure 72 00:03:21,560 --> 00:03:23,440 your airbags will work. Properly if you need them. 73 00:03:23,880 --> 00:03:25,440 Glad I asked. Thanks Gemini. 74 00:03:26,400 --> 00:03:28,840 Now this is particularly impressive for a few reasons. 75 00:03:29,240 --> 00:03:31,920 First of all, there are other applications that can do things 76 00:03:31,920 --> 00:03:35,800 similar, like ChatGPT, but so far those are gated towards paid 77 00:03:35,800 --> 00:03:37,680 accounts. So only the people paying the 78 00:03:37,680 --> 00:03:40,360 $20.00 a month have this advanced functionality. 79 00:03:40,640 --> 00:03:43,400 But here Google is not only adding this functionality of 80 00:03:43,400 --> 00:03:47,000 live video feedback, but also making it free for all of their 81 00:03:47,000 --> 00:03:48,480 users. They're going to be rolling this 82 00:03:48,480 --> 00:03:51,320 out globally to every user in the Gemini app, and they're not 83 00:03:51,320 --> 00:03:53,120 only matching what the competitors are doing, but 84 00:03:53,120 --> 00:03:55,200 they're now lowering the price down to free. 85 00:03:55,320 --> 00:03:58,200 In investing terms, what Google's doing by matching the 86 00:03:58,200 --> 00:04:00,840 functionality of their competitors but making the price 87 00:04:00,840 --> 00:04:03,920 lower is giving their current user base, which is still 88 00:04:03,920 --> 00:04:07,720 massive, less incentives to turn over to different applications, 89 00:04:07,960 --> 00:04:11,920 less reason to move. Initially, Google was way behind 90 00:04:11,920 --> 00:04:15,320 Chachi BT there is significant incentive for people to leave 91 00:04:15,320 --> 00:04:18,279 the Google ecosystem and enter into the competitors. 92 00:04:18,600 --> 00:04:21,959 But now that incentive is becoming less and less to the 93 00:04:21,959 --> 00:04:23,720 point now where it's completely diminishing. 94 00:04:24,040 --> 00:04:27,000 We have another example here of Google pushing the limits, this 95 00:04:27,000 --> 00:04:29,160 time not just matching competitors but creating 96 00:04:29,160 --> 00:04:32,800 entirely new features. For example, live video language 97 00:04:32,800 --> 00:04:34,800 translation. Let me turn on speech 98 00:04:34,800 --> 00:04:39,640 translation. It's nice to finally talk. 99 00:04:39,640 --> 00:04:42,280 To you is bueno ablarte finalmente. 100 00:04:47,720 --> 00:04:49,360 You're going to have a lot. Of fun and I think. 101 00:04:49,360 --> 00:04:51,320 You're going to love visiting the city. 102 00:04:51,560 --> 00:04:54,800 The house is in a very nice neighborhood and overlooks the 103 00:04:54,800 --> 00:04:57,200 mountains. That sounds wonderful. 104 00:04:57,440 --> 00:04:59,520 This is obviously groundbreaking stuff. 105 00:04:59,600 --> 00:05:01,960 Being able to communicate with someone else in an entirely 106 00:05:01,960 --> 00:05:04,560 different language, have it translate everything you're 107 00:05:04,560 --> 00:05:07,880 saying on the fly in your voice, is incredible. 108 00:05:08,280 --> 00:05:10,840 This is something that Google and Google alone is doing. 109 00:05:10,920 --> 00:05:12,200 They're at the leading edge of this. 110 00:05:12,360 --> 00:05:14,280 Of course, the integrations don't stop there. 111 00:05:14,280 --> 00:05:17,520 Google's integrating Gemini and their AI features into every 112 00:05:17,520 --> 00:05:20,480 single one of their properties. In fact, the integrations go a 113 00:05:20,480 --> 00:05:22,400 lot further than you would initially expect. 114 00:05:22,480 --> 00:05:26,280 For example, in this demo here, you can aim the camera the the 115 00:05:26,280 --> 00:05:29,800 live video camera at a specific thing like a postcard or an 116 00:05:29,800 --> 00:05:32,760 event, maybe a wedding invitation and literally just 117 00:05:32,760 --> 00:05:36,280 say add this to my Google Calendar and it will create a 118 00:05:36,280 --> 00:05:38,720 calendar event with that physical thing. 119 00:05:39,080 --> 00:05:42,320 Now it shows another example here of a shopping lifts that 120 00:05:42,360 --> 00:05:45,560 that you jotted down and then you say add it to my Google Keep 121 00:05:45,600 --> 00:05:48,200 and it will do that as well. So we have the live video camera 122 00:05:48,200 --> 00:05:50,440 being integrated into the rest of their product suite. 123 00:05:50,440 --> 00:05:53,160 This is the type of integration that other companies simply 124 00:05:53,160 --> 00:05:54,960 don't have. They don't have the billions of 125 00:05:54,960 --> 00:05:57,560 touch points with different users, but Google's able to 126 00:05:57,560 --> 00:06:00,360 leverage this and they are now getting to another aspect of 127 00:06:00,360 --> 00:06:02,040 this demo. Quite possibly the most 128 00:06:02,040 --> 00:06:05,280 impressive thing that we saw yesterday was Google's ability 129 00:06:05,280 --> 00:06:07,840 to create AI videos. We know that they've been good 130 00:06:07,840 --> 00:06:09,080 at this for a long period of time. 131 00:06:09,080 --> 00:06:12,840 In fact, Gemini has probably been the best by far in image 132 00:06:12,840 --> 00:06:16,200 generation and video generation. You can think they're huge 133 00:06:16,200 --> 00:06:19,760 library of YouTube content to train that data on, but 134 00:06:19,760 --> 00:06:24,520 regardless, they've introduced Flow, a new AI film studio that 135 00:06:24,640 --> 00:06:28,280 ties together all their various products to work in concert to 136 00:06:28,280 --> 00:06:32,160 create films. It uses VO, Imogen, and Gemini 137 00:06:32,280 --> 00:06:35,280 all together and strings different pieces of content 138 00:06:35,280 --> 00:06:37,720 together. One of the issues with AI video 139 00:06:38,040 --> 00:06:40,920 is there's a lot of discrepancies, inconsistencies. 140 00:06:41,160 --> 00:06:43,360 There's no continuity between clip after clip. 141 00:06:43,720 --> 00:06:47,160 And this hopes to solve that. So we have some insane examples 142 00:06:47,160 --> 00:06:49,880 of this tool being used. Like all of these AI tools, it 143 00:06:49,880 --> 00:06:53,080 starts off with with a prompt. So you simply have a text based 144 00:06:53,080 --> 00:06:54,600 prompt. More specific you are the 145 00:06:54,600 --> 00:06:56,640 better. But then you can actually start 146 00:06:56,640 --> 00:06:59,200 to edit it. You can revise things, you can 147 00:06:59,200 --> 00:07:02,720 import it into different tools, you can clip things, you can 148 00:07:02,720 --> 00:07:06,120 actually work on the content. It's not just a stand alone 149 00:07:06,120 --> 00:07:07,800 clip. You can actually start to create 150 00:07:07,800 --> 00:07:09,800 longer and longer pieces of content. 151 00:07:10,120 --> 00:07:13,680 And we see this natural gravitation of just these silly 152 00:07:13,760 --> 00:07:16,960 AI clips now starting to make more meaningful content. 153 00:07:17,000 --> 00:07:19,520 Google showed off the quality of this new video generation with 154 00:07:19,520 --> 00:07:22,040 VO3. It looks completely stunning. 155 00:07:22,200 --> 00:07:27,240 This ocean, it's a force, a wild, untamed might, and she 156 00:07:27,240 --> 00:07:30,000 commands your awe with every breaking light. 157 00:07:30,200 --> 00:07:31,960 There's some different clips that Google made that are 158 00:07:31,960 --> 00:07:34,800 incredibly impressive, but then there's ones that users are 159 00:07:34,800 --> 00:07:37,760 quickly making after this new demo after this product was 160 00:07:37,760 --> 00:07:39,720 released. Here's another test of Google's 161 00:07:39,720 --> 00:07:42,720 new video generation. This is entirely AI generated. 162 00:07:42,960 --> 00:07:46,360 Do a non existent car show. Let's see some opinions. 163 00:07:47,200 --> 00:07:49,960 I mean man, the acceleration is crazy. 164 00:07:50,200 --> 00:07:53,760 You look far, step on the pedal and you are there. 165 00:07:54,680 --> 00:07:58,840 I feel safe with him in an SUV and it seems to be like the 166 00:07:58,840 --> 00:08:01,200 right type. Of car for him I think the range 167 00:08:01,200 --> 00:08:04,000 is only. Be honest, would you be able to 168 00:08:04,000 --> 00:08:06,160 tell if you were just watching this? 169 00:08:06,160 --> 00:08:08,680 Would you know I'm not? I'm not sure. 170 00:08:08,680 --> 00:08:10,200 I don't think I would be able to. 171 00:08:10,600 --> 00:08:13,640 It's getting to that point where it's crossing the line of I 172 00:08:13,640 --> 00:08:15,480 can't obviously see that it's AI. 173 00:08:15,600 --> 00:08:17,560 If I'm being honest. It just looks so real. 174 00:08:19,080 --> 00:08:24,280 Only going to get better, sorry. We don't want to drive gas cars 175 00:08:24,280 --> 00:08:26,680 anymore. Yeah, no more gas cars. 176 00:08:26,680 --> 00:08:32,280 You can see I'm kind of a. Kind of a misfit here, but. 177 00:08:32,600 --> 00:08:35,080 Don't tell anyone. I've just bought an electric 178 00:08:35,080 --> 00:08:36,840 car. There's a few things that give 179 00:08:36,840 --> 00:08:41,280 it away, like Hell's Angels being spelled HELS, misspellings 180 00:08:41,280 --> 00:08:43,679 on things, different lanyards, and signs that seem a little bit 181 00:08:43,679 --> 00:08:46,320 off, but overall it's very confusing. 182 00:08:46,320 --> 00:08:48,520 Even people in the comments are still confused of whether or not 183 00:08:48,680 --> 00:08:51,760 this is real or actually it's a real video disguised as AI. 184 00:08:51,800 --> 00:08:53,920 Here's another one. This is entirely created by 185 00:08:53,920 --> 00:08:56,080 Google's Flow, their AI generation. 186 00:08:56,360 --> 00:08:59,560 All of this is AI video. It's different segments and 187 00:08:59,560 --> 00:09:03,360 clips cropped together to form a narrative, and this is possibly 188 00:09:03,360 --> 00:09:06,480 one of the most impressive examples of this new technology. 189 00:09:09,840 --> 00:09:13,920 When we get in there I want no I just stay on my 6 at all. 190 00:09:13,920 --> 00:09:25,790 Times stay sharp. 191 00:09:26,230 --> 00:09:28,310 They're nasty and dangerous. Stay alert. 192 00:09:32,230 --> 00:09:34,870 What the hell happened here? Where are the bodies? 193 00:09:55,720 --> 00:09:57,920 It doesn't look perfect. Some of the barrel flash is a 194 00:09:57,920 --> 00:10:01,080 little bit misaligned with the guns, but overall this looks 195 00:10:01,080 --> 00:10:03,360 pretty good. Now, all of this technology and 196 00:10:03,360 --> 00:10:05,480 initiatives from Google are incredibly impressive. 197 00:10:05,480 --> 00:10:07,880 It shows that the company's still at the leading forefront 198 00:10:08,120 --> 00:10:10,720 of AI development. But it doesn't answer that 199 00:10:10,720 --> 00:10:14,160 central question that Google investors are still concerned 200 00:10:14,160 --> 00:10:18,080 about, which is search. But Google did address this and 201 00:10:18,080 --> 00:10:21,080 they do have a plan to maintain their search dominance. 202 00:10:21,120 --> 00:10:24,080 This was the main focus from Sundar Pichai and he addressed 203 00:10:24,080 --> 00:10:27,360 this subject specifically of how they're improving search. 204 00:10:27,760 --> 00:10:31,480 For those who want an end to end AI search experience, we are 205 00:10:31,480 --> 00:10:35,240 introducing an all new AI mode and I'm excited. 206 00:10:35,240 --> 00:10:38,120 To share that. AI mode is coming to everyone in 207 00:10:38,120 --> 00:10:40,040 the US. Starting today. 208 00:10:40,320 --> 00:10:42,520 Today you'll see how you can ask anything. 209 00:10:42,680 --> 00:10:45,520 You'll find it as a new tab directly in search, or right 210 00:10:45,520 --> 00:10:49,000 from your search bar. First, with AI mode, you can ask 211 00:10:49,000 --> 00:10:52,400 whatever's on your mind. And as you can see here, search 212 00:10:52,400 --> 00:10:55,600 gets to work. It generates your response, 213 00:10:56,000 --> 00:10:59,760 putting everything together for you, including links to content 214 00:10:59,760 --> 00:11:02,880 and creators you might not have otherwise discovered, and 215 00:11:02,880 --> 00:11:06,560 merchants and businesses with useful information like ratings. 216 00:11:07,760 --> 00:11:11,960 Search uses AI to dynamically adapt the entire UI, the 217 00:11:11,960 --> 00:11:16,360 combination of text, images, links, even this map. 218 00:11:16,720 --> 00:11:20,480 Just for your question. AI mode combines all the best 219 00:11:20,480 --> 00:11:23,440 parts of Google search with artificial intelligence. 220 00:11:23,840 --> 00:11:26,600 And the way that this works as they describe is it basically 221 00:11:26,600 --> 00:11:29,680 creates search into an Omni search where you can still have 222 00:11:29,680 --> 00:11:32,720 the very simple searches of I just want to find this address 223 00:11:32,720 --> 00:11:35,880 and navigate to it, or is this restaurant still open? 224 00:11:35,960 --> 00:11:38,720 Those type of simple searches will have very simple outputs 225 00:11:38,720 --> 00:11:40,920 designed around those searches that just give you that 226 00:11:40,920 --> 00:11:43,080 information. But if you have a more deep 227 00:11:43,080 --> 00:11:46,680 search, one that requires more context and understanding, then 228 00:11:46,680 --> 00:11:49,480 you're sent through the AI flow dynamically. 229 00:11:49,600 --> 00:11:52,360 It'll give you an in depth AI response with all of this 230 00:11:52,360 --> 00:11:55,320 information around it. Google search is now an Omni 231 00:11:55,320 --> 00:11:58,600 search that dynamically adapts to whatever the user is asking. 232 00:11:58,960 --> 00:12:01,600 So no longer is it a dumb search with just blue links. 233 00:12:01,800 --> 00:12:04,640 No longer is it just a little AI overview snippet. 234 00:12:04,960 --> 00:12:08,560 Now it is an Omni intelligent search and they're pushing this 235 00:12:08,560 --> 00:12:10,480 out to everyone. Another thing that Google's 236 00:12:10,480 --> 00:12:13,240 going to leverage is your personal contacts. 237 00:12:13,240 --> 00:12:16,200 This is another thing that they have that no other company has. 238 00:12:16,640 --> 00:12:19,200 Google has so much information about you because of your 239 00:12:19,480 --> 00:12:23,000 YouTube viewing habits, your Gmail, your Google Docs, all 240 00:12:23,000 --> 00:12:25,720 your calendars, everything that's integrated with Google. 241 00:12:25,920 --> 00:12:28,320 They have all of that information, and with your 242 00:12:28,320 --> 00:12:32,080 permission, they can use that to supply better context to your 243 00:12:32,080 --> 00:12:34,280 searches. Soon, AI mode will be able to 244 00:12:34,280 --> 00:12:37,800 make your responses even more helpful with personalized 245 00:12:37,800 --> 00:12:40,040 suggestions based on your past searches. 246 00:12:40,360 --> 00:12:42,800 So now, based on your recent restaurant bookings and 247 00:12:42,800 --> 00:12:45,480 searches, it gets that you prefer outdoor seating. 248 00:12:46,480 --> 00:12:49,640 And since you subscribe to those gallery newsletters, it suggests 249 00:12:49,640 --> 00:12:52,160 some cool art exhibits to check out while you're in town. 250 00:12:52,360 --> 00:12:55,320 This means that Google can do things like look at the type of 251 00:12:55,320 --> 00:12:58,480 restaurants that you frequent and then suggest different 252 00:12:58,480 --> 00:13:00,600 restaurants based on the ones that you've been going to and 253 00:13:00,600 --> 00:13:02,560 navigating to in your Google Maps. 254 00:13:02,880 --> 00:13:05,600 Again, this is data that Google exclusively has. 255 00:13:06,080 --> 00:13:08,040 Now, they mentioned that this feature is not one that you have 256 00:13:08,040 --> 00:13:09,680 to have on. Of course, you can turn it off, 257 00:13:09,840 --> 00:13:12,040 but this has the potential to create a much more intuitive 258 00:13:12,040 --> 00:13:15,280 experience than competitors. Google's leveraging yet another 259 00:13:15,280 --> 00:13:17,120 advantage they have now with AI mode. 260 00:13:17,120 --> 00:13:21,040 It looks very similar to like the ChatGPT homepage or the Grok 261 00:13:21,040 --> 00:13:23,160 homepage. It's right in Google's search 262 00:13:23,160 --> 00:13:25,800 and it says Meet AI mode with a big text box. 263 00:13:26,400 --> 00:13:29,080 You now have the ability to do deep research on it. 264 00:13:29,400 --> 00:13:32,680 So now all the billions of users that haven't tried out ChatGPT 265 00:13:32,680 --> 00:13:35,720 or aren't aware of deep research are going to have this baked 266 00:13:35,720 --> 00:13:38,440 into Google. And this is using their latest 267 00:13:38,440 --> 00:13:41,160 greatest models. Deep Search uses the same query 268 00:13:41,160 --> 00:13:44,120 find out technique you just heard about, but multiplied. 269 00:13:44,560 --> 00:13:47,840 It can issue dozens or even hundreds of searches on your 270 00:13:47,840 --> 00:13:50,640 behalf. It reasons across all those 271 00:13:50,640 --> 00:13:54,480 disparate pieces of information, create an expert level, fully 272 00:13:54,480 --> 00:13:57,640 cited report in just minutes. Google's not just sitting around 273 00:13:57,640 --> 00:14:00,400 idly waiting for things to happen, they're creating the 274 00:14:00,400 --> 00:14:03,920 most powerful Omni contextual search in existence. 275 00:14:04,200 --> 00:14:06,800 Google also demoed different tools that weren't even on 276 00:14:06,800 --> 00:14:10,480 people's radar, just new things that people weren't expecting. 277 00:14:10,760 --> 00:14:13,320 For example, this tool allows you to try on clothing 278 00:14:13,440 --> 00:14:15,720 digitally. I have many pictures here. 279 00:14:15,720 --> 00:14:19,440 I'm going to pick one that is full length and a clearview of 280 00:14:19,440 --> 00:14:23,840 me and off it goes. You can see it here how it 281 00:14:24,200 --> 00:14:27,520 really gives me a feel for how this dress might look on me. 282 00:14:27,880 --> 00:14:31,520 And I am going to click this thing to track price. 283 00:14:32,360 --> 00:14:36,520 I pick my size then I have to set a target price. 284 00:14:36,600 --> 00:14:42,880 I am going to set it to about $50.00 and tracking is 285 00:14:42,880 --> 00:14:44,480 happening. There's two new pieces of 286 00:14:44,480 --> 00:14:46,360 functionality there. The first one, of course, is 287 00:14:46,360 --> 00:14:49,160 this new tool that allows you to superimpose new items of 288 00:14:49,160 --> 00:14:51,520 clothing on you so you can virtually try them on. 289 00:14:51,760 --> 00:14:54,240 You can purchase them online with greater confidence. 290 00:14:54,520 --> 00:14:56,800 But then the next thing she does here, I think is even more 291 00:14:56,800 --> 00:14:59,840 important. She looks at the item and then 292 00:14:59,840 --> 00:15:03,720 sets the price that she wants to pay for the item and then sets 293 00:15:03,720 --> 00:15:07,280 it to automatically buy the the clothing item as soon as it 294 00:15:07,280 --> 00:15:10,840 reaches underneath that price. This is a limit buy. 295 00:15:10,920 --> 00:15:14,000 This is like if you're setting a limit buy on a stock, but now 296 00:15:14,000 --> 00:15:17,560 Google's implementing this type of purchasing directly into the 297 00:15:17,560 --> 00:15:19,400 Google app, directly into Google itself. 298 00:15:19,680 --> 00:15:23,160 You can now set limit purchases on random websites to trigger 299 00:15:23,160 --> 00:15:25,360 the purchase when the item falls below that price. 300 00:15:25,360 --> 00:15:27,280 Now, these weren't the only features that Google shared in 301 00:15:27,280 --> 00:15:28,560 that demo. There's many other things 302 00:15:28,560 --> 00:15:31,200 they're working on, but these are some of the most significant 303 00:15:31,200 --> 00:15:33,720 highlights and it shows that this company is not waiting 304 00:15:33,720 --> 00:15:36,520 around to be disrupted. They are leaning into new 305 00:15:36,520 --> 00:15:39,200 technology. Sundar Pichai was being honest 306 00:15:39,200 --> 00:15:41,840 when he said that the innovator's dilemma is only a 307 00:15:41,840 --> 00:15:45,600 dilemma if you choose it to be. If you make it 1, he's always 308 00:15:45,600 --> 00:15:47,720 going to lean into the new developments, the new 309 00:15:47,720 --> 00:15:50,400 technology. He's going to disrupt itself to 310 00:15:50,400 --> 00:15:53,880 create new experiences. But in this case, the damage 311 00:15:53,880 --> 00:15:55,640 that investors are concerned about. 312 00:15:55,920 --> 00:15:59,040 The reason that the stock trades at such a significant discount, 313 00:15:59,360 --> 00:16:03,320 a 19 Ford PE ratio. This is cheaper than the S&P 314 00:16:03,320 --> 00:16:06,960 500. The S&P 500 trades currently at 315 00:16:06,960 --> 00:16:11,280 a 23 Ford PE ratio and Google's at a 19. 316 00:16:11,720 --> 00:16:15,200 This company is trading at a significant discount to the S&P 317 00:16:15,200 --> 00:16:19,400 500 while growing twice as fast. When we look at the revenue 318 00:16:19,400 --> 00:16:22,800 growth of Google, the continued strength of this company growing 319 00:16:22,800 --> 00:16:25,600 13%. I continue to believe that it's 320 00:16:25,600 --> 00:16:28,320 highly likely the concerns that investors have about this 321 00:16:28,320 --> 00:16:32,080 company are being overstated, that the disruption risk is 322 00:16:32,080 --> 00:16:35,520 being overpriced into the stock, and that investors today 323 00:16:35,520 --> 00:16:38,880 continue to have an asymmetric risk with high upside and 324 00:16:38,880 --> 00:16:41,240 limited downside. Google's trading up a little bit 325 00:16:41,240 --> 00:16:43,440 today. It's currently up 3% in a down 326 00:16:43,440 --> 00:16:46,840 market that's down 1%. So it has a lot of alpha on the 327 00:16:46,840 --> 00:16:49,160 day, and I think we're going to see a lot more of this in the 328 00:16:49,160 --> 00:16:50,960 future. Now, Google still remains a 329 00:16:50,960 --> 00:16:54,080 highly divisive stock amongst investors, with analysts like 330 00:16:54,080 --> 00:16:56,600 Gene Munster continuing to insist that Google's the new 331 00:16:56,600 --> 00:16:59,000 eBay. But we also have analysts like 332 00:16:59,000 --> 00:17:02,160 Mark Mahaney saying that the death of Google has been 333 00:17:02,160 --> 00:17:04,319 overstated. What it tells you is yeah, that 334 00:17:04,319 --> 00:17:07,000 it's a, it's a more powerful search product. 335 00:17:07,000 --> 00:17:11,520 It's more, it's it just, it's more, I think they use the term 336 00:17:11,760 --> 00:17:14,319 it's more personalized, it's more intelligent and it's more 337 00:17:14,319 --> 00:17:15,760 agentic. Whatever. 338 00:17:15,760 --> 00:17:17,440 It just makes it a better search product. 339 00:17:17,440 --> 00:17:19,920 You create you to improve the search product, people are going 340 00:17:19,920 --> 00:17:21,560 to use it more. And I think that's one of the 341 00:17:21,560 --> 00:17:24,520 reasons why I think the the death of search at Google is 342 00:17:24,520 --> 00:17:27,280 been greatly exaggerated, overstated. 343 00:17:27,480 --> 00:17:28,640 I think they're improving the product. 344 00:17:28,640 --> 00:17:30,360 People are going to continue to search with Google. 345 00:17:30,360 --> 00:17:32,320 I don't think you're going to see a dramatic share shift away 346 00:17:32,320 --> 00:17:34,760 from Google if they continue to innovate the way that they have 347 00:17:34,760 --> 00:17:36,320 the last year and what they're showing today. 348 00:17:36,320 --> 00:17:38,640 Search was up 13% in the first quarter. 349 00:17:38,640 --> 00:17:42,280 Operating margins were to 34%, which was their highest, as you 350 00:17:42,280 --> 00:17:44,560 pointed out, in 12 years. I mean, this is just 351 00:17:44,560 --> 00:17:47,600 extraordinary. So if they add more AI 352 00:17:47,600 --> 00:17:50,160 functionality to the main page, is that going to push the ads 353 00:17:50,160 --> 00:17:53,760 down? It could, it'll also make the 354 00:17:53,760 --> 00:17:55,720 ads more relevant. Look, the name of the game isn't 355 00:17:55,720 --> 00:17:58,560 to show the most ads. The name of the game is to show 356 00:17:58,560 --> 00:18:01,240 the most effective ads from a user's perspective. 357 00:18:01,240 --> 00:18:03,520 Like I get the information that I want, but also from an 358 00:18:03,520 --> 00:18:06,800 advertiser's perspective, which is I want the, I want that lead 359 00:18:06,800 --> 00:18:08,960 that I'm paying to click for. I want that to convert really 360 00:18:08,960 --> 00:18:11,080 well. And what Google is using AI to 361 00:18:11,080 --> 00:18:14,320 do, it's not too dissimilar from what Meta is doing, is using AI 362 00:18:14,320 --> 00:18:17,480 to better capture intent. So the better qualify the lead 363 00:18:17,480 --> 00:18:20,080 and it's an auction market. If the lead is more qualified, 364 00:18:20,080 --> 00:18:23,000 if it's converts, better marketers will bid up for it. 365 00:18:23,000 --> 00:18:26,320 So my guess is we've had, I think it's 11 to 15% revenue 366 00:18:26,320 --> 00:18:28,760 growth out of search for Google for the last seven quarters. 367 00:18:28,960 --> 00:18:31,480 I think there's a decent shot they do it again for the next 7 368 00:18:31,480 --> 00:18:33,360 quarters. I think the, the growth in 369 00:18:33,360 --> 00:18:35,960 search revenue is much more sustainable than market thinks. 370 00:18:35,960 --> 00:18:38,320 If I'm right about that and they keep showing us for the next 371 00:18:38,320 --> 00:18:40,320 three or four quarters, I think the stock re rates. 372 00:18:40,440 --> 00:18:43,480 And by the way, then there's the rest of Google, which is YouTube 373 00:18:43,600 --> 00:18:45,960 Cloud and Waymo. And I think these, if you put 374 00:18:45,960 --> 00:18:48,360 all those together, are just dramatically worth more than 375 00:18:48,360 --> 00:18:50,160 where the stock is now. That's why it's our number one 376 00:18:50,160 --> 00:18:52,400 pick. He points out that this product 377 00:18:52,400 --> 00:18:56,920 that's under so much question is still growing by 15% per quarter 378 00:18:57,280 --> 00:18:59,520 done so for the past seven quarters in a row. 379 00:18:59,600 --> 00:19:01,920 He believes it's going to happen for the next seven in a row. 380 00:19:02,240 --> 00:19:06,560 If that happens, Google will re rate to a 25 PE, a 29 PE. 381 00:19:06,800 --> 00:19:10,320 It'll go back up to that sub premium category away from being 382 00:19:10,320 --> 00:19:13,640 discounted below the market. If that happens, it'll show that 383 00:19:13,640 --> 00:19:16,040 Google is dramatically undervalued at this point. 384 00:19:16,080 --> 00:19:18,800 He also points out that the other properties making up half 385 00:19:18,800 --> 00:19:23,040 of Google, which is YouTube, Android, Cloud and Waymo are all 386 00:19:23,040 --> 00:19:25,240 great properties that have strong growth. 387 00:19:25,240 --> 00:19:26,920 These are very valuable properties. 388 00:19:27,280 --> 00:19:30,640 This company generates $70 billion per year and is trading 389 00:19:30,640 --> 00:19:33,800 below $2 trillion. So I believe, like Mark Mahaney, 390 00:19:33,800 --> 00:19:35,480 that Google is undervalued right now. 391 00:19:35,720 --> 00:19:39,200 We'll see what happens with the search query growth with Google 392 00:19:39,200 --> 00:19:40,560 search. We'll see if the revenue 393 00:19:40,560 --> 00:19:43,280 continues to grow. If it does, we're going to see 394 00:19:43,280 --> 00:19:45,240 the stock higher. Now moving on, we get to the 395 00:19:45,240 --> 00:19:48,520 other big news, which was Elon Musk sat down for an interview 396 00:19:48,520 --> 00:19:50,680 and he answered a lot of tough questions directly. 397 00:19:50,680 --> 00:19:53,320 And one of the first things he talks about in this interview is 398 00:19:53,320 --> 00:19:56,760 the subject of timelines. We know that this is a difficult 399 00:19:56,760 --> 00:20:00,320 subject for Tesla because in so many cases, Elon Musk has thrown 400 00:20:00,320 --> 00:20:03,240 out timelines that have been pushed back again and again and 401 00:20:03,240 --> 00:20:05,520 again, specifically with a robot taxi. 402 00:20:05,520 --> 00:20:09,000 This one feels like Elon Musk is no longer going to push it back 403 00:20:09,000 --> 00:20:12,400 or delay. He is set on releasing Robotaxi 404 00:20:12,400 --> 00:20:14,400 in June. Are you going to have full 405 00:20:14,400 --> 00:20:17,040 autonomous on the roads of Austin at the end by the end of 406 00:20:17,040 --> 00:20:18,360 June? Yes, you are. 407 00:20:18,680 --> 00:20:23,440 What gives you that confidence? We we have cars driving 24/7 408 00:20:23,440 --> 00:20:28,040 with drivers in the cars and we see essentially no 409 00:20:28,040 --> 00:20:29,760 interventions. So he's saying quite 410 00:20:29,760 --> 00:20:32,040 definitively that they're sticking to this timeline. 411 00:20:32,080 --> 00:20:36,120 They will have cars on the road without drivers in Austin by the 412 00:20:36,120 --> 00:20:38,880 end of next month. And then he gives a timeline of 413 00:20:38,960 --> 00:20:42,560 how it's going to ramp up. At what scale will Tesla start? 414 00:20:42,560 --> 00:20:44,920 And then how many vehicles will they add over time? 415 00:20:45,720 --> 00:20:48,080 Well, we'll have to see how, how well it it does. 416 00:20:48,080 --> 00:20:51,800 But you know, I think it's prudent for us to start with a 417 00:20:51,800 --> 00:20:55,520 small number, confirm that things going well, and then 418 00:20:55,720 --> 00:20:58,240 scale it up proportionate to how well we see it's doing. 419 00:20:58,720 --> 00:21:00,000 Right. And what's going to be a judge 420 00:21:00,000 --> 00:21:02,640 of how well it's doing? Wait, are there any incidents? 421 00:21:03,120 --> 00:21:05,080 Are there any, any interventions? 422 00:21:06,480 --> 00:21:11,080 And but we, we want to be, we wanted to deliberately take it 423 00:21:11,080 --> 00:21:14,440 slow and we could start with 1000 or 10,000 on day one, but 424 00:21:15,080 --> 00:21:16,320 we, I don't think that would be prudent. 425 00:21:16,320 --> 00:21:20,680 So we'll start with probably 10 for a for a week, then increase 426 00:21:20,680 --> 00:21:28,240 it to 203040 and I think by say yeah would probably be at 1000 427 00:21:28,240 --> 00:21:30,440 within a few months. So he says that they might have 428 00:21:30,440 --> 00:21:34,280 1000 in just a few months as operating robo taxis. 429 00:21:34,640 --> 00:21:37,160 Now, that doesn't sound like a lot, just 1000, because when you 430 00:21:37,160 --> 00:21:41,320 look at Ubers, 1000 isn't a lot. But as a robo taxi, that is a 431 00:21:41,320 --> 00:21:44,720 ton. Robo taxis work 16 hours a day. 432 00:21:45,120 --> 00:21:48,680 They can go out all the time. Even Waymo that's operating in 433 00:21:48,680 --> 00:21:51,840 multiple cities that just completed 10 million paid rides 434 00:21:51,880 --> 00:21:54,720 only has a bit over 1000 operational robo taxis. 435 00:21:54,720 --> 00:21:56,840 The fact that they're working around the clock is why they're 436 00:21:56,840 --> 00:21:59,720 so effective. In fact, in Los Angeles, robo 437 00:21:59,720 --> 00:22:03,400 taxis from Waymo are doing more business than all of Lyft. 438 00:22:03,760 --> 00:22:06,480 So they are highly efficient when you have them operational. 439 00:22:06,800 --> 00:22:10,360 But Elon Musk is suggesting that in only a couple months Tesla 440 00:22:10,360 --> 00:22:13,720 could pass Waymo in the amount of operational robo taxis. 441 00:22:13,840 --> 00:22:15,200 No. Next he's asked an important 442 00:22:15,200 --> 00:22:17,600 question. He's asked to compare what 443 00:22:17,600 --> 00:22:20,560 Tesla's doing with their technology perspective against 444 00:22:20,560 --> 00:22:24,000 Waymo. As we know, Tesla is vision only 445 00:22:24,000 --> 00:22:26,320 camera only. They're not using any type of 446 00:22:26,320 --> 00:22:28,840 sensors that you have on the fenders of the vehicle and 447 00:22:28,840 --> 00:22:31,640 they're not using the Lidar, which are the lasers that create 448 00:22:31,640 --> 00:22:34,360 awareness of the distance of different objects relative to 449 00:22:34,360 --> 00:22:36,160 the vehicle. Now Waymo's doing the strategy 450 00:22:36,160 --> 00:22:38,920 of all three of these. They have LIDAR, they have many 451 00:22:38,920 --> 00:22:40,760 cameras and they they have sensors. 452 00:22:41,080 --> 00:22:43,960 They combine all of these inputs together to make it a very safe 453 00:22:43,960 --> 00:22:45,960 vehicle. And that's what's been tested 454 00:22:45,960 --> 00:22:48,720 with Waymo's. Waymo credits this combination 455 00:22:48,720 --> 00:22:51,720 of different safety factors to the reason that they have almost 456 00:22:51,720 --> 00:22:54,400 no incidents and they've had no deaths with their vehicles. 457 00:22:54,600 --> 00:22:57,160 When you compare that again to Tesla, they're going down the 458 00:22:57,160 --> 00:23:00,640 route and they're sticking with it with vision only. 28 cameras 459 00:23:00,640 --> 00:23:03,120 that got Lidar and radar. You've had a different approach, 460 00:23:03,160 --> 00:23:06,520 6, I think 8 to 9 cameras and the neural network. 461 00:23:06,520 --> 00:23:09,240 Why do you feel that that is going to be the equivalent in 462 00:23:09,240 --> 00:23:12,160 terms of safety profile? Oh, I think it'll be better. 463 00:23:12,280 --> 00:23:16,480 Why? Because the the way that the 464 00:23:16,480 --> 00:23:18,640 road system is designed is for AI. 465 00:23:19,080 --> 00:23:21,480 It's basically, I should say it's for intelligence, 466 00:23:21,880 --> 00:23:25,640 biological neural net and eyes. That's how the whole Rd. system 467 00:23:25,640 --> 00:23:27,920 is designed. So that what will actually work 468 00:23:27,920 --> 00:23:30,800 best for the road system is artificial intelligence, digital 469 00:23:30,800 --> 00:23:34,600 neural Nets and cameras. And that we we'll also have the 470 00:23:34,680 --> 00:23:37,120 microphones, the car can hear emergency vehicles, that kind of 471 00:23:37,120 --> 00:23:40,600 thing, right? Yeah, you need to 'cause that 472 00:23:40,600 --> 00:23:42,560 was a question, right? You need to hear a fire engine 473 00:23:42,560 --> 00:23:43,880 or a police car. Yes, exactly. 474 00:23:43,920 --> 00:23:46,480 Right. So, but that's, that's how the 475 00:23:46,480 --> 00:23:50,320 whole Rd. system's designed. It's not designed for shooting 476 00:23:50,320 --> 00:23:52,760 lasers out of your eyes. Elon Musk has stated over and 477 00:23:52,760 --> 00:23:55,120 over again he's made this point many times. 478 00:23:55,120 --> 00:23:58,880 In fact, he said it ad nauseam that roads are designed for 479 00:23:58,880 --> 00:24:02,400 humans and that's the reason that Tesla is pursuing the path 480 00:24:02,400 --> 00:24:04,840 of vision only. They're just like humans. 481 00:24:04,840 --> 00:24:07,280 You see what's outside. That's how roads were designed. 482 00:24:07,480 --> 00:24:11,320 So it makes sense to create the car exactly like it was designed 483 00:24:11,320 --> 00:24:14,360 for humans. Now he says that point and it 484 00:24:14,480 --> 00:24:16,400 kind of makes sense at first. You hear that and you go, oh, 485 00:24:16,400 --> 00:24:18,960 that, that makes sense. Roads are designed for vision 486 00:24:18,960 --> 00:24:20,520 only. That's what humans have. 487 00:24:20,720 --> 00:24:23,280 Maybe hearing as well. They have a mic as well, but 488 00:24:23,280 --> 00:24:25,160 those are the two inputs. You just have the vision. 489 00:24:25,240 --> 00:24:27,920 After all, as he mentions, humans aren't shooting lasers 490 00:24:27,920 --> 00:24:29,680 out of their eyes. In fact, that seems silly. 491 00:24:29,960 --> 00:24:32,240 Why would they do that when human drivers aren't doing that? 492 00:24:32,360 --> 00:24:34,920 But then Elon Musk always makes It's a different point that 493 00:24:34,920 --> 00:24:36,880 seems to conflict with this point. 494 00:24:36,960 --> 00:24:39,160 Here's another point that he brings up in the same interview 495 00:24:39,160 --> 00:24:42,160 just seconds earlier. In order for that to be the 496 00:24:42,160 --> 00:24:45,240 case, we we want the autonomous car to be much safer than a car 497 00:24:45,240 --> 00:24:46,360 driven by a person. Right. 498 00:24:46,440 --> 00:24:50,480 We want the robo taxi car to be much safer than a car driven by 499 00:24:50,480 --> 00:24:52,720 a person. In Tesla's most recent earnings 500 00:24:52,720 --> 00:24:56,000 call, Elon Musk said that the robo taxi has to be orders of 501 00:24:56,000 --> 00:24:58,760 magnitude safer than the average human driver. 502 00:24:59,400 --> 00:25:02,520 So in one point, Elon Musk is saying that the reason we're 503 00:25:02,520 --> 00:25:05,280 designing our vehicles to only have vision is because that's 504 00:25:05,280 --> 00:25:07,760 how humans drive. It just makes sense to drive 505 00:25:07,760 --> 00:25:10,640 just like humans drive. But then in the next he says 506 00:25:10,640 --> 00:25:14,640 that the the bar, the standard for robo taxis is to be orders 507 00:25:14,640 --> 00:25:18,160 of magnitude safer than humans. Well, I would argue that these 508 00:25:18,160 --> 00:25:20,040 two points conflict with each other. 509 00:25:20,280 --> 00:25:23,560 Why does it make sense to design a vehicle exactly like humans 510 00:25:23,560 --> 00:25:26,840 drive if the goal is to make them drive much safer than 511 00:25:26,840 --> 00:25:29,120 humans? In fact, a way that you could 512 00:25:29,120 --> 00:25:32,840 possibly make human drivers safer orders of magnitude safer 513 00:25:33,120 --> 00:25:36,080 is if they had some special ability to shoot lasers out of 514 00:25:36,080 --> 00:25:38,520 their eyes and immediately measure the distance of 515 00:25:38,520 --> 00:25:40,320 different objects relative to themselves. 516 00:25:40,680 --> 00:25:44,480 Especially in very difficult conditions like cloud or rain or 517 00:25:44,480 --> 00:25:48,480 dark conditions where cameras or our eyes can be deceptive. 518 00:25:48,680 --> 00:25:51,400 Our eyes can struggle with low light conditions or sun glare, 519 00:25:51,400 --> 00:25:54,560 or fog or extreme rain. There's lots of scenarios where 520 00:25:54,560 --> 00:25:57,280 the human eye is inferior to LIDAR. 521 00:25:57,760 --> 00:26:00,360 So while Elon Musk makes these two points that seem 522 00:26:00,360 --> 00:26:03,840 contradictory, we're designing Teslas to fit the road of 523 00:26:03,840 --> 00:26:07,200 humans, but we need Teslas to be orders of magnitude safer than 524 00:26:07,200 --> 00:26:09,600 humans. You have Waymo that is making 525 00:26:09,600 --> 00:26:13,120 them orders of magnitude safer than humans by having better 526 00:26:13,120 --> 00:26:16,160 technology than humans. Now, Tesla investors continually 527 00:26:16,160 --> 00:26:19,560 mock Waymo for their LIDAR because it looks a little goofy. 528 00:26:19,920 --> 00:26:22,360 And in some cases, Waymos can even do silly things. 529 00:26:22,360 --> 00:26:25,600 They can block traffic, they can get stuck, they can go in 530 00:26:25,600 --> 00:26:28,800 circles or do funny things. But so far there's been no 531 00:26:28,800 --> 00:26:32,000 serious video of a Waymo being in a near death collision. 532 00:26:32,360 --> 00:26:35,400 There's been no truly frightening video of a Waymo. 533 00:26:35,800 --> 00:26:38,720 When we look at examples like this, like there's a video here 534 00:26:38,920 --> 00:26:41,920 that this was going viral amongst Tesla investor circles. 535 00:26:42,360 --> 00:26:45,400 And this is of a Waymo driving through this, this deep puddle. 536 00:26:45,640 --> 00:26:49,040 Obviously the the LIDAR and the the cameras themselves can't 537 00:26:49,040 --> 00:26:51,640 look at how deep this puddle is, so it goes through it. 538 00:26:52,160 --> 00:26:54,440 It bounces a bit. It's a rocky ride. 539 00:26:54,840 --> 00:26:57,920 I think this is probably more of a fault of the roads in LA than 540 00:26:57,920 --> 00:26:59,840 the Waymo itself. But either way, these are the 541 00:26:59,840 --> 00:27:01,720 type of mistakes that Waymo's are making. 542 00:27:02,080 --> 00:27:03,800 They're driving through deep puddles. 543 00:27:03,800 --> 00:27:05,480 Sometimes they get stuck in traffic. 544 00:27:05,760 --> 00:27:08,040 That's what we see when we compare that with some of the 545 00:27:08,040 --> 00:27:10,640 footage we've seen from full self driving, especially in edge 546 00:27:10,640 --> 00:27:13,080 cases, again, like cloudy conditions like we're seeing in 547 00:27:13,080 --> 00:27:15,320 this one, they can be truly frightening. 548 00:27:15,360 --> 00:27:18,000 Here's one example of a terrifying edge case of full 549 00:27:18,000 --> 00:27:29,800 self driving. The person that posted this 550 00:27:29,800 --> 00:27:32,240 video said they've owned their Tesla for less than a year and 551 00:27:32,240 --> 00:27:35,240 within the last six months alone it's tried twice to drive 552 00:27:35,240 --> 00:27:37,800 straight into a train. Now I'm not bringing this up to 553 00:27:37,800 --> 00:27:41,320 bash Tesla, that's not my goal, But it's to illustrate that 554 00:27:41,320 --> 00:27:44,680 these Lidar sensors come in with those edge cases. 555 00:27:44,840 --> 00:27:47,760 The difficult part with full self driving, a robo taxi is not 556 00:27:47,760 --> 00:27:51,680 to do a normal drive in great conditions with no edge cases. 557 00:27:52,160 --> 00:27:54,840 There's most full self driving systems or any similar system 558 00:27:54,840 --> 00:27:57,960 that can accomplish that. It's the unique cases, the edge 559 00:27:57,960 --> 00:28:00,400 cases that define whether this technology works. 560 00:28:00,680 --> 00:28:02,640 So far, Waymo has proven that out. 561 00:28:02,960 --> 00:28:05,280 Tesla hasn't, and there's still a question of whether or not 562 00:28:05,280 --> 00:28:08,640 Tesla can truly rule out these type of edge cases without the 563 00:28:08,640 --> 00:28:10,640 use of Lidar. Now moving on, we get to another 564 00:28:10,640 --> 00:28:13,320 news story that's being ignored by the media, which is the 565 00:28:13,720 --> 00:28:16,200 dramatic fall in stock price of FICO. 566 00:28:16,320 --> 00:28:21,600 The company is down 14% today, so huge fall and share price 567 00:28:21,600 --> 00:28:23,360 today. And then on the week it's been 568 00:28:23,360 --> 00:28:25,040 down even more. In fact, if we go out just to 569 00:28:25,040 --> 00:28:28,800 the past week, it's down 23%. Now, Fico's not the only one. 570 00:28:29,120 --> 00:28:32,760 We also have the credit bureaus. Equifax in particular is down 7% 571 00:28:32,760 --> 00:28:34,200 today. So it's giving up some of its 572 00:28:34,200 --> 00:28:35,720 gains. If we look over the past week, 573 00:28:36,040 --> 00:28:39,880 it's not down quite as much as FICO, only 4%, but it has given 574 00:28:39,880 --> 00:28:43,680 up a lot of its gains, going down from 280 now to 260. 575 00:28:43,680 --> 00:28:45,120 What is going on with these companies? 576 00:28:45,120 --> 00:28:48,520 Why is FICO down so much today? Well, this has everything to do 577 00:28:48,520 --> 00:28:51,840 with the new Federal Housing Finance Agency director, Bill 578 00:28:51,840 --> 00:28:54,600 Poulton. He is addressing the obese 579 00:28:54,600 --> 00:28:57,120 Fannie Mae and Freddie Mac, and he's putting them on a 580 00:28:57,120 --> 00:28:59,240 treadmill. Bill Poulte was at a conference 581 00:28:59,240 --> 00:29:02,120 and he made remarks that were aggressively directed at 582 00:29:02,120 --> 00:29:06,320 expenses in mortgage assessment costs, specifically with FICO. 583 00:29:06,320 --> 00:29:09,920 In particular, Bill Poulte was asked about the Trimerge credit 584 00:29:09,920 --> 00:29:12,600 scoring and converting that to buy Merge credit scoring. 585 00:29:12,920 --> 00:29:15,720 Now, right now, you currently get your credit score from all 586 00:29:15,720 --> 00:29:17,960 three credit bureaus. That's how you get mortgages. 587 00:29:18,240 --> 00:29:20,440 And he wants to change that to where you only get it from 2. 588 00:29:20,600 --> 00:29:23,080 And Pulte said that they're actively looking at getting it 589 00:29:23,080 --> 00:29:23,760 done. Quote. 590 00:29:23,760 --> 00:29:26,440 I think FICO should make sure that they're being as economic 591 00:29:26,440 --> 00:29:28,400 as possible. We're actively looking at 592 00:29:28,400 --> 00:29:30,680 getting it done. I don't like some of the things 593 00:29:30,680 --> 00:29:33,720 I've heard in terms of cost. It's only a couple sentences, 594 00:29:33,720 --> 00:29:36,480 but it was enough to drop Fico's stock by 20%. 595 00:29:36,520 --> 00:29:39,000 Now, why are FICO investors so concerned about this? 596 00:29:39,000 --> 00:29:41,760 After all, it can't be that concerning to switch from three 597 00:29:41,760 --> 00:29:44,920 credit bureaus to two, right? Well, there's more to it. 598 00:29:45,360 --> 00:29:47,400 If you understand the way that FICO makes money. 599 00:29:48,040 --> 00:29:50,960 Everybody knows that this company has the FICO score, the 600 00:29:50,960 --> 00:29:53,680 score that you get when you're applying for a mortgage or any 601 00:29:53,680 --> 00:29:56,600 big purchase. It's to assess your credibility 602 00:29:56,840 --> 00:29:59,680 and allow the lender a better look at what type of interest 603 00:29:59,680 --> 00:30:01,600 rate you get. That way they can price their 604 00:30:01,600 --> 00:30:03,840 loans in the interest rate more appropriately. 605 00:30:04,280 --> 00:30:06,520 So that's the basis of Fico's business. 606 00:30:06,840 --> 00:30:09,680 But more specifically, the way that they sell these loans is 607 00:30:09,680 --> 00:30:12,160 they have licenses with all three credit bureaus. 608 00:30:12,320 --> 00:30:14,800 You have Experian, you have TransUnion, and you have 609 00:30:14,800 --> 00:30:18,280 Equifax. FICO licenses their score and 610 00:30:18,280 --> 00:30:20,560 their algorithm to all three of these companies. 611 00:30:20,960 --> 00:30:24,120 When a customer wants to buy a home and they have to get a 612 00:30:24,120 --> 00:30:27,520 mortgage, they get their credit pulled, which is a trimerge, 613 00:30:27,720 --> 00:30:30,000 meaning that they pull their credit from all three credit 614 00:30:30,000 --> 00:30:32,200 bureaus. Every credit Bureau has their 615 00:30:32,200 --> 00:30:36,800 own unique FICO score, so there is a FICO Equifax score, FICO 616 00:30:36,800 --> 00:30:39,880 TransUnion score, and so on. When you look at these scores, 617 00:30:39,880 --> 00:30:42,840 sometimes they differ because they have different data sets 618 00:30:42,840 --> 00:30:44,480 and different algorithms behind them. 619 00:30:45,000 --> 00:30:48,040 And so you can have a situation, for example, like the TransUnion 620 00:30:48,040 --> 00:30:52,160 score being a 5, the Equifax being a four, and the Experian 621 00:30:52,160 --> 00:30:55,560 being a six. In that case, what happens is 622 00:30:55,560 --> 00:30:57,920 the lender will use a combination of all three scores, 623 00:30:57,920 --> 00:31:00,360 usually the mean of them, and that's what you get with your 624 00:31:00,360 --> 00:31:02,720 credit rating. You take all three data inputs, 625 00:31:02,720 --> 00:31:05,560 you combine it together and that's what dictates your credit 626 00:31:05,560 --> 00:31:08,720 score and your interest rate. Now, if Bill Polt a successful 627 00:31:08,720 --> 00:31:11,880 here in turning this from a Trimerge into a by merge poll, 628 00:31:12,240 --> 00:31:14,000 that means that you're not pulling from all three credits, 629 00:31:14,000 --> 00:31:15,560 you're just pulling from two of the three. 630 00:31:15,960 --> 00:31:18,800 You'd presumably pick two different ones every time that 631 00:31:18,800 --> 00:31:21,680 they pull credit, and either way you would only have two of those 632 00:31:21,680 --> 00:31:23,800 data points. So the credit score in and of 633 00:31:23,800 --> 00:31:26,120 itself may not be quite as accurate because you're missing 634 00:31:26,120 --> 00:31:29,640 out on one credit Bureau, but it would be cheaper because again, 635 00:31:29,640 --> 00:31:33,320 FICO licenses with all three. Every time you have a Trimerge 636 00:31:33,320 --> 00:31:36,200 score, all three credit bureaus are paying FICO. 637 00:31:36,680 --> 00:31:40,280 So if you change that to two, that essentially wipes away 638 00:31:40,280 --> 00:31:44,880 around 33% of Fico's score revenue every single poll. 639 00:31:44,880 --> 00:31:49,000 So in very simple terms, this is as if Fico's losing 33% of their 640 00:31:49,000 --> 00:31:52,120 customer base with their high margin credit business. 641 00:31:52,120 --> 00:31:54,520 Now of course, that's a big simplification, but you can see 642 00:31:54,520 --> 00:31:57,280 the concern here. If this goes through, it could 643 00:31:57,280 --> 00:32:01,120 impact materially Fico's free cash flow and their earnings. 644 00:32:01,600 --> 00:32:04,800 Now when we look at Equifax, this company is also trading 645 00:32:04,800 --> 00:32:08,120 down a bit with the rest of the credit bureaus, but albeit not 646 00:32:08,120 --> 00:32:11,320 as much as FICO. The reason that Equifax is a bit 647 00:32:11,320 --> 00:32:14,480 less exposed to this is first of all, out of the three credit 648 00:32:14,480 --> 00:32:17,440 bureaus, if we move to a by merge credit pulling system 649 00:32:17,440 --> 00:32:20,760 where we could only pick 2, Equifax and TransUnion are the 650 00:32:20,760 --> 00:32:23,320 most likely to be picked on the most common basis. 651 00:32:23,560 --> 00:32:25,800 They have the most data, they're at the cheapest prices. 652 00:32:26,080 --> 00:32:28,640 Experian would be the one that would likely suffer the most. 653 00:32:28,760 --> 00:32:31,920 So even though simple math would dictate Equifax's picked only 654 00:32:31,920 --> 00:32:34,840 66% of the time, the odds are that they would be picked more 655 00:32:34,840 --> 00:32:37,120 like 80% of the time. But I'll also mention that 656 00:32:37,120 --> 00:32:39,880 Equifax is simply more diversified when we look at what 657 00:32:39,880 --> 00:32:41,680 they're doing. The reason that I'm investing in 658 00:32:41,680 --> 00:32:44,520 this company primarily is because of their workforce 659 00:32:44,520 --> 00:32:48,120 solution, the work number, their verification of previous 660 00:32:48,120 --> 00:32:50,800 employment, that is the product that's growing the most, that 661 00:32:50,800 --> 00:32:54,160 has the highest margins. The credit scoring is nice. 662 00:32:54,240 --> 00:32:56,680 It's a a nice business. It gives them a lot of data to 663 00:32:56,680 --> 00:32:59,480 work with, but it's not the most important part of the investment 664 00:32:59,480 --> 00:33:01,560 thesis. So Equifax will certainly be 665 00:33:01,560 --> 00:33:04,480 impacted by this if it goes through, but it's not going to 666 00:33:04,480 --> 00:33:06,280 be to the same detriment as FICO. 667 00:33:06,560 --> 00:33:09,120 Now moving on, we get to the fail of the week, which this 668 00:33:09,120 --> 00:33:11,600 time we're going to highlight the company Klarna. 669 00:33:12,040 --> 00:33:16,600 This company is reportedly seeing widening losses, lots of 670 00:33:16,600 --> 00:33:19,240 losses, as people are not repaying their loans. 671 00:33:19,560 --> 00:33:22,720 Now, if we look at the business model of Klarna, the way that 672 00:33:22,720 --> 00:33:26,400 this company makes money is by exploiting one of the worst 673 00:33:26,400 --> 00:33:30,640 parts of American consumerism, which is overspending, getting 674 00:33:30,640 --> 00:33:33,560 into debt, not being able to pay back your loans, destroying your 675 00:33:33,560 --> 00:33:35,960 credit. Now, credit card companies do 676 00:33:35,960 --> 00:33:38,960 this to some degree, but Klarna here took it to a whole new 677 00:33:38,960 --> 00:33:41,600 level, extending enormous amounts of credit to people that 678 00:33:41,600 --> 00:33:43,520 have no business having this credit. 679 00:33:43,640 --> 00:33:46,000 And Klarna is now seeing the obvious outcomes of that. 680 00:33:46,480 --> 00:33:49,440 Klarna SOTS losses jump in the first quarter as a popular buy 681 00:33:49,440 --> 00:33:53,600 now, pay later firm applies the brakes on a hotly anticipated US 682 00:33:53,600 --> 00:33:56,600 initial public offering. Swedish payment startup said 683 00:33:56,600 --> 00:34:00,640 it's net losses for the first three months of 2025 totaled 99 684 00:34:00,640 --> 00:34:04,000 million, significantly worse than the 47 million loss it 685 00:34:04,000 --> 00:34:06,640 reported a year ago. Klarna said that it was due to 686 00:34:06,640 --> 00:34:09,880 several one off costs related to depreciation, share based 687 00:34:09,880 --> 00:34:12,400 payment and restructuring. Now, even though Klarna wants to 688 00:34:12,400 --> 00:34:15,400 blame a lot of one time items like depreciation and so on, 689 00:34:15,719 --> 00:34:18,880 they do have to mention that credit losses with their product 690 00:34:18,880 --> 00:34:23,120 are up 17% year over year. So as they continue to loan more 691 00:34:23,120 --> 00:34:26,239 and more people, they're finding that these people don't want to 692 00:34:26,239 --> 00:34:28,199 pay it back. And that brings up an 693 00:34:28,199 --> 00:34:30,920 interesting point here. If we really simplify what 694 00:34:30,920 --> 00:34:34,239 Klarna is doing here, they're taking investor capital, 695 00:34:34,360 --> 00:34:37,040 diluting investors, taking their money and providing it to 696 00:34:37,320 --> 00:34:40,239 customers, customers that want to pay for their Crunchwrap 697 00:34:40,239 --> 00:34:42,639 Supreme in four easy installment payments. 698 00:34:42,920 --> 00:34:44,560 That's the demo that they're targeting. 699 00:34:45,000 --> 00:34:48,560 And now we're starting to see the first early cracks in this 700 00:34:48,560 --> 00:34:51,239 investment plan. So we'll see how this one works 701 00:34:51,239 --> 00:34:53,520 out over time. But as of now, because of the 702 00:34:53,520 --> 00:34:56,480 rise in the credit losses, they're delaying their IPO and 703 00:34:56,480 --> 00:34:59,280 they are the fail of the week. That's all for this episode. 704 00:34:59,400 --> 00:35:00,200 See you in the next one.