Is Tesla Doomed? | Ep 002 Lemonade Stand

Summary

Podcast Summary: Lemonade Stand - "Is Tesla Doomed?" | Ep 002

Host/Authors: Aiden, Atrioc, DougDoug
Release Date: March 13, 2025
Duration: Approximately 22 minutes into the transcript provided

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1. Introduction and Episode Overview

The second episode of Lemonade Stand kicks off with Aiden, Atrioc, and DougDoug reuniting to tackle the pressing question: "Is Tesla Doomed?" The hosts initiate light-hearted banter and quickly set the stage for an in-depth discussion centered around Tesla's current standing in the market, its self-driving technology, competitive landscape, and broader implications for the automotive and technology industries.

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2. Tesla's Current Challenges and Market Perception

Aiden opens with a critical analysis of Tesla's recent downturn:

Aiden [09:01]: "Texas. We got 44 wheels thrown off a Tesla in the parking lot. We got superchargers on fire in Massachusetts... Tesla drops 50%, that's $800 billion of market cap lost. That's equivalent to... something like Enron collapsing, but much bigger."

This dramatic decline highlights significant challenges Tesla faces, including incidents affecting its infrastructure (e.g., supercharger fires) and a substantial loss in market capitalization. The hosts discuss how political sentiments and Elon Musk's personal actions have impacted Tesla's reputation, especially outside China where anti-Musk sentiment is more pronounced.

Doug [10:46]: "I don't think Tesla's system progressing past me still having to sit in the driver's seat."

Despite these setbacks, Caba emphasizes that Tesla's innovations, like the Model Y refresh, aim to keep the company relevant in a rapidly evolving market:

Caba [13:50]: "It's like you wouldn't buy the PS5 if the PS6 is coming out in two months for the same price."

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3. Financial Analysis: Tesla vs. Other Tech Giants

Aiden delves into Tesla's financial metrics, particularly focusing on the Price-to-Earnings (PE) ratio to assess its valuation compared to other tech giants:

Aiden [17:10]: "Tesla's profit was 7 billion, but their PE ratio today is still 101. That's saying that the market thinks Tesla is worth 100 times what they're making in a year."

Contrasting Tesla with companies like Apple, Google, and Microsoft, Aiden argues that Tesla's high valuation is heavily reliant on optimistic future projections rather than current earnings:

Aiden [19:28]: "So they're still implying a level of growth that I think is not there."

Caba counters by highlighting Tesla's significant achievements in battery storage and its leading position in the market:

Caba [86:12]: "Tesla's leading the market globally in selling batteries and power packs and storage solutions."

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4. Self-Driving Technology: Tesla vs. Waymo

The core of the discussion revolves around self-driving technologies, comparing Tesla's vision-based approach to Waymo's use of LIDAR and radar systems.

Tesla's Vision-Based Approach

Tesla relies solely on cameras (vision) to navigate, arguing that this method mirrors human driving capabilities:

Caba [28:02]: "They have cameras all around the car and can see all of around it."

Elon Musk is quoted dismissing LIDAR as unnecessary and overly expensive:

Caba [36:35]: "LIDAR is a fool's errand. Everyone relying on LIDAR is doomed."

Waymo's Multi-Sensor Approach

In contrast, Waymo employs a combination of cameras, LIDAR, and radar to create a comprehensive 3D mapping of the environment:

Caba [29:48]: "Waymo's approach... have more sensors to give you a sense of numbers."

The hosts discuss the reliability and safety differences, with Doug sharing his experience riding in a Waymo vehicle:

Doug [33:57]: "We pulled up to... someone crosses in front of us. The car slammed and got out of the way. I saw this happen and I was like, I don't know if I could have done that as a human."

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5. Competitive Landscape and Market Dynamics

The conversation shifts to competition, especially focusing on Chinese automotive giant BYD, which is gaining ground in the EV market without relying on technologies like LIDAR:

Caba [92:10]: "Tesla's advantage is diminishing so rapidly that I don't know."

Aiden points out regulatory and market-specific challenges that limit Tesla's competitiveness in regions like China:

Aiden [91:05]: "BYD rolled out FSD... rolled out for free to every make and model in China... this makes me worried about their ability to compete."

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6. Risks and Challenges for Tesla

Several risks threaten Tesla's ambitious plans:

• Regulatory Hurdles: The complexity of obtaining approvals for fully autonomous vehicles.

• Brand Reputation: Negative publicity from accidents and Elon Musk's controversial actions affects consumer trust.

• Competition: Rapid advancements by competitors, especially in China, erode Tesla's market share.

• Technical Challenges: Achieving reliable self-driving without LIDAR remains a significant hurdle.

Aiden [44:27]: "If Elon Musk's personal antics continue, it makes it harder to sell Tesla as a business."

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7. Potential Advantages and Future Prospects for Tesla

Despite the challenges, Tesla possesses unique strengths:

• Data Advantage: With millions of cars on the road, Tesla accumulates vast amounts of real-world driving data, enhancing its AI capabilities.

• Battery Technology: Tesla's advancements in battery storage position it well in the growing energy market.

• Fleet Deployment Potential: With 400,000 cars equipped for Full Self-Driving (FSD), Tesla could rapidly scale autonomous services if technology matures.

• Optimus Robot: Tesla's venture into humanoid robotics could diversify its portfolio and open new revenue streams.

Caba [83:03]: "Optimus robot... if they pull it off, their fleet instantly becomes obscenely valuable."

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8. Tesla's Financial Moves and Insider Sentiment

The hosts note that key insiders at Tesla are selling shares, indicating potential concerns about the company's future prospects:

Caba [89:09]: "Nobody bought... they're only selling. They understand how much Hopium is baked into this stock price."

This insider selling contrasts with other tech companies where insiders typically buy shares, suggesting a lack of confidence from within Tesla's leadership.

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9. Transition to Saudi Investment in Pokémon Go

The discussion veers into Saudi Arabia's acquisition of Niantic, the company behind Pokémon Go, highlighting broader investment trends and geopolitical influences in technology:

Aiden [93:56]: "Niantic is being sold to a gaming company owned by a Saudi government for $3.5 billion."

The hosts speculate on the motives behind such investments, considering Saudi Arabia's extensive oil wealth and desire to diversify its portfolio into tech and entertainment sectors.

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10. Public Transportation in America vs. Global Models

The conversation shifts to public transportation, contrasting American car-centric infrastructure with efficient systems in cities like Copenhagen and Seoul:

Doug [75:53]: "Los Angeles has one of the largest parking lots in the world... It degrades cities and quality of life."

The hosts lament the slow adoption of effective public transportation solutions in the U.S., attributing it to entrenched car culture and regulatory barriers.

Caba [78:06]: "We need a trains guy. We need to give him one job."

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11. Vibe Coding and AI in Game Development

Aiden introduces the concept of "Vibe Coding," where AI tools like ChatGPT assist non-programmers in developing games. The hosts debate the implications of this trend, balancing concerns about the quality and soulfulness of AI-generated content against the democratization of game development.

Doug [102:54]: "Vibe coding is just letting AI do all the coding... It saves a lot of time."

Caba remains optimistic, viewing AI as a powerful tool that, when directed by human creativity, can enhance the game development process.

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12. Conclusion and Future Directions

Wrapping up the episode, Doug encourages listeners to engage with the podcast by providing thoughtful comments and feedback:

Doug [108:20]: "Keep providing that because follow-ups and including your guys' conversations in the show is something we want to incorporate."

The hosts express their ongoing commitment to exploring pivotal technology and business topics, promising more insightful discussions in future episodes.

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Notable Quotes

• Aiden [09:01]: "Tesla drops 50%, that's $800 billion of market cap lost. That's like... something like Enron collapsing, but much bigger."

• Caba [13:50]: "It's like you wouldn't buy the PS5 if the PS6 is coming out in two months for the same price."

• Caba [36:35]: "LIDAR is a fool's errand. Everyone relying on LIDAR is doomed."

• Aiden [17:10]: "Tesla's profit was 7 billion, but their PE ratio today is still 101. That's saying that the market thinks Tesla is worth 100 times what they're making in a year."

• Caba [86:12]: "Tesla's leading the market globally in selling batteries and power packs and storage solutions."

• Caba [83:03]: "Optimus robot... if they pull it off, their fleet instantly becomes obscenely valuable."

• Aiden [44:27]: "If Elon Musk's personal antics continue, it makes it harder to sell Tesla as a business."

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Final Thoughts

In this episode, Lemonade Stand offers a comprehensive and nuanced analysis of Tesla's precarious position in the market. While acknowledging Tesla's innovations and potential, the hosts underscore significant financial, technological, and reputational challenges that could determine the company's future. The discussion seamlessly transitions to broader topics, reflecting the hosts' ambition to address diverse and impactful issues in business, technology, and society.

For those interested in the intersection of business strategy, technology innovation, and market dynamics, this episode provides valuable insights and thought-provoking perspectives.

Transcript

[Doug]

I'm not saying it's. It's not awful. I'm telling you, that layer you're removing. No, no, I. It looks like a video game. And that's removal of the human element is like, is is real.

[Caba]

And I do want to be clear. This is not running over dogs. This is radar on a street.

[Aiden]

I've already claimed it. Hey, I got a question. I asked my chat this. If we could saw off Texas, load it out to the ocean and then float Australia in where Texas is, first of all, would you do it? And second of all, what do you think it would do to the character of the United States?

[Caba]

It would fill up the Gulf of America. We can't have that. We'd have to rename it to Gulf of Australia.

[Doug]

We just renamed it. You know, we want to go through.

[Caba]

That whole process of permitting again.

[Aiden]

I had to redo all my globes.

[Doug]

It was a pain, just really inconvenient. All things. All things considered. But welcome back to the second episode of Lemonade. Stan.

[Caba]

That was for classic. Welcome.

[Doug]

Don't.

[Aiden]

Well then I didn't finish. What if you're driving through New Mexico to Florida and then you got to hear somebody say good night, Caba.

[Doug]

That's your best.

[Aiden]

That's the word. That's how you do a better one.

[Doug]

No, that's not a road trip. I saved that for the other show. You know, I, I don't think, I don't think that would be. I, I don't think you even be that.

[Aiden]

I'm defending it now because you're making me mad. Wouldn't it add some charm to America? We don't have enough accents.

[Doug]

First of all, you're really concerned that's.

[Caba]

A segment we can do.

[Doug]

The death of regional accents.

[Aiden]

I just feel like TikTok is really good.

[Caba]

It wouldn't be that bad because you could go the entire distance on a single drive using Tesla's new full self driving features, which you don't even have to put your hands on the wheel for 99% of situations.

[Doug]

And what a segue from the master. Because today's topics are focusing on Tesla. Is it doomed to fail or will it come out on top, specifically with how it handles itself, self driving technology, and also the future of self driving cars in general. With both of you taking one side of the debate, you're already doing your moderator voice, my moderator voice. I'm clocking in. I'm. I'm the judge. And then I think we're also going to be talking about Pokemon Go becoming property of the Saudi Arabian crown, which I know we were all edge of our seat waiting for. And. And lastly, public transport in. In America and going to solve it.

[Aiden]

Right here on the podcast.

[Doug]

I think in the next two hours, we'll have the whole thing sorted out.

[Aiden]

That's what I hope for this whole show is that one by one, each episode, us three guys solve every problem in America.

[Caba]

And it goes up until we sell the podcast to the Saudis.

[Doug]

Yeah, yeah.

[Aiden]

I've been in talks.

[Doug]

I'm looking for. I'm already looking for my way out.

[Caba]

Yeah, we're ten show like this. This is our exit strategy. At some point, we're ipoing and we're going Saudi.

[Aiden]

You know, I was looking for a way out. Is Tucker Carlson because he's number 11, baby. We knocked him out of the top 10. That guy's desperate. He's set. I mean, I think it's weird that Vladimir Putin hasn't reached out to do an interview here.

[Doug]

Just not even a bigger reach.

[Caba]

Yeah.

[Doug]

How do you think that works? Do you think you just get like, what's the KGB email domain that you get in your inbox?

[Aiden]

Yeah. You said you Russia in Russia. You said if we did that interview, you literally wouldn't do it.

[Doug]

Dude, I would be terrified.

[Aiden]

Honest question. If Vladimir Putin reached out to lemonade stand, said he would do an exclusive interview with us in Moscow.

[Caba]

Absolutely, yes, I would do it. Do that.

[Doug]

Dude, I would do it, but I'd be shitting bricks the whole time because you can't. It's. You have to go softball mode.

[Aiden]

You don't drink the tea. You don't drink the tea. You don't. You don't take the free snacks.

[Doug]

That Tucker interview isn't even an interview. It's. It's Vlad doing 45 minutes on the history of Russia.

[Caba]

We get him on the podcast on the presentation board, and then he just a history lesson.

[Doug]

Doug is doing what he normally does, which is drawing.

[Aiden]

Over, like, the Balkan region.

[Caba]

This.

[Doug]

This used to be ours.

[Caba]

Put on.

[Aiden]

The presentation wall is fire.

[Doug]

All right. But as far as this, like, debate goes, I think you guys are both taking sides of the argument. Not necessarily the exact sides that you agree with, like, personally, but you are more Tesla doomer. This company is going to flame out.

[Caba]

Yeah.

[Doug]

And you are vouching for the side of Tesla is going to make it and how they're going to do so.

[Caba]

Yes. And I want to be very clear to people listening, I do not loves Elon Musk. I do not agree with every single.

[Aiden]

Thing of what is happening. For the sake of argument, a personal.

[Caba]

I am going to be Doug Doug, communicating the potential upsides of Tesla and of what Elon Musk is doing. And I know that people are going to say, oh, my God, they're going to stop it there. They're going to cut. They're going to watch the first two minutes of the show. I can't believe Doug personally endorsed Elon Musk on the show.

[Doug]

You think you should leave all those kids in the dirt? The all 14 kids in the dirt?

[Caba]

I think you should give us one of them. We need a video editor for our shorts and the kids know what's up on Tik Tok.

[Doug]

This is. This is. Have you seen the clip of him walking off the stage and leaving his kid behind? It is. I don't. In a vacuum. Like, that's. You know, I was a kid once. I got lost in the grocery store on occasion. But it is funny to just leave your kid in the dust as you, like, walk and wave to the fans in the crowd.

[Aiden]

I'm not sure that clip's real. I think I. I think I heard. It might have been.

[Doug]

It's fake.

[Aiden]

It might be fake.

[Doug]

I've been got.

[Caba]

It's not fake, but there's more. God, I'm already apologizing. You guys are literally gentlemen saying something wrong. If you continue the clip, he goes and gets his kid, brings him over.

[Doug]

No, that's what I'm saying. It's.

[Caba]

Everybody's like, oh, Doug spent the whole podcast defending Elon Musk. You guys are saying something. It's not what happened.

[Doug]

This is a good.

[Caba]

Literally not what happened.

[Doug]

I'm correcting the narrative because I would like. I, like I said, my parents lost me in the grocery store.

[Caba]

You guys can do this. You can just say wrong about Elon and then I have to look like the dick sucker who's going to come in and be like, actually, no, no.

[Aiden]

Easy money. Yeah, I, I. On the Internet opinion side, this is the easy side of the argument to be on. But I'm going to try and go at it from a business angle angle, which is that I am not making the argument that Elon Musk sucks. It doesn't matter to me. Like I mentioned, I talk about this on the stream. I'm not a big fan of Jeff Bezos either, but I own Amazon stock. All right, What I'm saying I'll make an argument here is that I think Tesla is in a really negative position going into the future, that I'm not confident in their ability to execute and that they're in a worse spot. That's what I'm going for.

[Doug]

I, I like that idea of the conversation because similarly, like, I'm not a fan of Elon Musk personally and he's not my best friend. Like, Doug, you don't have posters on.

[Aiden]

Your wall like he does or.

[Doug]

Yeah, I do think there's this idea that like anything he touches or is associated with is automatically bad. But when I saw like SpaceX catch the rocket for the first time, I'm like, that is as heat. That is so cool. So I like to see like the, the version of this argument that extends way more past like Elon Musk sucks and is like, what is the actual financial situation behind the company right now? Because from my understanding, it's pretty grim at the moment.

[Aiden]

Yeah, I mean, I could jump in. You want to do a go to our patented presentation wall or do you have something or do you want to.

[Caba]

Kick off like your overview, like high level argument about what's going on with Tesla and then we can back up and talk about what's going on with self driving. Because ultimately I think what underpins almost all this conversation is self driving cars. That is what Tesla is betting on. It's not really about how many Model Y's they sell. And so we'll, we'll dive into that. I'm going to compare Waymo and Tesla. But what's your like kind of fundamental core argument here?

[Aiden]

I would say my fundamental core argument is it is about how many Model Y's they sell.

[Caba]

Okay. Okay. You think selling cars is what matters for a car company?

[Doug]

Interesting.

[Caba]

This is a future company. Okay.

[Aiden]

Yeah. My core argument is that, you know, at as much as we extrapolate all these different things he's doing, the money the company makes is from selling cars. That's what, that's what it's from. And they're not selling as many cars as they used to sell. So that's a problem. Right. And the company, I mean, I can go into my presentation. Can I.

[Doug]

Should I pull it up or you get up there?

[Aiden]

Yeah, I feel like I need to.

[Caba]

Show some grass charts to get up there.

[Aiden]

Plus, I love this patented presentation wall.

[Caba]

Only. You think Tucker Carlson could give a PowerPoint? He can't do it.

[Aiden]

You can't even open PowerPoint.

[Caba]

Do you think Tucker Carlson can like kind of awkwardly stand and cover the left side of the TV for most of the PowerPoint?

[Doug]

He just can't do it.

[Aiden]

Like, imagine having Xi Jinping here for A guest, and we're, like, fumbling with PowerPoint for 50 minutes.

[Doug]

I do like the idea of the. This, like, CCP Secret Service equivalent, like, scoping the place for bugs. And it's just sorting through fake lemon and lime can sodas.

[Aiden]

And I'm going to hide one. I'll get one in there. All right, I'll go real quick. All right. This is a much longer presentation I did on my own channel, but I want to catch you guys up on what I'm thinking about Teslas lately. All right, here we go. First of all, Texas. We got 44 wheels thrown off a Tesla in the parking lot. We got superchargers on fire in Massachusetts. We got protesters arrested in New York. We got protesters arrested in Georgia. We got paint and vandalism in Berkeley. We got shots fired in Oregon. We got swastikas drawn on cars in Europe. And three months ago, none of this was happening. Elon Musk, $400 billion richer than Mansa Musa and John D. Rockefeller, richest man in human history, richer than every single fictional rich person combined, according to Forbes. Scrooge McDuck much richer than Scrooge McDuck, richer than Scrooge Doug. And then in the past three months, Tesla drops 50%, all right? Astronomical amount to drop. That's $800 billion of market cap lost. That's equivalent to. I'm going to skip ahead here. Toyota, Mazda, Subaru, Ford, Nissan, Rivian, Honda, Ferrari, Porsche, Mercedes Benz, Aston Martin, Hyundai, Kia, VW, GM and BMW combined all going to zero in three months and then lighting $10 billion on fire on top of that. So it's a. It's, you know, it's a significant loss. Like, it's worth talking about from a business POV for me, it's fascinating because that's. That's not normal. That's like. That's. That's. I think about something like Enron collapsing. That was like 20 billion. That's nothing by comparison. So it's a big deal. And you could say if I asked why, people might show you this clip of Elon, possibly C. Kyling, possibly Roman, saluting. And, you know, you could point to that as one political thing, but I want to go into a deeper business context, which is that basically, sorry, skip this.

[Doug]

Like, you had The Iron Man 2 screenshot in there.

[Aiden]

Yeah, you could point to him being Iron Man. You could point to him cheating in path of exile. You could point to all that. But the whole point is that regardless of what you think about this stuff, it's causing a Reputational problem with a certain class of consumer. And these people used to buy a lot of EVs. So in every country they sell in other than China, Tesla's reputation score keeps falling. For a business regardless of politics, that's just bad. Right? That just means it's harder to sell cars. Especially when if you do the math and I got a little craft here, I mean, Aiden, you want to guess what the top 10 states that bought EVs voted for in this election? We think they were blue or red.

[Doug]

Oh, tough call, tough call.

[Aiden]

They were all blue.

[Doug]

Go blue on that.

[Aiden]

They were all Blue. This is 2020 election. I don't have the data for but. And then what do you think about the 10 states that bought the least EVs? I mean, they were red.

[Caba]

They're red.

[Doug]

They're red.

[Aiden]

Yeah, you guessed it right, they're red. So it's like even if you're switching one consumer for the other, in the states that are red, they're just buying. They don't care as much about EVs. Their towns might not even as many chargers. It's not, the infrastructure's not there. They don't care as much. And so it's not a one to one trade to piss off one group for the other if you're an EV car selling company. So you know, I got this poll here, 55% Republicans say there's no chance at all they'd ever buy an EV in the next decade. That's a, that's a tough market to sell into. That's a part pivot if you sell cars. All right, second thing, we're possibly entering a recession and late car payments right now. This, this article's from like 3 days ago have hit the highest level since they started recording the data. So people are just are not making their car payments, especially subprime. Which makes it a weird time for Tesla to be offering 0% down, 0% APR loans. It's like 2006 for housing, dude. There's doing a bunch of this like car giveaway that I think will be problematic if people can't pay their bills. So from a business side I get all this stuff. Makes me nervous about investing in Tesla. Right then I looked at the top 10 countries they sell in is down 76% in Germany, down 63% in France, down 70% in Canada, down 81% in Australia, down 38 in Norway, 44 in Sweden.

[Caba]

It's going to come up later, so I'm going to interject. Okay, this is recent. This is like last 2ish months. Right?

[Aiden]

This is correct.

[Doug]

So I was, I was actually going to ask that a version of that question because my understanding was relative to the rest of the EV market, they were already starting to trend down because of the basically quality of EVs offered by other companies. So is this accelerating from that? And it sounds like yes.

[Caba]

Yeah. There's also an so which we'll talk about later. There's also an argument the Model Y is their biggest selling car by far. That's like almost all of Tesla sales. It's one of the best selling cars in the world right now. They're doing a refresh and they're releasing a new version of it in like a month or two. So in the last two months, Tesla has been pitching the thing of we are releasing a newer, better version of Model Y extremely soon. So that could justify and who knows exactly how much some amount of people no longer wanting to buy the main car that Tesla's selling. Right.

[Aiden]

A hundred percent.

[Caba]

Like you wouldn't buy the PS5 if the PS6 is coming out in two months for the same price.

[Aiden]

100%. And it's also worth saying, like, if your Q1 sales are down from Q4. Well, Q4 is the end of the year. People make big purchases Christmas time, yeah, of course they're going to be down, but this is a pretty significant, this is not a normal amount of drop. And they're down year over year too. So they're down over January of last year, they're down. They're just down. So you know, outside of the uk, nine out of ten of these countries, it's down. Right. So that's a bad look in general. And I think it's because, listen, in China, nobody cares about Musk's politics. They don't care. They actually think he's the coolest tech guy. They still think he's Tony Stark.

[Doug]

There's not, there's not a lot of like anti elon sentiment pumping on Weibo.

[Aiden]

No, on Billy. Billy still based. Okay. They have no problem.

[Doug]

They're living the, The Iron Man 2 dreams.

[Aiden]

They still think he's Iron man, but the problem is, you know, there's other Iron Mans now in China, which is mainly this company, byd Build your Dreams, who is offering Tesla like cars for way less that are built for the Chinese market. So they have just massively outstripped Tesla sales recently. And because they're made in China, they're built by a Chinese company that knows what Chinese consumers want. They're just getting out Competed. So that's like another pressure on Tesla that makes me scared again to be an investor.

[Doug]

Quick thing.

[Aiden]

Yeah.

[Doug]

I was curious. Have either of you ridden in one of those?

[Aiden]

A byd? No.

[Doug]

Have you in a BYD model?

[Caba]

No.

[Doug]

I did when I went to Mexico recently. And a ton of The Ubers are BYDs. And I was in a pretty, like, base cheap model.

[Aiden]

Okay.

[Doug]

Very nice car. It was like, it was super functional. I asked the guy I used Google Translate to talk to my Uber driver. I know, I know. I love talking to Uber drivers. But. And he was talking about how much he loves the car and how good and, like, useful it's been for specifically his job. And the inside of the car was awesome. Like, I mean, a lot of, like, new cars are nice, right? But I was like, I was pretty impressed. And it was my first time ever riding in one.

[Aiden]

I was considering driving down to Mexico, buying a Chinese EV and smuggling it back into the United States to not pay the tariff. And then I looked up what would happen to me. The fine is astronomical. And I could get jail time for smuggling.

[Caba]

That's worth it. Do it for the pod dude. Research.

[Aiden]

I really thought it'd be like a minor slap on the fence.

[Caba]

The.

[Aiden]

The jail fine, the lawyer and the right.

[Doug]

It's a company expense. I actually, this is. I looked into. There's a model of car called the. I don't know if Perry could pull this up. It's called the Renault Twizzy.

[Aiden]

Okay.

[Doug]

And it's a really, really tiny, like, street electric vehicle that I saw in Paris.

[Aiden]

European.

[Doug]

And it costs like 15k. Yeah. Renault is like a French car manufacturer. And I want. I looked so hard to see how you could import one of these, like, even if you have to pay fees and stuff. But it's not. You can't make it street legal in the US So there's no real way of doing it.

[Aiden]

Only Europeans would call car Twizzy.

[Caba]

Yeah, no shade. No shame, dude.

[Doug]

It's like a. Basically a golf cart. It's so. It's so funny. This is it.

[Caba]

Oh, wow. Yeah. No, that's cool.

[Doug]

But we. Yeah, I just. I was looking at the same thing. Like, what would it cost to, like, import one of these cars that we don't have? But. Yeah, but.

[Aiden]

All right, so just a very quick math here. This is why this is my simple dumb business. Major brain. There's a thing called PE ratio. Basically what a company's worth divided by what it actually makes in earnings. All right. A company like Ford or most car companies between 5 and 10. Pretty normal for a stable, mature business.

[Caba]

So this means like what their, their total market value is five to 10 times what they make in a year.

[Aiden]

That's right. So it's basically an idea for an investor of like how quickly you'll get your money back in a way.

[Caba]

Okay.

[Aiden]

And it's based on if it's a really high number, that means you actually expect the number, the amount they make to go up rapidly because you're. Nobody's gonna wait 20 years.

[Caba]

Yeah.

[Aiden]

So a company like Apple might be 35 times because it's a high growth tech company. Right. So they have a. People expect the revenue to keep rising. And all that makes sense because they make $96 billion in profit a year. They're just a cash generating geyser profit. This is after all expenses. I'm being told to stand closer. I'm getting so heated about Apple. I love how much money they make. Google makes 100 billion in profit. Microsoft makes 88, Bill Meta makes 62. Bill up 39%. Amazon makes 59, Bill up 94%. Nvidia has a PE of 60 something which is incredibly high. But they're up 144% making 72 billion pure clean cash profit. Can you guess what Tesla's profit was last year?

[Doug]

I'll say, I mean, I'm guessing it's very low. I'll say something like 2 billion low relative to these companies.

[Aiden]

You're ruining my reveal because that's way too low. No, it's 7 billion, but you got.

[Caba]

To like look shocked to be like, I don't know, 50 billion. And you build them up, you set.

[Aiden]

Them up for the big magnificent seven eight. And they're all, seven companies are considered the big tech companies. All of them generate 50 billion plus in profits except for Tesla which makes 7 billion, a 52% decline. So their profits are way lower and they're declining. So why are they worth 1.5 trillion the way these other companies are? That's, that's my big question. And so now they're only down to 7 to 22 billion. But if you do their PE ratio today, it's still 101. So they're still implying a level of growth that I think is not there.

[Caba]

So and that's saying that the, the, the market thinks that Tesla is worth 100 times what they're making in a year. Right?

[Aiden]

That's right. Okay, that's right. And again, what they're making, you know, it's 7 billion but like 2 billion of that was like bitcoin going up. They hold some bitcoin so their actual profits are like closer to four. And that's just not enough to be worth 720 to be worth more than all those car companies I listed earlier. So that's my, my core thesis is like there's so much Hopium built into this. And so you know, if you do the math with the normal PE ratio of like an apple, they're worth about 84 bill based on what they make and based on being valued like a normal tech company. So the rest of that is all this hype of what we're going to talk about later. It's self driving, it's optimus robots, it's robo taxis, it's a possible new $25,000 car. All that stuff is what is like being Hopium in to this massive valuation. And I don't believe it, or I don't believe all of it. You know, maybe it's like some of it might come to fruition, but I don't believe those are going to come out to make billions in pure clean profit the way Apple launching a new iPad or earbuds will do. That's my, that's my core business thesis here is like I just, I'm not buying it. And I gotta say, Elon Musk perhaps in the past has been less than truthful. Right. I don't actually, I don't have it in here. But he's, he's occasionally over promised, I think even his biggest fans, he's done that.

[Caba]

Okay. To be fair, he's done that once or twice every year.

[Aiden]

So that's why I get, you know, from an investing pov, I get a little nervous.

[Doug]

They just got a little sidetracked when they made the flamethrower. Dude, I don't know.

[Aiden]

Speaking of sidetracked, every dot on this chart is a tweet. You'll notice after 2022 it gets blood red. He's tweeting thousands of times a month and you know, he's got 14 kids, he's got 10 businesses or whatever. It's like as a Tesla investor, are you really getting his full attention and value as a CEO of a $744 billion company? So here's a quote from Elon. I'll just end on this before we get into our big discussion. He said when looking at our actual this is from 2020 and it's kind of like a small interview. I don't think he knew this would go so big. But when Looking at our actual profitability, it's very low. Investors are giving us a lot of credit for future profits. But if at any point they conclude that's not going to happen, our stock will get crushed like a souffle under a sledgehammer. That's what I'm saying. If at any point everybody has the same thought that I do, which is this is not going to happen. This stock is worth so much less than it's currently being valued. And he's also got one more quote and this is going to lead to.

[Caba]

What we're talking about. This quote is important for me and for my point. Yeah. But the overwhelming focus is solving full self driving. So. Yeah, and that's essential. And that's really the difference between Tesla being worth a lot of money and being worth basically zero.

[Aiden]

So that's our argument. Is it worth a lot of money or is it worth basically zero? And I think I can sit back down. That's basically the main thing I want to say.

[Caba]

Yeah. And that, that is ultimately the crux of why anybody would think that it's worth a hundred times what it's making. Is that bet, which is full self driving. Should I drive into some full self driving?

[Aiden]

Yeah. Disclaimer. I'm not a tech guy and I, I can tell I have many times been impressed by the tech Tesla's rolled out Tesla and Elon has rolled out SpaceX impressed me with the, with the rocket grab. Starlink has impressed me in some countries where you can get, yeah, insane Internet. I've been impressed by Tesla, not, not super recently. I feel like there's been a lot more EV innovation elsewhere. But like Tesla's impressed me the hell when they came out. So you know, there's products there and I believe in them. But just this is my business case of like I, I would be so scared to put money into this company is basically what I'm saying.

[Caba]

Yeah.

[Aiden]

Okay.

[Caba]

Okay. To talk about whether Tesla is basically making a gigantic gamble on self driving and if it lands, they become insanely valuable and if it doesn't, they are, they are completely screwed like Elon just said. So let's step back first and there's basically two competing tech perspectives on how to do self driving cars which are going to dramatically affect whether or not Tesla succeeds at this giant gamble. So I'm going to start with a very obscure forced analogy that probably won't land. Okay. Imagine you have two brothers who are brilliant chefs, okay. And they come up with a Sule recipe, a lemon Sule recipe, the Atrio and Aiden Bros.

[Aiden]

Okay, we've done sule.

[Caba]

Now this is sus. These are very hard to make, right? Extraordinarily difficult.

[Doug]

Not.

[Caba]

Not for you guys.

[Doug]

Easy as breathing.

[Caba]

And by the way, you guys, my roll Twizzy.

[Aiden]

I drove you.

[Doug]

I drive in my golf cart to.

[Aiden]

Work, have my twy to work.

[Doug]

I make a soup.

[Caba]

And one of the weird things is both these guys are German. The accent makes no sense.

[Doug]

I like, rolled my arm.

[Caba]

Okay, so you guys, you come up with this out in Romania, you come up with a souffle recipe. And this is incredibly complex, but you think if you can get this out to the masses, it will be like game changing for food, right? Everybody's going to love it. And so you guys have two competing ideologies for how you want to distribute to the market. You, Aiden, are like, this is super hard to make. I'm going to go to our local fine dining restaurant, Gusteau's, okay? And these guys, they're. They're Michelin starred. Every single person, every cook, they've gone to culinary school, right? They're the best of the best. It's really expensive and it's slow to make anything, but these guys will get it done, right? And you go to them and they're like, we'll make your souffle over time. Maybe we even make a second Gusto's and then a third each year. We can kind of expand a little bit. Okay, so you're thinking, okay, yeah, slow, steady, careful, the top of the top, right? You atrioc, you hit up McDonald's a.

[Aiden]

Little dirtier, little grimy.

[Caba]

Or you hit up McDonald's, the headquarters of McDonald's, which is in Romania.

[Aiden]

I'm a greedy brother.

[Doug]

You're trying to bring our souffle to McCafe.

[Caba]

Yeah, yeah. You got to.

[Aiden]

Money is you get the combo of the McCaffrey.

[Caba]

I don't want to drive a two way anymore.

[Aiden]

I want to drive a nice American car, a nice Ford F150 in the streets of Paris.

[Doug]

Okay?

[Caba]

And McDonald's has 41,000 stores around the world. And their pitch to you is this. Hey, no offense to anybody who works at McDonald's. We're not the greatest cooks of all time. We don't necessarily know exactly how to make the souffle. Might take us a little bit of time to figure it out. Might take us a long time to figure it out, but we're pretty sure we can do it. And if we do, boom, 40,000 restaurants around the entire world are serving you souffle. Okay, which approach would you guys take? Which do you think is a smarter approach to getting your souffle out into the world?

[Aiden]

Well, I mean, I would ask a question. I would say, does my souffle have a chance of killing people?

[Caba]

You know what, that's a good point.

[Aiden]

Is there a little bit of poison in the.

[Caba]

Yes, there's something that is sprinkled in. Yeah, the, the, the ice cream machine that makes the souffle might break a lot. Yeah.

[Doug]

Okay.

[Aiden]

I'd go McDonald's, maybe make that money.

[Caba]

I made a guess of which approach you guys would take. Was that correct?

[Doug]

You're correct. I would go the Gusto's route. I would go, I would go the perfectionist route for sure.

[Caba]

Okay, so why on a like, high level business? What's your, what's your thinking?

[Doug]

I think if you, from my perspective, if you sacrifice the quality of the product, especially early on, the bad press that you potentially get about, about that product is so damaging. Like people's ability to value it down the line is so shaped by that first year or first couple years of the product being made poorly. And that makes it infinitely harder to standardize it later or introduce it as something positive to people later. So that's the main reason why I think I would.

[Caba]

So I have a follow up question that's maybe related. Would you get into a Tesla full self driving vehicle right now and trust it to take you across Los Angeles?

[Doug]

I.

[Caba]

And Tesla's telling you it's really good. They just updated it. But there's been a lot of problems with full self driving in the past, but they're telling you it's good now.

[Doug]

And I'm just going off of, I'm going off of just that update from them and no other context.

[Caba]

Let's say, you know, you've researched a bit, but you don't have a ton of context. The point is really, how much reputational damage is there going to be when you're deciding whether to get in that car?

[Doug]

I, I guess I'm going against myself because I would get in the car and try it out. I would.

[Caba]

That was the wrong answer. You die. You, you get hit by a cyber truck.

[Doug]

Wait, I die right now? You die.

[Aiden]

A truck wins, I win and McDonald's is making money. This is great.

[Doug]

Wait, so is this the way it played out? Is that, is this to say that it actually is this bad right now?

[Caba]

No, no, no. It's to say that there is a fundamental divide when designing a self driving car about whether you want to make A system that has the minimal amount of tech necessary to work and get the job done and basically try to get your cars out there cheaply and efficiently to the masses and eventually get it working like a McDonald's would, or if you go really slow and steady. And that is like the fundamental divide that is happening between cars and specifically with tech, it's between LiDAR versus just vision. So all EVs that are trying to do self driving have vision, which is cameras. When you say vision, it's cameras. So think of like a human being. We have two cameras in our eyes, kind of. That's how we drive, right? We.

[Doug]

And these are my cameras, my cameras here.

[Caba]

And that's why you, you sometimes wear eye camera shades like this. So all of the vehicles have cameras. And when you buy a Tesla, like right now it's like eight cameras, right, that are all around the car and can see all of around it. Now that can get you a lot of information. But as you guys know, if you've ever looked directly into the sun, it's actually hard to see.

[Aiden]

It sharpens the peepers.

[Doug]

Well, if you do it often enough, you kind of strengthen ocular muscles, right?

[Caba]

Yeah. You train. Or if it's incredibly foggy or there's whatever conditions that make it hard to see. There are obvious downsides with driving, right, that make driving difficult. Maybe a blizzard or a hurricane or whatever is going on. So LIDAR is light detection and ranging. It is literally shooting laser beams out of the car. And those laser beams hit stuff around the car and then bounce back. And from that it can make a 3D map. It's actually up behind us right now. That's what it looks like.

[Aiden]

Holy.

[Caba]

And this is what a Waymo, which is the most successful like fully autonomous car right now is doing. If you've seen self driving cars anywhere, it's in a couple Cities in the U.S. yeah, it is literally acting like a bat. And there's that spinning kind of like siren looking thing at the top. That's a lidar system. So it's spinning around and literally shooting lasers at everything around it. And in ridiculous amount of definition you get this like 3D world around it looks like the Matrix. You know when Neo like sees the Matrix and it's all like green things, like all green lines and everything. That's what it looks like with lidar. And you might think that's badass. Right? You should do that. Not only should you do it, it has nothing to do with light really. Right. You can do this in complete darkness. And since you're shooting laser beams everywhere in fog and in doesn't need light. Yeah. And then on top of that, there's a third thing you can add in, which is radar. And if you look at the imaging here, not nearly as defined as LiDAR radar is, you know, what you hear about in, you know, planes and whatever else, which is that this is red.

[Aiden]

Dot as your puppy getting run over. These are so bad. When you see it like that, though, it's not as visceral.

[Caba]

This test footage is done. They basically drive a Waymo through a dog park. And each of these dots, this is.

[Aiden]

The email you're getting from Waymo. And it's not.

[Doug]

It wasn't that bad.

[Aiden]

It's not that bad. It's like.

[Doug]

Do you ever look at those, like, WikiLeaks videos that came out that Chelsea Manning leaked and it's like the videos of them killing civilians in the helicopter. But hold on, why did you say that so casually?

[Aiden]

Because, you know, I watch those videos of people killing civilians.

[Doug]

The video is casual. It looks like. I'm not kidding. It looks exactly like.

[Aiden]

Watch the broad highlights.

[Caba]

You know what you.

[Doug]

I'm not casually looking. It's not a daily thing through mass murder to briefly to come out of. This is like, what you're saying is true. What you're saying is kind of true. There's. There's like these leaked videos that came out that Chelsea Banning, like, leaked to WikiLeaks. And they came out and it. It a video from helicopter of like civilians getting shot by the US Military. And the video like looks exactly like when you call in like an AC130 in Modern Warfare 2. Like, it's like, it's. I, I don't. I. I'm not saying it's. It's not awful. I'm telling you that layer you're removing. No, no, I. It looks like a video game. And that's removal of the human element is like, is. Is real. That. Like that. That when you see something like damage.

[Aiden]

Like that I've seen does remove you.

[Doug]

From the consequence of what. What is happening. Not super related to this.

[Caba]

And I do want to be clear. Over dogs. This is radar on a street.

[Aiden]

I've already claimed it. No, it's already been claimed.

[Doug]

Saying if it did run over dogs, it would feel less bad.

[Aiden]

It wouldn't be as bad because you're not seeing the puppy's face.

[Doug]

You wouldn't see the puppy's face.

[Caba]

Oh, yeah, yeah.

[Doug]

Anyway, so that's your argument for RA doing okay it's doing both of these things.

[Caba]

Okay. Okay. So, so here, here's the, here's the core thing with radar. Quickly, the benefit lidar is this really cool version. Right. You can see everything around you. Looks super futuristic.

[Aiden]

Yeah.

[Caba]

Crazy powerful radar, way less so. And this is older tech, right. This is shooting microwaves. There are radio waves. Sorry, they're slower, so you're not as getting as much definition. But they can go through certain types of, let's say fog and whatever else. So it's. You basically have two physical different wavelengths and they allow to. They can kind of COVID each other's gaps. Right. Lidar might have some gaps. Radar can cover that. And then vision, which is cameras that can see everything around you again, like eyeballs. Right. Like you would imagine. So there are three different sensors, types of sensors that you can put into a self driving car that will help you to learn what's around you. Right. And so what Waymo, which is the current leader in the US has done is they are making their cars with cameras all over, just like a Tesla. And also there's a LIDAR system. There's that thing at the top and on the sides they have lidar. So it is shooting lasers everywhere while they're driving. And they have radar. They have three different systems which are overlapping and basically covering each other to make sure absolutely everything is covered. And all three of these combine together in a Waymo to give it a ton of information of everything that's around it in any condition. That is their approach. They think this is the Gusteau approach. We're going to go slow, careful.

[Doug]

So the way this manifests, and I think Doug might have a similar story. It's. I used one of these for the first time like a week and a half ago.

[Caba]

Yeah, yeah.

[Doug]

And super. I was excited to just try it out. And we pulled up to the, you know, get in the car, pull up to the first intersection and somebody crosses in front of us. And on the screen in the Waymo, you can see the like digital person walking across.

[Caba]

Yeah.

[Doug]

And it's like even their finger and like hand movements, you can see their whole every move captured on the screen.

[Caba]

Yeah, you can kind of see it here in this LIDAR thing. Like it's ridiculously detailed. And this again, you could be in pitch blackness and it would see this.

[Doug]

And it kind of crazy, blew my mind because we were on the way to a party that night and while we were driving on this street, you hit a dog. A homeless guy. A homeless guy stepped out into the street. In front of the car with, with his bike. He just walked out and the car slammed and got out of the way. And I saw this happen and I was like, I genuinely don't know if I would have been able to do that as a human if I was driving the car. And it was a weirdly, uncomfortably good demonstration of like it was people that go, he's looking at his watch and he's like timing his way out on the street.

[Caba]

But, and they had to go through a lot of homeless people to get.

[Aiden]

A lot of got run over.

[Caba]

Right. But that's part of the, that's the nature of it. Progress.

[Aiden]

That's the business.

[Caba]

Yeah, it's like I said last week, you got to destroy some jobs.

[Aiden]

That's not what he said. That's not what he said. Folks, we got enough comments.

[Doug]

So I, I, yeah, this, that, that more manufactured and like meticulous approach, I guess I feel, or I felt more confident about trying the Waymo than I would try in a Tesla. Yes. However, I think as someone who's generally interested in both of these things, I'd be willing to try the Tesla self driving stuff as well.

[Caba]

So your reaction is probably everybody's reaction, which is Waymo and the other major autonomous driving vehicles. So Waymo, for people who don't know these cars are, they do not have a driver, there's no driver in them. And they're going around Los Angeles, I believe Phoenix, I wrote it down in San Francisco right now. So they're in three cities, they're expanding rapidly. The other big one that's going on is Baidu, which is a Chinese company. They're also doing this with driverless cars in five different major Chinese cities. So there's two like major leaders right now that are currently deployed doing this stuff. And then Tesla is the other big player in the space. Tesla though does not have these systems, right. They do not have LiDAR, they do not have radar. They don't have this extra layer of knowledge and information that a Waymo has.

[Aiden]

Just cameras.

[Caba]

Just cameras. And so Elon Musk has said the following. LIDAR is a fool's errand. And anyone relying on LIDAR is doomed. Pauses. Doomed. Expensive sensors are unnecessary. It's like having a whole bunch of expensive appendixes.

[Aiden]

Well, that settles it.

[Doug]

That and there it is from the.

[Aiden]

And there's no business reason he might want to cut costs on safety.

[Caba]

So, all right, so you probably are thinking, you know, hearing this and going like, why would you not just add the extra stuff?

[Doug]

Like, okay, so could I could I predict the answer here.

[Caba]

Yeah, I would love to, I would love to hear what you think.

[Doug]

I do have a thought. Is in way for Waymo's business model or the way the company is playing out right now? I guess that spending a lot of money to maximize the performance of each car is more acceptable in the context of the business because you don't need to sell the cars to owners. They're basically taxis that are used by a bunch of people all the time on the street in the same way that you could, that people just use like bikes for rent on the street. So you can, you can spend a lot of one, a lot of money on one car because of how often it's going to get used by a bunch of different people. But Elon and Tesla have to take a different approach because they have to make the cars affordable to individual consumers.

[Caba]

Basically. Yes.

[Aiden]

And get value out of all the millions of cars they've already sold.

[Caba]

Right?

[Doug]

Ah, right, yeah.

[Caba]

So there's two big arguments here. So again the, the obvious response to this is like, holy shit, I'm not gonna get in a car if it doesn't have lidar, if it doesn't have these extra sensors, like why on earth would I ever get into a Tesla and let it drive me somewhere? If Waymo has more information, more sensors to give you a sense of numbers, a recent Tesla has eight cameras on it. A Waymo has 29 sensors across these things. Right. So it's not just different types, it's also just more of them. And you can see it when you look at a Waymo car. There's just more stuff on does look insane. It looks insane, it looks wild. Whereas a Tesla looks like a car. Right. And so why would Tesla do this? There's a couple main arguments. One is like what you said, it's expensive. Lidar is very, very expensive. Initially it costs tens of thousands. Is the estimate to put lidar into a car. That is completely undoable when you're talking about selling a car to an average consumer. Right. It is going down in price. Waymo is like working to really, really drop it down. But traditionally it's been very expensive. And then the other. So that's the kind of obvious one. And the other is a more high level idea about how you focus your business, which is like, okay, it's great to have three complex systems, lidar, cameras and radar in a Waymo, but now your team of engineers who have to solve this unbelievably hard problem of self driving with all the different Conditions that can happen. And to do it at a level with such an obscene amount of security and safety and redundancy, because the instant you do hit that dog, you're probably in a lot of shit. Even if you do show them that radar footage and Aiden laughs like you're in trouble.

[Doug]

I don't even see the dog.

[Aiden]

You're just a dog, you're a Corwin.

[Caba]

They only share the radar footage. Like, guys, it's not bad. And so the idea here is you should focus your team on one thing, right? Instead of having your team be split into the LIDAR team, which has to make the hardware and the software for LIDAR and the camera team, which makes the hardware and software and the radar team, and then a team that brings all that together and the computing becomes more complex. Each of these cars comes with a built in computer which is running all of this really complex AI processing. The idea is Waymo has a, arguably that's is the thinking, a bigger and more complex problem to solve. And they are more spread out. What Tesla's theory is, is that human beings do not have lasers in our eyeballs. We don't shoot radar beams. Speaking for myself, we don't shoot beams. Our entire road system is based around human beings looking with eyeballs. And the thinking is if you do a really good job of making software that can just navigate roads well with cameras like a human, and in fact, Teslas have more cameras than we have eyeballs. They have more information. Right, true. And the roads are built for this. They should in theory be able to make a car that is just as good as humans. And if they can do that with way less cost and way less complexity, they're making a better product for people that can scale way better. And then the real moonshot thing, the real thing of oh my God, if we pull this off, we win, is the fact that right now they have 4 million cars out in the world, they have 400,000 with the full self driving hardware. They, the instant it's ready, like a McDonald's, can deploy it to every single one of their cars and instantly become the dominant player. By comparison, Waymo has 750 total cars. They're the big cool leader. Oh my God, Waymo 750 in their entire history. And so if Tesla pulls us off, if they focus all of their resources on this one thing and say, hey, we're going to do what is arguably a harder problem because we have less information on our cars, we don't have lidar, we don't have radar, but we have the same amount of info that a human being would have. If we get this right, the amount of payoff is absolutely astronomical because instantly we are the dominant player around the globe.

[Aiden]

All right, you got a question?

[Caba]

This is even arguing for, against Tesla as a business right now. This is simply, this is the argument of self driving. And we have two very different competing ideologies here. Most self driving car companies are using LIDAR and radar. Yeah. Tesla is basically the only one that's like we're going without it. And actually important quote Waymo CEO said in 2021 for us, Tesla is not a competitor at all. We manufacture a completely autonomous driving system. Tesla is an automaker that is developing a really good driver assistance system. So Waymo is like, look, the only way you're gonna get this right is to do it our way. You do it slow, you do it with a lot of sensors. You do this really, really, really carefully.

[Doug]

The Gusteau's approach. The Gusteau's approach, which, you know, much like Gusteau's every Waymo actually has a little RAT that drives the car under.

[Aiden]

The hood on your head and pulls your hair.

[Caba]

He's the one guiding the laser beams at the top. Yeah, that's what the siren on top of the waymo. There's actually 29 rats in every Waymo car.

[Doug]

No, the fuel's really affordable. It's only what you have to feed to the rat. I think this, this is, I'm, I'm going off of everything you've just told me right now. Pretty much.

[Caba]

Right.

[Doug]

It sounds like the Waymo CEO is correct to me. Like these are essentially two different products. That's, that's what it feels like.

[Caba]

Yes.

[Doug]

And in order for like a regulatory body to. I don't think they'd ever sign off on full autonomous driving. I have a hard time imagining that Tesla's approach will be okay, like as a public service. Right. It feels like right now that Tesla's approach will never get you.

[Aiden]

Has a lot of influence in the government.

[Caba]

And that gets to our point later. To get. You are teasing. A wonderful factor of this conversation we'll.

[Doug]

Get to later.

[Caba]

In steps. Like regulation would make it hard for Teslas to get this stuff out onto the market. What if the government really liked you? What if the government was really, really.

[Aiden]

On board your plan all along?

[Doug]

This is a strong. I'm beginning to see the direction that this is moving in.

[Caba]

Right.

[Doug]

Because this is where it stands. Ignoring that huge factor, I would say it's hard for me to imagine Tesla's system progressing past me still having to sit in the driver's seat. Right. It's like it will be a really, really good system that still involves me being at the wheel and at least on paper, having to stay like wake. Right. I. So, yeah.

[Aiden]

Okay.

[Doug]

To the next part.

[Aiden]

Well, I want to say is, you mentioned that we have. Have only eyes and these have only cameras.

[Caba]

Yes.

[Aiden]

And we make it work.

[Caba]

Yeah.

[Aiden]

And it's going to be just as good as us. The problem is, I don't know if you know this, humans occasionally make accidents. We do die driving.

[Caba]

Speak for yourself.

[Aiden]

But yes, I've killed a few people. Vehicle manslaughter.

[Caba]

So if I didn't know that I needed glasses until two months ago and I couldn't read dogs.

[Doug]

This is the other I think you're about to get into. What. What was the number one point in my mind is better than humans is not enough.

[Aiden]

Exactly.

[Doug]

And it. It, I think a. An amazing example with this is recently, and I don't agree with like cuts to the FFA and like these pl. These aircraft accidents that have been happening. Right. There's been a bunch of high profile. A bunch of high profile aircraft accidents. And, and then let me, let me play devil's advocate, like Boeing, the air.

[Aiden]

Before planes stay up.

[Doug]

I like when they don't crash. But even with all of this, think about how bad the press is about like, air travel right now.

[Aiden]

No, Boeing, you could tell me, hey, Boeing has 99% of the planes stay up. For most people, that's not good enough.

[Doug]

And that's the thing. It's way more than that. It's still, with everything that's happened in the last like two or three years, it is still the safest form of transportation by a huge margin out of everything. But think about how damaging that presses. And that's what it's like with when it's technology and a company behind it. And the way these stories, like, proliferate, being better than humans is not enough. It needs to be basically zero risk at all. And I feel like the only way you can get to that point is by taking this gusto's approach.

[Aiden]

Yeah, that's where I'm at. I just think they're opening themselves up to accidents that will already tarnish a brand that's in trouble with a lot of people. And then, you know, one thing I want to mention, one of the things Waymo's been running into is that this is a driverless car. You can get in, get out of it. People don't take care of it the way they would their own car. People are often leaving a mess or vandalizing it or leaving problems. Teslas are getting vandalized right now in their driverless robo taxis. I think they're the brand issue is. Is core to everything and only going to get worse if they have any accidents at all. If they become even considered as walking death traps.

[Caba]

Right.

[Aiden]

I don't see how they can make a mass market profitable business out of that. And then that doesn't even count the legal part of it. Now again I agree it was smart of Elon Musk to get in with the government because that gives you regulatory access to like make these things the legal right to go on roads but doesn't cover you for the lawsuit. If somebody gets in an accident, gets in trouble. Who's at fault with a self driving car in that situation? Is it you for the as the car owner? Is it Tesla who's getting these big mass market lawsuits if five accidents happen, if 10 accidents happen? These things are like big problems that are not addressed. I don't think solved and I don't think have a good answer for in a, in a. In a dream profitable future where they're making trillions of dollars off of these. That's my.

[Caba]

You want to, you want to dive into full on Tesla because now we can analyze Tesla and it's worth the cap off this conversation because we've basically just been talking about the two approaches to, to self driving cars. Right. How do I open tabs? There we go. So last year like that quote I gave from the Waymo CEO is basically like these are two different products. You guys are making cars where you can take your hands off on the freeway on a Tesla and it's really nice and it currently can do that and people do that all the time. And Waymo is saying hey this is a car where you don't even need a driver.

[Aiden]

I do want to say one thing and that is that the way most CEOs I guess right for right now. But the truth is this happens in business all the time. The products can be different in whatever ways their companies say they are but they solve the same problem for the consumer. So in consumer doesn't matter. They're a transportation solution. I'm trying to get from point A to point B consistently whether I'm using Waymo or whether Tesla the market share is going to one or the other. Like at the end of the day.

[Doug]

I'm going to pick one or other things, alter things.

[Aiden]

Yeah I'm Just saying it's like that problem has to be solved and someone's going to solve it and they have their own solutions, make them different. But doesn't matter to me. I'm a consumer. I just want.

[Caba]

Right.

[Aiden]

I want my shit.

[Caba]

So Tesla's stated goal here is to become like Waymo, where these are driverless cars. So last year they did this Wii robot presentation. It was very flashy, not really a lot of actual details. In kind of typical Elon Musk fashion, they showed their Optimus robot, which we'll probably talk about a little bit. A big thing that they talked out was the Cyber cab, right. Which is their. This, it's their driverless version of their Tesla. Right. So they are very explicitly saying, we are going to be a competitor, we are not just going to be a car that assists a driver and you have to be there. We are going to be a driverless vehicle, just like Waymo. We're going to be good enough. And it's happening in 2026.

[Aiden]

This has no driver's seat, right? Correct.

[Caba]

Yeah. There is no ability to drive this thing. There was a cat in that just now. That was strange. So that they are very explicitly making that play. I don't think others are necessarily like, BYD has driving assistance. BYD is massive Chinese car manufacturer. They have driving assistance. I don't think they're proposing that they're going to be fully driverless anytime soon. But this is at least the intention. And so now we can talk about this a little more about whether it seems feasible at all. I can kick this off by saying, so one argument and again, I am not disclaimer. I don't think Tesla is going to succeed for sure. I'm going to give arguments for why they have a real shot. I don't think it's a giant shot, but it is real. So one of the biggest arguments by far is that Andrej Karpathy, who's a very renowned AI scientist who led Tesla AI and self driving for a number of years, his thinking is basically, this is not a hardware problem, it's a software problem. It feels good to have these cool laser beams shooting everywhere. But ultimately what is really, really, really difficult about self driving is the obscene amount of difficulty knowing every single edge case, handling the situations when other people show up. I mean, it's this infinite amount of.

[Doug]

Possibilities, I think conveniently, and maybe Waymo, you know, the Waymo spokesman is in my brain again. They set up this situation too, although maybe reflect poorly on them, is there's a film being shot in my neighborhood right now. And the other. And waymos come through all the time. And on the film set, I actually think, coincidentally, they were filming a car commercial. They have police officers that, like, block off the road with, like, safety cones for portions of time that the filming is happening.

[Caba]

Right, right.

[Doug]

And I watched a couple cars, like, get stopped by the police officer, and then he's like, come on through, and he's, like, standing out in the middle of the road next to, like, one safety cone. Waymo comes up to him while I'm, like, drinking my coffee, and I'm just watching this unfold. Waymo blows past the police officer, just doesn't slow down much like the homeless man. In my experience. It just drove out and kept going and then drove through the film set. So as far as, like, edge cases go, it's like, that's the. That's the one with the. The lidar technology. Right. And, like, Way has way more information available to it than the Tesla does, and it's still making mistakes like that.

[Caba]

Right.

[Aiden]

I saw a video. I don't know what city this is in, but vandals wanted to basically strip a Waymo.

[Doug]

Yeah.

[Aiden]

And they took chalk or whatever, but they just drew white lines in a circle around it so it looked like street signs. It couldn't move. Yeah, it was just. It would not. It would freeze in place because there's a white circle around it. And then they could just do it. It would just won't move. That's crazy. I mean, that would be such a sick heist movie in the future, like, all the different.

[Doug]

But that's an. These are examples of, like, weird edge cases that, like, the human driver just figures out.

[Caba]

Right. And there's an unfathomable amount of these. And if you think about different weather conditions, different cities, the fact that when you drive, it's not just you doing your own thing, it's based on everything that happens around you and the literal infinite possibilities. If you think about it like that, getting a lidar system on your car that can make a 3D projected map, that's very cool. But that does not solve the problem of the infinity scenarios you need to be able to handle in order for somebody to truly feel like it's safe and a city to feel like this is truly not causing a problem. So really, this is not about having all the sensors. It's about knowing what to do with the information you have. And if Tesla's argument is we have 99% of the information we need, it doesn't Matter if you have that 1% more of like, yeah, cool. In a fogging situation, we can see that there is a dog that's on the other side of the road to the right. Right. What's more important, it'll matter to the dog. This is a human podcast, Adrian. We don't care about the dogs here. And in this case. Right. And obviously there are flaws to that. Right. You do have a lack of information to the degree that a Waymo does. But really this is going to come down to an absolutely obscene amount of AI and training and machine learning using data from cars in real world scenarios to figure out how do we make a system that can handle basically everything and which car company in the world has the most data when it comes to driving cars. Cars that drive.

[Doug]

I mean, Tesla, right?

[Caba]

Tesla by many orders of magnitude.

[Doug]

Yeah.

[Caba]

Because they've had cars in all their Teslas for many years. They've had millions of cars, hundreds of thousands or millions of cars on the road for many years with the cameras.

[Aiden]

With computers in them.

[Caba]

With cameras and computers. Right. Even if you don't have the full self driving thing, they have cameras that are looking at. This has been the case for a long time for Teslas. Right?

[Doug]

No, I mean they're, they've been, they've had a version of like testable self driving available for I feel like almost a decade.

[Caba]

Right, right. An incredibly long time. So compared to every other auto manufacturer.

[Aiden]

The guy at our basketball pickup game was like, yeah, I turn it on and I scroll TikToks. Well, that's right. Which is very.

[Caba]

Yeah, I know a bunch of people.

[Aiden]

Other writers, but like that.

[Caba]

There's a lot of Tesla users who just treat it like it is fully self driving and it works the vast majority of the time. It does work most of the time. And so the question is, and this is why for a while I was actually really bullish on Tesla and I'm not so much now. It's like ultimately I think self driving probably comes down to who has the most training data, because you just need an unfathomably large amount of training data. And Tesla has more than everybody else by this obscene order of magnitude. It's not just that they've had cars out for a longer time, they've had hundreds of thousands of cars out for a longer time, while waymo has had 100. Right. Like these are scales that are just not even in the same.

[Aiden]

I'll do a quick counterpoint again at.

[Caba]

This point, like when. Tim, you want to jump in, my.

[Aiden]

Understanding is that is 100% true.

[Caba]

Yeah.

[Aiden]

They have the most real world data from the cars, although it's not all full self driving data. It's not, it's like.

[Caba]

No, no, but it's, it's just literally visual info of the process. Right. To say what is this situation?

[Aiden]

Nvidia had this project for companies other than Tesla that wanted to get a self driving because they're going to handle it for them, which is the Nvidia Drive automotive initiative, whatever. And what they do is they recreate. They send out these.

[Caba]

Simulate.

[Aiden]

Simulate, yeah, the entire city. And then they run digitally billions of simulations. They run. You can set it up for as many things as you want. They could have some car run in front of you or there could be a guy run in front of you, or they just run billions of them. So you can get more training data in 10 minutes than you can get in the real world in, in 10 years. That's, that's the idea. And I think that I don't know the success rate of that, but I do know that like I've written in those cars and they worked great around San Francisco and San Jose. And it's like there could be something there.

[Doug]

Which ones are those? Is that cruise?

[Aiden]

No, this is just, I mean this is a Nvidia green card.

[Doug]

Wait, literally an Nvidia public.

[Aiden]

It was just you could do it at the office.

[Doug]

Oh, I see.

[Aiden]

They were, they were selling the technology to other companies that want to have their own self driving kind of over the air built in. So I don't know, I don't know if that route makes more sense. But it does seem like it could get around the idea that okay, we don't have so many cars, but we can digitally recreate this and do more training.

[Caba]

Yes. Right now Waymo does that. So they, you know, they tout like, oh, we have like 9 million miles that have been driven by our cars, but then they do 100 million simulated. Right. So they, they create these digital environments and have the car digitally pretend that it's in it. And it's, it's really a metaverse for cars if you think about it. And in the metaverse, what if the.

[Aiden]

Cars wa up from the Matrix and try to.

[Caba]

Yeah, they realize you're fake.

[Aiden]

Streeto is like Neo in the Matrix.

[Caba]

They're in a, in a GTA 5 RP server and none of it's real.

[Aiden]

Kill me.

[Doug]

I, I, I do. So I, I think this, this helps me understand it a lot better. Like what these like angles of these companies are fighting for. And something that I had been thinking about a lot was I guess maybe your more personal perspectives on how valuable or cool you think this race to self driving technology is. Because I do think it's cool. I'll call it the CGP gray utopia of all automatic cars. Driving around that communicate with each other and there's basically never accidents is. It sounds cool. But I think on the whole I'm a pretty anti car person. Like I think cars in general are like a blight.

[Caba]

You're more of a hyperloop guy on.

[Doug]

Society, less of a hyperloop guy. And I think I'm more like you know, pro public transportation pill. But even as far as cars go, like there are certain frustrating aspects of it to me is like, like in.

[Aiden]

The US have you ever sat down in a Ford F150 on the open road and just let that chopper sing? Just fucking.

[Doug]

You know what? I have, I have Atrion and it's too damn big. It's. Have you, have you guys ever looked at for example like in the US there's this huge. If you look at sales of vehicles in the US there's this huge spike in SUV sales. Yeah.

[Aiden]

Big cars.

[Doug]

There's a longer winded explanation behind like why that exists especially in the U.S. but the amount of fatalities, like road accident fatalities has also spiked in the.

[Aiden]

Past couple decades where like as the cars get bigger people die. So you need a bigger car to be safer.

[Doug]

Everybody needs to be reminded about the prisoner's dilemma.

[Aiden]

I think I will be driving a tank.

[Doug]

That's what it's gonna take.

[Aiden]

That's gonna be awesome.

[Caba]

Or you go super small with the Twizzler.

[Doug]

Just your Renault Twizzy making contact with an F150 exploding. I, I think I. But that's like. That is an example of like the. These vehicles that are I would argue needlessly big exist primarily because of like loopholes and like regulations and laws that were meant to like save fuel economy. This cars in general force a lot of things on cities and societies that I see as a net negative. And I'm not here to say that this technology around self driving cars is bad necessarily. It's not that I wouldn't want this to exist. I think there's a part of me that is disappointed or sad that because something like a really well built train system doesn't have the hype behind it that gets venture capital involved and pushes legislation and has the same hype behind it that would ultimately solve these public transport needs in the same way that you're talking about. It's not about owning my car. It's about getting from A to B and making those situations as convenient as possible. And a specific situation I can think of is. So when we went to the major together in Copenhagen.

[Caba]

Hey.

[Aiden]

Worth bringing this up? You can show me.

[Doug]

But yeah, we, we went to the major and Copenhagen has a pretty nice like train system that you can use to get around the city, which is nice. And we, we used it a bunch. And when we do you want to.

[Aiden]

That's the robo van. I know it's going to flash bass, but.

[Doug]

But I don't think this, this is essentially the same thing. It doesn't, it doesn't make any difference.

[Aiden]

Like, this is a small difference, right? It's like a, it's a, it's, it's a bigger car.

[Doug]

It's basically an Uber xl. Like that's.

[Aiden]

Or I mean, maybe I don't know how big this is. I don't make it fit. But it's more like a bus which has, has.

[Doug]

There's a reason for that to exist. Like, I'm not, I'm not denying that. It's more. When we left the major that night, on the night of finals, there's this huge stream of people coming out of the arena that they had just built. Yeah. And we all headed towards the train station. It's a massive amount of. It's like 10,000, 15,000 people that, that walk to the train station. And within, you know, within 10 minutes.

[Aiden]

It was so easy.

[Doug]

Everybody is on the train and out. Earlier last year I went to a Dodgers game.

[Caba]

Yeah.

[Doug]

And I was leaving Dodgers Stadium.

[Aiden]

It's insane.

[Doug]

And I walked down to like the Uber pickup area, like where you get Ubers, taxis, whatever you can get.

[Caba]

Right.

[Doug]

And there's this massive backed up line of people waiting to like get in the cars. And even in the most idealistic version of the autonomous car paradise that we're talking about, even if you take away all the inefficiencies of movement and they can all communicate with each other, that is a drastically shittier experience than just getting on the train and going into that.

[Aiden]

If you just look around like I was thinking the same thought because when we were in Sweden, we go to the stadium, right? Up to the stadium, housing buildings, everything. In la, you go to Dodger Stadium, the parking lot is as far as the eye can see.

[Caba]

Yeah.

[Aiden]

I think people don't even understand how big it is. It's the, it's one of the biggest parking lots in the world, it's like stretches out.

[Doug]

This is kind of what I'm talking about is like the car. The car requires. Especially even if you go. Even if everybody's Tesla can drive themselves, all of a sudden the car still requires parking space and infrastructure and things that I would argue like functionally degrade cities and quality of life. And it seems disappointing to me that the amount of like effort, both like technologically and politically is going into like making cars better when even the best case scenario in like the situation I described is still shittier than the train that you can get on in Copenhagen. Like, that is. I think that is unfortunate. I think the reality, like the Prague pragmatic version of me recognizes that I might not be able to shift the political or maybe even like cultural attachment to cars and like car culture in the US And I would rather see some sort of solution than none.

[Aiden]

This is the top 10 podcast on Spotify. Your voice here is going to change. Trains will rise up based on the words you're saying.

[Caba]

Dude, we're going to get that California high speed rail all the way to. That's Fresno.

[Doug]

So that's.

[Aiden]

So that's part of dream to be.

[Doug]

That's part of the problem though is like, isn't it shitty that that project has to deal with so much bureaucratic.

[Aiden]

I agree with you. It is shitty. But like, it's not. I'm the anti Tesla person here, but I don't think it's Tesla's responsibility.

[Doug]

No.

[Aiden]

To fix car culture.

[Doug]

No, I'm not saying that money. I'm not saying either company is responsible for fixing that. I'm saying that as an example. It's like you're talking about the. The government, like regulatory angle of why Tesla or like why Elon would want this relationship with the government so he can shift things in the direction that benefits his car company. There's no guy like that for trains.

[Aiden]

There's a trains guy.

[Doug]

There's no.

[Caba]

Is there a trains guy.

[Aiden]

We need a trains. That'd be so sick.

[Doug]

And. And it sucks that this problem is a train billionaire. Respectfully, I'm not.

[Aiden]

Bring him out of jail. We give him one job. You're the train.

[Doug]

You're the train guy.

[Aiden]

You're the conductor.

[Doug]

He looks like he could be the train guy.

[Caba]

Yeah. You're not building it.

[Doug]

He's the hair of a train gu.

[Aiden]

Yeah. On a global train tour.

[Doug]

I don't. It's tough. I just think as. As someone who maybe has been lucky enough to travel a lot and been like, been to Cities all over the world. Like, I, I remember going to Hong Kong as like a teenager and being like, what do you mean? You can just walk everywhere and the train comes within two minutes every moment of the day and you can get wherever you want and it's dog shit, cheap dude. What do you mean that that exists and I don't have that at home? Like, that is crazy to me.

[Caba]

Counterpoint. There's like five dogs an hour that die from the Soul Train system.

[Doug]

Five dogs.

[Caba]

Perry, pull that up.

[Doug]

What are you talking about?

[Caba]

I'm just trying to contribute to the conversation. I haven't been to Seoul yet, so I'm just making an educated guess.

[Doug]

Dogs die to the trains.

[Caba]

Running some numbers.

[Doug]

Trains are really grainy. Feel very bad about it. I don't mean. I'm not saying that this technological leap is not interesting to me at all. That is not what I'm saying. It's just like it feels like the system in place right now of hype, venture capital, all these things that back these sort of projects is why does it have to be directed in this direction instead of something that is demonstrably better?

[Aiden]

Well, I mean, the answer is hype and venture capital are going to go to things that make money. Of course, the only reason you'd build a train which doesn't really make money, it's for the benefit as consumers, is if your tax money came together and the government decided it was a good idea because, yeah, it's never going to make as much money as there.

[Caba]

There are privatized train systems going up in Florida with actual success. Yeah. So we could dive into that at some point because that's, that's a very stark contrast to California where our high speed rail system has been completely complete fucking disaster.

[Doug]

Very ironic.

[Caba]

This story is.

[Doug]

This story is awesome. And I don't know if there's really enough time to talk about it next week. Section of privatized rail that's becoming really successful, like up the coast from Miami.

[Caba]

Yeah.

[Doug]

And it's.

[Caba]

They have a successful leg and then they're growing it more. Yeah. So there is an example, but that's the whole point. It just requires governance. Right. You can't, you can't do this if there's a bunch of legislation stopping it. You can't do it in California. Like the amount of legislation, overhead is just completely obscene to get anything built, let alone a train that goes through a million different things. And any company, and any construction firm and any train company, any landowner can stop it with.

[Aiden]

We're going Gavin Newsom's podcast next week. And we're going to get this, we're.

[Caba]

Going to bring him on. We're higher ranked than him.

[Doug]

Yeah, we're dog walking.

[Aiden]

I think his new podcast number five.

[Doug]

Number five big dog, number five on YouTube.

[Aiden]

But he's, he's got a.

[Doug]

On Spotify, the. So it's kind of in the vein of what you were talking about. You showed that there was this long quote from like Ezra Klein where he's talking about one of his opinions that's dramatically changed over time is about regulation and about how regulation realizing that regulation is not necessarily good. It like is also the bureaucratic like gate more nuanced. Yeah, it's like it's just a more nuanced topic than more regulation good, less regulation bad.

[Aiden]

There can be bad regulations, there could be good.

[Caba]

Right.

[Doug]

And yeah, I think that's just the thing I think about all the time when I see self driving car news and like hype about self driving cars. It's like, dude, this the best outcome of this situation compared to what I've experienced in other countries and cities still sucks. And I think that is disappointing.

[Aiden]

All right, so Aiden's not going to be buying the self driving dream, but.

[Caba]

Well, let me make an argument for some of the benefits. So I first off, I agree with you. I like obviously we're unique podcasts in that we have three white men giving opinions. But what does differentiate us is that I also like going to Japan.

[Aiden]

And so when I go to, when.

[Caba]

I go to Tokyo, like the train system, anybody who goes, that's our hook. Anybody goes to Tokyo. Right. You immediately are like, holy shit, this is the greatest train system in the entire world. Oh my God, I want to live here. Right.

[Aiden]

Bring us back to our country.

[Caba]

Right, Right. And so I, I'm fully the same boat, to be clear. I would much prefer that in a world that I think happens in the next 10 to 20 years, at least in the United States, some benefits of self driving cars. So one, I mean first off is just reducing deaths. So there are 42,000 people die a year in the US from car accidents and then 13 and a half thousand of those are DUIs and 12,000 are speeding related. So like it's not just 42,000 people die unnecessarily.

[Doug]

Yeah.

[Caba]

It's also a lot of those are human negligence, like the majority of them. Right. And then every year around the world, 1.2 million people die a year from car accidents. That is obscene and tragic. And then you have like, it's like 6 million accidents a year in the U.S. there's $340 billion in damages. I don't think it's like the biggest driver for these types of technologies, but it is a big deal of like, we are going to solve so much death and destruction and damage because once you stop human beings, it's insane that we put a bunch of humans.

[Aiden]

Fewer sleepy drivers, drunk drivers checking their messages.

[Caba]

Like, I think of myself as like a smart, responsible person and I'm an idiot when I check my phone and I change the music and I'm tired and I'm not paying attention and like, yeah, it's just. So we put people into death vehicles and like shoot them around the roads. It's insane. And we'll stop so much of that. Another is climate change. I think there's various studies and things to show that like electrification of vehicles broadly will decrease carbon footprint. It makes driving more efficient, requires less energy, all that type of stuff. And then the economic argument is, wait.

[Aiden]

Wait, there's more selfish reason too. I used to commute an hour each way to Nvidia. Listen, I think, I don't know the math, but the amount of human misery created extrapolated across all people for all these commutes has got to be. So if you could get an extra hour of sleep in your car, you know what I'm saying?

[Caba]

You're incredible.

[Aiden]

Relax. I think that would literally make the world happier.

[Caba]

Yes.

[Doug]

Because a hundred, A hundred percent misery. One hundred percent. If, if the only option. If you told me that somehow like public transportation solutions are just never going to be possible in the US 100% because of we're existing in a hypothetical situation and this is the only way forward. It's like, of course, of course this has so many benefits. And I agree with all of these things. Every point that you've said so far is also something that gets better with, with people's increased access to public transportation.

[Caba]

Yes. No, you're right. I mean, I, I'm in the same boat. I don't see any path forward. There has to be such a massive change because it's like it's not just, oh, we're building trains in la. It's like the whole infrastructure of LA is built for cars. So I don't see a way in our lifetimes that that gets reversed.

[Doug]

Personally, this comes around to a topic that I wanted to talk a little bit about, like public transportation in the US but specifically streetcars. And I don't want, I want to enter this conversation with the idea That I do not think streetcars solve a lot of the problems that exist now, especially because they exist on the street.

[Aiden]

Cars like 1930s.

[Doug]

I'm dude to not even earlier than that. I couldn't believe how far back this goes. It was further back than I thought.

[Aiden]

That's the solution. Streetcars.

[Doug]

No, no, I just said. Hold on.

[Aiden]

I literally just said streetcars aren't the solution, America. Streetcars are solution.

[Doug]

I said are not the solution.

[Aiden]

Supposed to listen to you and the actual.

[Caba]

What is a streetcar? I thought you were just talking about cars on a street.

[Doug]

Oh, no.

[Caba]

So like, like those, like trolley things.

[Doug]

Yeah, like trolleys, basically. So the way the. If you go back. If we go back in time. Come back in time with me. Back into.

[Caba]

Dude.

[Doug]

Back into the mid-1800s, big cities in the US started laying out rail. Yeah. And had these trolleys to get around.

[Caba]

I saw a documentary about that called red Dead Redemption 2. It was. It was in St. Denis. Yeah.

[Doug]

And they. And these things started off by getting pulled by horses. And then by the end of the 1800s, they started to electrify these systems.

[Aiden]

And that's where it all went wrong is what you're saying.

[Doug]

And then they did an electric.

[Aiden]

I got you a. We go back to the horses.

[Caba]

The.

[Doug]

But in cities like Los Angeles at the time, at the end of the 1800s, early 1900s, Los Angeles actually had the largest tramway system in the world. Like the most amount of track. And what ended up happening was these systems got phased out as the automobile just became very, very popular in the US but ultimately it's like if you look at pictures or stories from this period of time, this was a huge infrastructural change in cities going from the period or like the decades were this was the dominant mode of public transportation in a lot of cities to the period of time where cars were more favored. And I think maybe not politically or bureaucratically, but the idea that you can't make quick large scale changes around public transportation I don't really think is true because it's even happened within the scope of our own country's history. There's been huge pivots and changes with the way public transportation works in the US this being an example where in essentially the span of like a couple decades, these. These like streetcar systems disappeared.

[Aiden]

So what's your ideal? You want. You want streetcars back? You want trains back? You want horses carrying trains?

[Doug]

I think the reality is I don't really care about streetcars. I think as far as like space and efficiency goes Even you can make an argument that the like robo autonomous, like buses basically accomplish the goal. Fine. I think the issue with buses as solutions in public transportation is that buses exist in the traffic that exists already. You don't solve traffic by like making buses because they just have to compete with all the cars around.

[Aiden]

You want one more lane.

[Doug]

Famously. Famously. If you just build one more lane, freeze it all. That's the coolest.

[Aiden]

That's my solution too. I was going to say if we just added a single more lane, maybe.

[Doug]

Even like two lanes, like two lanes of solid.

[Caba]

I was going to say rickshaws.

[Doug]

Just a bunch of rickshaws.

[Aiden]

Fitness, but carried by a horse.

[Caba]

This new invention, you know, we go.

[Doug]

Back, we go back, we get the horses, their jobs back.

[Caba]

Call it a chariot. I think we'll have it pull a train.

[Doug]

The just. I just want to push back on the idea that fundamental shifts in like public transportation infrastructure or travel infrastructure in general can happen in quicker times than we think. And I think a lot of the reason we think it's not possible is because the way we've done things has existed for so long. And in the US specifically, it feels like there's a lot of.

[Aiden]

If you build.

[Caba]

That's a fair point.

[Aiden]

Public transportation network in LA and it makes my house in the suburbs less valuable, I will kill you with a gun.

[Caba]

Thank you, Adrian Minecraft.

[Doug]

And that's part of the problem. You know, there's the NIMBY angle to it. There's so many things like that. Like where I think Elon Musk is even tied into this. I don't know the exact details, so please correct me if I'm wrong, but if I recall when he was really hyping up the hyperloop stuff, it was part of a campaign that pushed back against the money and funding behind public transport efforts in California. And killing those, pushing back or killing those efforts is important to, like, companies he's made. And, you know, more broadly, we use.

[Aiden]

Hyperloop every day now.

[Doug]

We could look at more infamous cases of billionaires with oil money like the Koch brothers, lobbying at the local level to stop public transportation projects. Because if public transportation succeeds in a bunch of major cities, my oil empire will start to start to crumble a little bit. It's. It's not. And I, like I said, I'm pragmatic. I understand. I actually think that car culture in the US is like borderline. Like it's not in the Constitution, but it's like borderline gun culture in the U.S. the idea of Having your car hitting the open road, having the great American road trip, like the, all of these things are so embedded in the idea of American lifestyle. And I think it's why people get so like, like, so defensive of like, we're gonna take away your gas cars. It's like, it's almost the same level of vitriol reaction as when you talk about taking away guns. It's, it is, it is a very similar, it is more culturally embedded in America. And I, I'm not here to say I can overturn that. I don't think I can. That's why I want to leave. That's like, I, I'm, I'm not saying it's. It's just disappointing to me that these things are, are not looked at as like the better, more idealistic solutions and that they're possible because even within our own history, they are.

[Caba]

That's a good point. That's a good point. I wish. I feel like there need to be some massive political change to do that, but, you know, if we can't even build housing, it's like, you know, it's, I think it just gets into this horrific morass of lack of building in the United States. So.

[Doug]

And you're talking about what my idealistic world is. It's like it has so many intertwining threads with that issue as well.

[Aiden]

Right.

[Doug]

So many aspects of like housing and building need to function.

[Caba]

To dramatically oversimplify things, the previous generation, the boomers for, you know, in the 70s, like, built a massive amount of stuff in our country and now they have frozen it in amber and said nobody should build anything. And now everybody else is fucked except them. Which is.

[Aiden]

Well, it makes the value go up. That's worth it, right?

[Caba]

No, it's. No, obviously it's self incentivizing. Right. It makes sense. Everything, once you own a car, everything incentivizes you to stop public development, to stop housing development, to stop your car, your home goes up, your area remains more valuable. Everything is incentivizing you to not do that. And they built out the whole country and then just stopped it. And I could see something happening, but it would need like a genuine political revolution of some kind and a strategic streetcar reserve.

[Doug]

And then every, and then every few years we vote on, we vote on adding another lane. You know what they don't tell you about the lane thing? What is that? If you add enough lanes, you actually do solve it. Well, yeah. Yes.

[Caba]

It's the guy.

[Doug]

It's.

[Aiden]

We're actually almost there.

[Doug]

It's it's so funny. It's like adding another lane doesn't solve traffic. But theoretically if you have like 50 lanes, it does solve. Of course nobody ever talks about that.

[Aiden]

That would actually be so sick. A 50 lane highway.

[Doug]

You could just go wherever, just all it's it. Cuz of course it'll. It'll happen in Dallas first, you know, and the whole city of Dallas is just gone. It's just a hundred lanes side by side.

[Caba]

The only way you could justify a 50 lane highway is if the city was 50 times bigger. @ which point the traffic is back. It doesn't even fix it. It does not fix it.

[Doug]

Dude.

[Aiden]

Imagine forgetting your exit and having to merge over 50.

[Doug]

50 dude.

[Aiden]

Zoning out and then this hard wheeling over 50 lanes. That'd actually be so fire God. I've no.

[Caba]

You sold me. We're 50 lane transit.

[Doug]

The end of this whole debate is that we should make. Add more lanes. More lanes.

[Caba]

More lanes, more lanes, more horses.

[Doug]

We've done it. We said we'd solve it by the end of.

[Caba]

Oh, we're going to number eight for sure this week.

[Aiden]

This is how government actually works. They call it a day.

[Doug]

Just a backpack. Colorado.

[Aiden]

Did everyone backpat one more lane? Where do we land on Tesla? Where you didn't mention the robots.

[Doug]

Maybe, maybe we should.

[Caba]

Where do you.

[Aiden]

Are you going to put money in Tesla stock right now? Where are we?

[Caba]

So look, I can give a few more counterpoints to why Tesla has some potential legs to it, why it has a real shot and we can go back to that. So actually it's a good segue. So the thinking, the reason that Tesla might in quotes be worth a hundred times what they're currently making a year, which is an again insane valuation. I'm not saying I agree with this, but one such thing is if they hit driverless cars, if they manage to do this, their fleet instantly becomes obscenely valuable. Right? If every person has a car that can drive them and they don't even need to be in the car, that is incredibly valuable. The amount of cars they can sell go up. But every car itself becomes much more valuable because then people can use it and send it out into the world to do jobs for them like an Uber.

[Doug]

I was going to say as soon as you do that, that the people can sell the car. Tesla could buy them back and use them for a service like this.

[Caba]

So the way, the way to think about it is, and this is explicitly what Elon.

[Doug]

This is what Elon has stated.

[Caba]

This is what Elon has stated. And he never lied.

[Doug]

No trains.

[Aiden]

I put it money down. I'm not buying it in cash because I'm a normal person with a normal job. I put my money down, I loan it, I send it out to do a job. It comes back damaged.

[Doug]

Yeah.

[Caba]

I mean there we need to.

[Aiden]

So that we're have to solve what I'm saying. You've created all these problems for me as a regular person. I'm not going to. I don't want to be a tax. I don't own a taxi, Bishop.

[Doug]

Right.

[Caba]

And not everybody will. But if the pitch to a hu. To most people who own cars is hey, normally we think about car ownership as you drop 20, 30, $40,000 on a car and then it immediately depreciates in value and for the rest of its ownership. Or you buy a 20, $30,000 car and it is going to actually generate money for you over the lifetime of the car. You don't have to do that. But every day while you're asleep or while you're at work, you can send it out. It's generating 100 bucks bucks on the meantime. And it's just doing this for you every single day.

[Aiden]

Think about having to own 6 million DVDs in our house or whatever.

[Caba]

Yeah.

[Aiden]

Now we rent it from a service because it's become that distributed and cheap. If you, if cars are self driving and working everywhere. I don't want to spend $30,000 to own it and then lease it out to people to make money back. I'm just going to use it at the cheap cost when I need to use it.

[Caba]

Sure.

[Aiden]

So, so if it's that distributed.

[Caba]

Right, Right. So I think the argument, I think the, the argument here is if they pull this off, they have millions of owners of Teslas who can suddenly start adding their thing to the fleet and it's this incredible value add as a consumer. If they want to do it, obviously for the person who doesn't want a guy shitting in their car, you don't need to do it. But, but enough people will. Right.

[Aiden]

Will shit in your car and I.

[Caba]

Will, I will do it. Right. And it comes back covered in dogs.

[Doug]

And you know you got a Waymo this week.

[Aiden]

Yeah.

[Caba]

To help Tesla write in the timestamp right. In the comments. When do you think I shit my pants during this episode? And so, but so even if they, even if they don't like, even if every single person who owns a Tesla doesn't use it in this way, they are going to produce these like cyber cabs, right. Which are meant to be Ubers. These things, which are meant to be. This is going to go out into the world and just be an Uber for everybody. So really the idea is if they pull it off, giant, if they just also got Uber, right. If they take over the entire. What is the name of that industry? Like self industry, Uber. Lyft.

[Doug]

Ride sharing.

[Caba]

Ride sharing. If they, they can, if they pull this off, take all of ridesharing immediately. Uber has a valuation of $150 billion. Lyft about 40 billion.

[Doug]

Right?

[Aiden]

150 plus. 40.

[Caba]

Right. Plus Tesla, that's $900 billion.

[Aiden]

Even if they had entire Uber, entire Lyft plus their current valuation, real estate valuation of like 84, they're not even close to what they're worth now.

[Caba]

One more argument, two more.

[Doug]

I have a dark question at the end of this.

[Caba]

Okay, I'll keep it somewhat concise. The other two points. One is Optimus. So they have this robot, if we pull it up here, they have this humanoid robot that they supposedly are going to release. I sure. You know, he says like every year it's going to come out. Who knows if it'll ever come out. If it does. Yeah. Then that is going to be this unbelievable amount of units that they could sell because every company, every home could have these help helping out. Now you might be like, ah, that's pie in the sky. Anybody can make a robot. And that's probably correct. But part of what, for example, Andrej Karpathy has said, who did the Tesla, who led the Tesla AI stuff is again, it comes back to this data. If they have. Tesla has the amount of data that can fill an ocean and Waymo and everybody else has a swimming pool of data. Right. The scale is that different. What Andre said is that there's actually a lot of translation from car vision processing over to robotics processing, that it's actually very similar of how you manage self driving and process all that visual information to having a physical robot that's moving through your house. I don't know enough about robotics to know if that's true. It's probably oversimplifying things, but in theory that gives them this massive advantage again over the Boston Dynamics, who make this funny prototype that they show once a year. These guys actually have an insane amount of data to work on.

[Aiden]

How much by paying for that today, how much have they shown? That makes me trust that's coming out relatively soon. Will work, will sell to consumers, we'll make a profit. We'll make a.

[Caba]

You know what I'm Saying, editor, cut this from the episode. I don't believe that the robot thing will work. This seems way too optimistic, and, I don't know. Optimistic, if you will.

[Aiden]

Hey, I'm moving over.

[Caba]

Get over here. Okay. And then, and then last thing. And then we could, like, you know, we conclude the whole argument is battery storage. So it's easy to think of Tesla just as a car company, but they do a ton of work with batteries. So their growth. Actually, I have an article here. The growth that they've had with batteries is insane.

[Doug]

Yeah, yeah, I've seen a little bit about this.

[Caba]

You can see this. They've had 20, 24 figures represent a 214% leap in storage deployment. So Tesla's. Tesla is leading the market globally in selling batteries and power packs and storage solutions. And this is only going to grow a little bit. Like the guy who sold pans to the gold miners in the gold rush. Like all the other EVs don't have this kind of power management system and technology and deployment. Right. So in theory, just in the same way that Tesla's superchargers are the de facto chargers across the nation. Right. They can also be, and quite possibly will. Yeah. Okay. If Ford comes in and releases an amazing ev, that's great. But they're almost certainly gonna be using Tesla's batteries, their system, their charging network, and that is almost gonna be as valuable or more valuable because the amount of energy that is going to be needed and used and even within AI, like battery technology, this is going to become a massive industry, is and is going to keep growing estimates that it's going to grow like, I don't know, like 900% or something crazy. I forget the exact number over the next like eight years. But batteries, storage, the idea that in the future, as we unlock more types of energy generation, that there's systems that are like, we're selling energy to each other, that people, again, like the Tesla thing, you can have, have solar panels in your house and you sell the extra energy onto the market and this becomes a real value add for people. With Tesla taking a piece of every single thing, it's another one of those, like, if this lands and they can deploy it to everybody and get there. Crazy valuable. A massive if, though. And that is the argument for why Tesla might be worth a hundred times what it makes.

[Aiden]

I appreciate you giving it to me and I like hearing it. And. And I. Again, I don't know. Right. I don't know.

[Caba]

Can I admit something?

[Aiden]

Yeah.

[Caba]

This is not a joke. Ten minutes before we recorded this. I sold half of my Tesla stock. I bought a bunch.

[Doug]

I love that. That whole episode left after that.

[Caba]

I bought a lot a few years ago because of the full self driving thing. And I am now not nearly as confident that they're gonna succeed. It literally looking into all this made me sell my Tesla stock. That's fine.

[Doug]

That's crazy.

[Caba]

I think there's an argument for all this, but I wouldn't go all in on it.

[Doug]

You would have kill Model UN dude.

[Aiden]

Can I set this up so you're not the only one. This might take a pull up, but you. Yeah, here it is. You're not the only one doing what you just did. So is Elon Musk's.

[Caba]

It's all the executives, right, cfo?

[Aiden]

Yeah, I think I got it right.

[Caba]

And then Elon is selling. I mean it makes sense he would.

[Doug]

Always sell prices like plummeting the stock. Yeah.

[Caba]

Well. So okay. The stock was ridiculously highly valued. Just. Just for.

[Aiden]

For.

[Caba]

For recap of people. People are saying Tesla's crashing. Just to give a sense of it. Tesla was obscenely highly valued. What like let's say six months ago. Then they became double obscenely valued and now they're back to obscenely overvalued.

[Aiden]

That's right.

[Caba]

So actually we're still talking right now. After the crash. They are obscenely overvalued.

[Aiden]

You got the Tesla chair selling. You got the CFO selling. You got Kimball Musk selling. I did this thing where I looked at Nvidia insider sales. They've got you know, 1.4 million buys, 2.8 million sales. Most companies will have more sales than buys insider because people get paid in stock and they want to offer.

[Doug]

Yeah.

[Aiden]

Tesla zero buys. There's not a single Tesla insider buying shares. Everyone is selling.

[Caba]

What's the time range on that is.

[Aiden]

Like 3 months and 12 months.

[Caba]

For over 3 months. Nobody bought.

[Aiden]

No. I think a regular level employee doesn't get included. But. But anyone who's like a senior level employee gets counted for this. And Nobody bought over three months or 12 months. They're only selling. So I think they also understand how much Hopium is baked into this stock price. That. That's my argument.

[Caba]

Yeah. Like what I've been describing is all these moonshots of like if they pull off full self driving with just vision. That's crazy. Unbelievable achievement. Opens up so much. If they. The batteries keep growing at the rate if optimus robots are. Are what they're talking about. And then if all of those things land, maybe it's worth its current valuation. Like that's crazy. You know, like I don't get why it's 100x right now. And then particularly a few years ago, the argument I made earlier of they have so much more data than everybody else gives them an obscenely huge advantage when it comes to training the AIs and the systems that are going to achieve full self driving. I still think that's true, but that that advantage is diminishing so rapidly that I don't know, like right now with what's going on in China, in China.

[Aiden]

I was not even in America.

[Caba]

China's deployment is so large of EVs that that exact data advantage that they've had for a while that is rapidly going away and they do not seem like they're right on the verge of full self driving. So if they take another three years to get there and it's this, oh my God, incredible thing, they did it without lidar. That's amazing. China has the same stuff.

[Aiden]

So I don't know. So byd, you know how Tesla, for fsd, full self driving you have to pay, I think it's eight, ten grand.

[Caba]

Yeah.

[Aiden]

On top of your car. Oh, BYD rolled it out for free to every make and model, even the old ones, their own version. And it's built exclusively for China. So they've planned for certain Chinese things, like for example, that China has all these bus and bike lanes with different lines that Tesla can't adapt to with their current method. So this guy, they rolled out FSD and Tesla recently, February this year, this guy in China tries it. He immediately gets seven tickets in the first ride because it keeps veering into these camera checked bus lanes and out. And you get a ticket. Get a ticket. Now this is all fixable. What I'm saying is like BYD is building for their consumer. They know what they have to do.

[Caba]

Yeah.

[Doug]

Bicycle path. No, no, no, no.

[Aiden]

You know, he's nervous. And so, you know, again that makes me worried about their ability to compete in the second biggest market or actually probably the biggest market.

[Caba]

Right. It's like I don't see how they win in China for a variety of reasons. And then around the world like the Chinese EVs are going to catch up so hard. It's like what you said with Mexico, you know, if, if China can come in and offer a cheaper ev, if.

[Aiden]

There wasn't a tariff, I mean, people would be buying them, right?

[Caba]

Would be buying them here. Yeah, yeah. And so that like really the Chinese EV manufacturers, that's what's making me go like, I don't, I don't see the advantage anymore. To the same degree. I still think it's incredibly like Tesla has amazing products. Everybody I know who has one loves it. It's great cars, like the full self driving, like driving stuff is incredible. But like, I'm not seeing this, this advantage that'll let them exclusively hit this point of technology before everybody else. And it could happen. It'd be dope if it did.

[Aiden]

And then the last thing I want to say, because we didn't talk about it much because I don't think it's important or open a discussion. I don't want to make it too political, but like there is a part of it where I'm just. I personally and I think a lot of people are souring on the brand because of Elon Musk's personal antics to the point where if there was a comparable thing from someone else or even a slightly worse thing, I might pick that. Like, I want to buy an EV soon. I'm not going to buy Tesla probably because of this reason. And I think that alone makes it a harder sell as a business when you're, you know what I'm saying?

[Caba]

Like, yeah, it does not be scared.

[Aiden]

To be a Bud Light investor during their controversy because the sales went down. Whether or not I agree or disagree, it's like, you know what I'm saying? So that's, that's a big part of it for me too. It's like I just feel like there's so much risk baked in, so I don't want to do it. Speaking of things that have possibly controversial brands, Pokemon Go. Sweet, safe, Loved what we've all been waiting for.

[Caba]

Wait, no, no, no. That is not a good enough segue. Segue us from. You need to find a connection. You're ending the conversation. You got to go. From Elon Musk tarnishing the Tesla brand into Saudi and Pokemon in an organic way.

[Aiden]

Elon Musk needed buyers for a new venture where he was buying Tesla. He needed money to borrow for loans. Where did he go? The Saudi Royal Wealth Fund. They are the biggest purchaser other than Elon Musk of the Twitter buyout. They're also buying something new lately. Pokemon Go.

[Caba]

That was great. That was really good. I'm moving to your side.

[Doug]

That was amazing.

[Aiden]

Pokemon Go. Niantic is being sold to the Saudi Foreign Wealth Fund for three point. Actually, it's being sold to a gaming company owned by a Saudi government for $3.5 billion. What are your thoughts on that gentleman.

[Doug]

The sports watching continues. The sport buying the next major esport. Dude, I think it's so funny. I my. I mean, my first reaction was, why? Because, like, is Pokemon Go, Is it just really successful and profitable?

[Aiden]

And they already makes good money. Oh, here's also. I got a little background. So Saudi Royal wealth fund. They buy everything, you guys. I mean, they've. They've spent money on sports teams, on everything, esports, everything. They've done tons of purchases.

[Caba]

So is this, like, real quick, is this like a government entity that buys all this stuff? Yes, and it's. Okay, so it's public or not public, but it's government owned.

[Aiden]

Yeah, essentially government. It's public money. It's like they. They have this extra money from oil.

[Caba]

I mean, they bought esl, the company I used to work for, right. And I'm like. And I don't really know what's going on there. I just know all my friends who work in esports are now like, yeah, I got this offer to go work in Qatar for the World Series. And I'm like, okay, that's cool. But it's all in. It's all in. It's all in the Middle east now.

[Aiden]

So that's the idea.

[Doug]

They're making move moves, dude. They body a cell. They killed Jamal Khashoggi.

[Caba]

Yeah.

[Doug]

They keep it real over there.

[Caba]

They shot him and they walked away. They said just good business.

[Aiden]

They have all this extra oil money, and they want to invest it in things that are like future buzzwords, basically. Whether it's EVS, whether it's eSports, whatever. They want to have flashy, cool things that are. So when the oil money runs out, they've got all this business. That's the idea. And so they've been buying gaming companies. One thing, they bought the company that made Monopoly go, and it turns out that made a mint. I don't know if you guys know Monopoly Go. It's not like Monopoly at all. It just looks like Monopoly, but it's like the greatest money extractor game of all time. Like, it just. It's got all the loot boxes and puzzles and everything, and they've been printing. That game is, like, one of the most profitable games ever.

[Caba]

Yeah. I worked in mobile games at ea, which is a beloved category.

[Doug]

Mobile games.

[Aiden]

Careful, he's a hero.

[Caba]

Yeah. Yeah. So as. As the resident Elon Musk fan, I worked at EA on mobile games.

[Aiden]

I'm so glad you're on this pod, dude. You're like the. You're like the. The Winston and Overwatch for the comments.

[Caba]

I. I literally was there when it was voted worst company in America. All right, that's. And then. And in the. The article for that, they said it's mostly because of Doug.

[Doug]

One guy.

[Caba]

Yeah. No, not. It's like not a joke. And I did. And obviously I left. But. So like mid range. This is a decade ago. Mid range mobile games make like a million a day. If you're talking like, isn't it crazy? That's mid range. You're talking about clash of clans. You're talking about tens of millions. And then, well, that's when they do a big drop. Like, for example, Fortnite, you can make 50 to 150 million on a new skin.

[Aiden]

Yeah.

[Caba]

Like when Fortnite was at its peak. So the, the numbers that you can get off microtransactions in mobile games are genuinely obscene.

[Aiden]

And they cost a little bit. You know what I'm saying?

[Doug]

Buying digital items in video games, you.

[Aiden]

Own so many CS Go knives, it's crazy. Your grandchildren will starve. You're a rich podcaster and your grandchildren will starve.

[Caba]

Because if your grandchildren can sell them to the Saudis.

[Doug]

Look at it. Look at the butterfly knife. It spins. It's blue. It's pretty blue.

[Aiden]

It's not fully blue.

[Caba]

I'm with Aiden on this.

[Doug]

I didn't. Dude, I did not re. I mean, I understood that mobile gaming in general is like the biggest chunk of the gaming market it. Revenue wise. That is still wild to hear.

[Caba]

Yeah.

[Doug]

I think the idea of. I was thinking earlier about when you first brought up the topic of people like the line in Saudi Arabia finally gets built and you're playing Pokemon Go in the line and you're just you and your friends walking down one long hallway catching Pokemon. You never turn left or right.

[Aiden]

You guys don't know the line is a fire.

[Caba]

Somebody's like, oh, guys, there's a charizard and it's at the end of the line. Like, there's only one look at Go all the way. You gotta go to the other end of the line.

[Aiden]

500 miles.

[Doug]

It's great shot. It's just. Yeah. I think the passing headline makes you think is. Is my initial reaction is like, why would you. Why would you do this? But there's a larger cohesive strategy surely around this amount of money being spent. That's what I'd like to think.

[Caba]

I can wildly speculate.

[Doug]

I think sometimes it feels like, you know, the rate at which my familiarity with esports in particular makes me feel a Little doubtful of like my own take in the sense that it feels like they've overpaid for a lot of things. Like you don't have to bring this level of spending to esports.

[Caba]

It is highly irrational. Yes.

[Doug]

Get a lot of the hold that they wanted in the industry and to a degree I can kind of. It feels like flexing on like a geopolitical.

[Aiden]

Yeah, it does feel like flexing. You know, it feels like, like, is this worth three and a half billion? Pokemon goes down from its peak. The people that are using it said if they change microtransactions, I'm gone. Now people always say that, you don't know, but like if they try to.

[Caba]

Make it, Pokemon fans are not leaving. I'm sorry, like, no, they've been abused for decades. They're keep. They're not going to go away.

[Aiden]

Yeah, I don't know. I don't know what it'll mean, but there's definitely a lot of push back and like anger and fear from the.

[Doug]

Community of like from the Pokemon Go community.

[Aiden]

Pokemon Go community because they don't want to change anything. They want everything to be. They, they, they do it all the time. They've been doing it for years and years and years. They're worried about change.

[Caba]

What they said in the article was that they're focusing basically on AI and I need to look more into it and we can do this in the future. One thing I'd want to talk about.

[Aiden]

Speculate. Speculate.

[Doug]

Pokemon Go AI.

[Caba]

Well, okay, I will speculate based on what I've read about AI gaming. So there's a push from some major companies, Microsoft being the biggest recently, who announced they have this new AI generative game that is trained on one of their games and they're going to start using the Microsoft library to work on generative AI videos games. I think this is incredibly far off in the future. I don't have a lot of faith that that would. I'm pretty pro AI and I have a very, very hard time seeing any of that ever manifesting in a way that people want to play or buy at all. But that is at least an explicit push. So in theory what these guys are doing is saying we're dropping the traditional video games. And they said this in the article, like they are focusing more on AI tech and AI games. So they're like, pokemon Go, that's great. That's old news. That's human beings making things that other humans being enjoy. Yeah, we're going to make a bunch of AI shitty game slop. That nobody enjoys. And like. And if you believe that, you know, that's like, that's what they think is the future and. Or at least you know, the big moonshot opportunity and that's what they're going for.

[Doug]

I'm actually curious because in a weird. In a weird change of pace on the yard bonus episode this week, which you listen to on patreon.com yard are we feeling hats? Yeah, we. No, we. We talked about something a little more serious. We talked about Vibe coding.

[Caba]

Yeah, yeah.

[Doug]

And. And the. The way people are.

[Aiden]

You four talked about Vibe coding?

[Doug]

Three of us. Lwig was gone.

[Aiden]

Three non coders talked about vibe coding.

[Doug]

Well, we were.

[Caba]

Can you give me like a one sented summary? I would love to hear what kind of breakthroughs you guys came to.

[Doug]

I don't know if.

[Aiden]

What did slime have to say about vibe coding? What did he.

[Doug]

I think it would be. It was actually a huge chunk of the episode. It would be unfair of me to characterize.

[Caba]

Have to go to the Patreon, see.

[Doug]

What you guys think of it. Because I had not heard of this until I think Nick brought it up. This idea of Vibe coding where you use ChatGPT to spit out code that you don't know how to write and you build a game like that and then you just iterate on the game by using ChatGPT prompts. And apparently these games are starting. You know, you could turn around a project in a relatively short period of time. And then people are launching these games on like mobile and then filling them with advertisements and then making. Making money. And it's a trend. And I thought this was really interesting because my two reactions were on one hand I was like, oh man, this really cheapens this art form and makes it. This feels a little soulless. And then on the other hand, I was like, well, if you can provide a tool to people to create their ideas without being inhibited by being unable to learn how to code for whatever reason. Do you know what is good and bad about this? And that's basically what we talked about for like 20, 30 minutes.

[Caba]

That phone call just bumped us down to number 10.

[Doug]

Tucker's carving his way back in, brother.

[Aiden]

It was Tucker, if you can believe me.

[Doug]

He knew what he was doing. So I always wanted your. Because I feel like it's in the vein of this conversation of like something like AI just pumping out video games automatically. This is sort of similar to that. It's like still a prompt, still a human idea, but somebody sitting at a computer and making games in a very different way. And potentially sacrificing some of what they have in their mind because they aren't able to meticulously edit and understand the code.

[Caba]

Yeah, here, can I get the telestrator? Yeah, you can kick it off.

[Aiden]

I mean, look, my answer to this, I'm not a coder, so I haven't tried vibe coding. I don't know the difference and what the. But here, my understanding is that the games that have been made so far are pretty sloppy. Yeah, one of them I know made it. It was like an MMO flying game this guy Pierre made. I don't know, he has a big audience, dude, he made it. It made a lot of money. It was making like 100k a week or something. It was like. It was like printing money. And it was like. I tried it, it was really sloppy, but it was like, you know, a kid could play. You're playing game I'm playing, so there could be potential there. Right now, as a gamer, I see such a drastic gulf between. I mean, it just has.

[Caba]

Yes.

[Aiden]

There's so many issues and edge cases that come up that you don't get fixed that I think it's kind of crap.

[Doug]

But during the segment where we were recording, Zipper tried to make a game using ChatGPT, and he successfully made a tiny game where you control a profile picture of me that eats hamburgers, which were yellow dots. And every time you fed it a hamburger, the score went up by a million. And so within the span of us having the conversation, that was crafted.

[Caba]

Yes.

[Aiden]

That's how they made Red Dead Redemption too. It's the same mistake.

[Doug]

Yes, sir.

[Caba]

Yeah. So vibe coding, this was coined recently by Andrej Karpathy, actually, who was the leader of Tesla. And so basically, it's what you're saying, it's just letting AI do all the coding. And that's been the slow transition that everybody's going through over the past two years since ChatGPT came out. So for people who are not programmers, every programmer now asterisk. Almost every single programmer is using AI extensively. And it's so unbelievably helpful for so many tasks. And that doesn't mean that the entire project is done by AI. It means that you are figuring out the outline, you're deciding what things to do. And then you say, okay, now that this is defined AI, can you do this for me? So you are building the structure, you're thinking through what it is, but then you're directing the AI like you would a junior engineer at a software company. And you're saying, okay, now go through the logistics of making this work and you still then like a senior engineer would review what they're doing. And because there's going to be problems, there's going to be lots of issues, you have to review things. It doesn't always work, but that's the idea. And it saves a lot of time. I do this all the time with Vibe coding. It's getting to a point now where you do not need to ever code or review code. So that ratio of like, oh, it's helping you as an assistant with all these things is becoming like a hundred percent as opposed to, you know, it's 50% of the code or something like that. So with regards to games specifically. So I guess to summarize that AI is getting good enough to do this now and it's improving rapid, rapidly. Every few weeks there's a new model which is even better programming. So this is very much a thing that is happening. So I think that what Microsoft is largely arguing for is the idea that an AI itself is basically going to generate the game, right, that you are playing. So it's AIs directing AIs to make things and a whole bunch of just AI is basically doing it all. And that's the thinking is, you know, they can go release this into the wild and then people are just playing these infinitely generated AI games. Vibe coding is more of a human who is then directing AIs. Right. So with Vibe coding, like, you as a human in the case that you were talking about, are still directing what the app or game is, right?

[Doug]

Yeah.

[Caba]

With Zipper's case, like, he's deciding the design of the game. The AI isn't doing that.

[Doug]

He wants me to eat the cheeseburger.

[Caba]

He wants you to eat the cheeseburger. And so this is where I think a lot of AI development is going to go and why I'm generally optimistic about it. I think there's a lot of examples, like I have people in my pointcrow and failbox, I love them. Horrible at programming, just truly awful. And both of them have started to really add cool, sophisticated stuff into their streams that use programming because AI helps them do it. And so I think this case of like humans directing AIs to do their ideas, they are the creative director and the AI does the grunt work. That's where it's largely going to work. And if a guy comes up with a cool, weird mobile game that people are like, oh, this is dumb. This shouldn't be making that much. Well, that's what we thought about Flappy Bird, right?

[Aiden]

Oh, I totally agree. I mean, you know, you don't get to decide what's worth it or not. People decided by playing it. Whatever's fun they'll play.

[Caba]

And this is obviously is again a huge conversation and we'll dive into it in the future. But I think core distinction being like fully AI generated stuff where no human is involved versus you are a creative director and AI is a tool just like Photoshop or like obs or like playing a video game. Right. And you are directing what is happening. That I think is good and legitimate.

[Doug]

I definitely, I want to to dive into this a little more and some of the questions around it in a future episode. But that's the end of episode two of Lemonade Stand. I think something we all liked about the last episode that we were hoping for is we got a ton of thoughts from people in the comments about pretty much every topic that we discussed, which I really, really liked. The plan in the future, I think if you have anything to add to a topic that we're talking about, if you have a correction about something that we're talking about, these long winded explanations or comments that people are giving are really, really great and we want to make sure that we include good feedback into the show in a way in the future. So I think we haven't quite figured out the exact way we want to segment it into the show yet. But keep providing that because follow ups and including your guys conversations in the show somehow going forward is something that.

[Aiden]

I'm going to read every single comment about. Doug wanting to take your jobs.

[Caba]

Wow. Yeah, yeah.

[Aiden]

Over the top of any, he wants.

[Caba]

To take our jobs and give them to Elon Musk. Yeah, no, the comment quality has been like really good. I don't know how to like respond to all of them, but I've seen so many thoughtful comments. That is stuff where we're like, we are reading and then I think meaningfully want to actually incorporate into what we're doing in some way.

[Doug]

Unless you're commenting on Spotify and which case. Honestly I didn't know that existed a week ago and I'm not really reading those very often. Feel free to get involved there. Still get involved. Awesome. Thank you for watching. See you guys next week.

[Caba]

Here's the part where Atrock finishes the lemon from last no.