A (2:07)

So Palantir is a company co founded by one of our favorite people on this show, Peter Thiel.

B (2:13)

But what's the Tolkien reference?

C (2:15)

Yeah, I know what the company is.

A (2:16)

Oh, so he names. So Peter, who as we've talked about, does things like he runs a venture capital firm, amongst other things, as PayPal founder and, you know, destroyer of Gawker. But also he at one point co founded this company, Palantir. And for all of his projects, he likes to come up with Tolkien references. This one happens to be, I think, some magical stones, like some like three super powerful stones that give you like some vision or something. Anyway, I can't remember the. I've never actually read all the books, so I can't remember the specifics of them. Anyway, he. What is Palantir? Palantir is a data analytics firm. Right. I mean, that's like, it's like the most benign sounding thing.

C (2:53)

It's a consulting firm in particular.

A (2:55)

Yeah. Except it was, you know, the idea is we're going to help government and business recognize patterns and mammoth amounts of data and work better. Right. And it was co founded though, with about $2 million from the CIA's venture capital firm. And yes, the CIA does have a venture capital arm and it sort of made its bones working for the government, you know, those, you know, shadowy agencies, the, you know, nsa, Department of Homeland Security, things like that. And it's now a 12 year old company, a 12 year old startup, which to me sort of sounds like a 40 year old virgin, but is nonetheless like, you know, somehow.

B (3:32)

So you're defining startup basically as any company that hasn't gone public.

A (3:35)

Well, so I actually want to talk about this.

C (3:37)

I gotta come on from. I think I might have mentioned this, but I just want to remind people that I gotta come on from Palantir to work for them as a data scientist.

A (3:44)

Oh, interesting.

C (3:45)

And the line that stuck out at me was we have competitive salaries for a startup.

A (3:51)

Yeah.

B (3:51)

Okay, so I really want to jump in here and talk about Palantir salaries, because Palantir is very, very famous.

C (3:57)

Yeah.

B (3:57)

For capping its salaries at $140,000 a year.

A (4:02)

Right.

B (4:03)

Although I think they recently gave everyone who's been there for a little while a 20% pay rise. So now they're making $170,000 a year. But this is right in the heart of Silicon Valley and this is where I do my ultra privileged white guy thing. Honestly, like, it's not that much. I mean, I feel so bad saying 170 grand isn't that much, but in Silicon Valley, in terms of cash, in terms of the amount of money you need to spend on a mortgage just to be able to house your family, it's not that much.

C (4:32)

And moreover, it's not the going wage for a data scientist with real experience.

A (4:36)

And so this is, you're starting to get a sense this might be a kind of quirky company. Right. I mean, they have, over the years there's been a lot of talk about kind of their Their torn sense of mission. You know, they're. The other co founder, Alex Karp talks about how he, you know, wants to make the world a better place through data and how he doesn't want to work for corrupt foreign governments at the same time he's doing spying for the US Essentially. So, you know, they have all these weird things about they're not, you know, they basically pay you like you're working at a nonprofit almost, in a way, like you have this higher mission.

B (5:02)

They do say that they're mission driven. Well, no, I mean, but this, this is, this is true. They say that they're mission driven. And one of the stated reasons why, why they pay below market salaries is precisely because they want only true believers to be working for them. And they have 1800 people working for them, many of whom are genuinely really smart data scientists. So it's not like they're having difficulty hiring at these relatively low salaries. So can Kathy or Jordan, can one of you explain to me what the attraction is of working for Palantir?

A (5:34)

Well, I think that'd be more for you. Should we actually talk about why they're in the news right now?

C (5:37)

I actually.

B (5:38)

Wait in a minute.

A (5:38)

Okay, we'll get to that event. We'll get to that eventually.

C (5:40)

I know some people that were very seriously concerned considering Palantir. And to be clear, they have two different sides to their business. One of them is government stuff where you need clearance. The other stuff is non government consulting. You know, you consult for large companies.

A (5:53)

And most of their money now, like over 50% of their money now comes from outside government work. That changed in the last couple of years.

C (5:58)

And, you know, I'll tell you what, like people who just got, who have PhDs in mathematics and have decided to make the switch to data science, if they get a job at Palantir, they're not going to stay there for more than two years, maybe a year and a half. They're going to learn the sort of cutting edge data science technology and then they're going to leave and they're going to be very marketable. That's a good reason.

B (6:14)

Okay, so it's basically like a lucrative postdoc.

C (6:18)

Yeah, it's a postdoc where you get paid.

A (6:20)

They also do some, I mean, legitimately cool stuff, like a lot of insider trading prosecutions have been accomplished using their software. You know, you have to piece together all these kind of disparate bits of data that suggest what kind of illicit activity might be going on in the markets. And that's the kind of thing they specialize in. So I mean they, it's not just snooping, but I guess we want to talk about why, you know, we were talking about big data being the future or not. The interesting thing that came out in the news this week is that Palantir is supposedly worth about 20 billion its latest. It was sold shares at a $20 billion valuation. Recently, however, some documents were leaked from Peter Thiel's own Founders Fund, his venture capital firm, showing that they valued it at about $12.7 billion at this like 38% discount. This is the carrying value. And so this raises, you know, these interesting questions about what, you know, again, we come back to this all the time. What do we mean when we talk about the value of these companies, these, the paper value of these, you know, quote, startups, these venture funded private companies and how, you know, is that a meaningful concept even?

B (7:25)

And this is one of the weird things which has happened. This is a very 2016 story is private valuations of private companies. Not even the valuations that companies ask when they raise money, but then they sell shares to Fidelity and then someone gets a piece of paper with fidelities carrying valuations or clarium capitals carrying valuations of founders funds and everyone's like, oh, this is an interesting data point. And frankly, I don't really understand why it's an interesting data point. And I've been fascinated to watch the evolution of Dan Primack, who's the kind of main journalist in the VC world who started off a few months ago when he started getting these numbers going, oh my God, look at these valuations. And it was a big story. And then after a couple of months of this just kind of gave up and said, no, there's no story here at all. Individuals will value illiquid securities wherever individuals value illiquid securities. And it's really hard, it's kind of silly to try and extrapolate anything interesting from that at all.

C (8:28)

Well, I think of venture capitalism as a sort of field, as like sort of a methodology of a sort of a hodgepodge of methodologies of trying to evaluate companies, right? And they're going to do a bunch of different sort of back of the envelope calculations and then they probably, they probably do it six different ways and they probably sort of average them to get something that they kind of believe and then they divide by two because everyone else, or multiple by, multiply by two, depending on whether it's a boom or a bust era, like very crude.

B (8:55)

My, my feeling about Founders Fund is that if they have a bun of Palantir shares in a fund which is doing really well right now, they have an incentive to kind of understate the performance of Palantir so that if they ever need a little bit of extra performance boost in a couple of years time, they can just write up their Palantir shares and, hey, look, we just made even more money in the past year.

A (9:19)

So here's, you know, one way I could actually see this having some real world implications maybe, which is that again, as you said, Palantir doesn't pay its workers very much by Silicon Valley standards, but they do give them pretty decent stock options, apparently. Or equity. Whatever. The question is, if suddenly you're working at Palantir and you see that Peter Thiel's own fund thinks your company is not worth the $20 billion you've been told, does that make you panic? Does that make you.

B (9:44)

No, it doesn't. Because Palantir has actually been providing liquidity to current and former employees, along with a bunch of interesting gag orders. Like, they're like, we will cash you out so long as you promise never to say anything about Valentin ever. You know, it's kind of weird, but they have been providing liquidity to employees at the official valuation, not at Peter Thiel's private valuation.

A (10:12)

Okay. And that's. But that's. That happens, like, intermittently, right? It's okay, but I guess enough.

B (10:16)

But it certainly isn't happening at whatever Peter Thiel invents his private valuation to be.

C (10:22)

I would just say that on the margin. I think Jordan has a good point. Like, if you're wondering, like, is it time for me to get a real job, you know, where I actually do believe in the mission, then this might not. And you, you might just say, I'll take that liquidity, you know, and I'll just, I'll get out of here. Because, you know, it's not looking. It's not looking like things are going up from here anytime soon.

B (10:42)

Well, isn't that actually the opposite? Like, the lower the valuation today, the more upside you have?

A (10:48)

Well, the lower, the lower the official valuation is. But if the official valuation is way above what everyone's private valuations are at these firms, then that might, that might give you a sense that, you know, things are as good as they're going to. This is as good as it's going to get, maybe.

C (11:01)

No, I mean, I disagree with you. I mean, like, look, you could think about it lots of different ways, but if we had found out that secretly, the Founders Club or whatever they're called, actually think that it's undervalued. That would have, I think, made us feel like, oh, this is, you know, when people wake up and realize that these really smart guys are right, this is going to be worth more anyway. It's obviously not a huge effect. It's not gone ipo, there's no actual stocks trading.

B (11:25)

But. Yeah, which brings me back to the question we started with earlier, which is what does it mean to be a 12 year old startup? And I think what it means is, number one, that you're VC funded, number two, that you haven't gone public yet, and possibly number three, that you're still losing money. And the interesting thing about Palantir is that after 12 years and now with some $1.7 billion of revenue, by all accounts, it is still losing money. Now, this isn't easy. When you're paying your employees below market rates and you have almost $2 billion a year of revenue, how do you contrive to lose money? I asked Will Alden this and Will Alden is the BuzzFeed reporter out in San Francisco who has been completely owning the Palantir beat for a while now. And he told me something interesting. He said that, yeah, they have like 1.7 billion of revenue, but of that about less than half a billion of that is cash. So in terms of cash flow, they're cash flow negative.

C (12:30)

So what does it mean?

B (12:31)

And then the rest of it is all of these weird sort of bonuses which get paid and payable in some weird kind of future way.

A (12:41)

It's like bookings. Is it like it's. Yeah, it's just like, we're going to get this money eventually.

C (12:45)

Maybe if we like your product, then we'll retroactively give you a bonus.

B (12:49)

It's all very odd. And Palantir, like, is notoriously secretive about everything, so no one really knows how it works.

C (12:56)

They have some pretty unhappy clients, too.

A (12:58)

Yeah, some of they've lost a few recently.

B (13:00)

There are all these wonderful stories in one of Will's earlier pieces about, you know, Coca Cola and various other clients just sort of complaining about these millennials at Palantir and the Palantir millennials going, oh, they're so old, they don't get us. It's all therefore, if the clients are unhappy, that the clients is crap.

A (13:18)

The phrase was low vision.

C (13:21)

I actually think that it brings it back to the income thing.

A (13:25)

Right.

C (13:25)

If you're only paying people sort of below market rate, then you're going to get. Young people are like, I'm going to get my feet wet in this and then I'm going to move on. You're not going to get the, the people that can talk to managers at Coca Cola.

A (13:36)

Yeah, I think that's, that's a superb point. Like you're going to get. If you, if you pay below market for young talent that's going to drink the Kool Aid. You're going to get people, young talent who drinks the Kool Aid and not someone who could sit down in a boardroom.

B (13:48)

So Kathy.

C (13:48)

Yeah.

B (13:49)

Tell me about another startup as in a vc, a VC funded company which never made any money and it just got bought for a billion dollars.

C (13:57)

I really feel like the lucky person of our trio today because I got to spend quite a bit of time reading and delighting in this ridiculous company called Dollar Shave, which just got the Dollar Shave Club. Sorry. Which just got bought for a billion dollars by Unilever, which is the third biggest consumer packaged goods company in the world.

B (14:18)

Just, just as a side note here, it took me a while to understand that there's, there's certain words which are different in English and in American, you know, we say aluminium and you say aluminum. In America there's this thing called cpg.

C (14:32)

Yeah.

B (14:32)

Which is, stands for consumer packaged goods. In England, you know what it's called?

C (14:36)

No.

B (14:36)

It's called fmcg.

C (14:38)

That's too much, too many letters.

B (14:40)

FMCG is fast moving consumer goods. Okay, so now you know. So this is either CPG or it's fmcg. And I'm saying this because Unilever is a British company.

C (14:50)

Yes, it is. It's British and Dutch.

B (14:52)

Yeah.

C (14:53)

And it's, it's old, it, I mean oldish compared to everything else that we've been talking about. It's from 1930. It's huge. It has like hundred countries have subsidiaries of this company. It's absolutely dominant in soap. Margarine.

A (15:08)

Yeah. Country Crock is one of their brands.

C (15:10)

Huge margarine producer, maybe like the biggest. It's competing with like Procter and Gamble and Nestle. Those are the two bigger ones.

B (15:18)

And. But yeah, it is a company which is built on soap and they know more about surfactants than any other company in the world.

C (15:25)

They knew a lot of, there's like a body care. I've got a couple, yeah. Dove, they own the Dove brand. They also own Lipton. So they're big on tea.

B (15:35)

So like second rate tea, kind of crappy tea.

A (15:37)

It's like there's not, there's not a brand you look at there on their website and go, ooh, yeah, there's nothing.

C (15:43)

Exactly.

A (15:43)

But that's, that's what the point is.

C (15:45)

That is the point. So they, they paid. So they. It was kind of an astounding sum. So usually people look at deals with respect to CPG companies in terms of how much revenue they have per year and how much, how many multiples of that they're being paid for. So it's typical that, you know, you'll buy something for twice or three times the amount of revenue per year. But with the, with this company dollar shaved a billion dollars, that's six, six times more revenue than it made 2015. It's probably. And they're expected to grow a little bit.

B (16:15)

They paid 6x revenues.

C (16:16)

Yeah.

B (16:16)

In a, in an industry where they normal. Where you'd normally pay 2x or 3x.

C (16:20)

Exactly.

B (16:21)

But the reason, I mean one reason would be normally if the, if the multiple is higher, you just have a higher growth trajectory that you, you know, it might be 6x last year's revenues, but maybe it's only 1x where you expect revenues to be in a couple of years time.

C (16:37)

Yeah, that, that's part of it. And I think, you know, it's. Let's just say what Dollar Shave Club actually does sends people men. It's a very male dominated company. It sends men razors on a yearly, on a monthly basis for $1 per month and $2 shipping and handling. I think that's the, the current deal. It's still very, very cheap. It's very, very consistent. People always need razors unless they decide to go beer. If they decide to go like hip.

A (17:05)

Like sometimes Jordan does, weirdly, they just both start staring at me even though I'm actually clean shaven for once in my life.

B (17:11)

Ish.

C (17:11)

So it's a very sticky sort of subscription model. Right. People don't cancel it. Well, like why would you cancel that?

A (17:18)

Also it's got some, I mean unlike most things that Unilever produces, people actually like Dollar Shave Club, like they have a personality as a company. They kind of broken onto the scene in 2012 with this, you know, really funny web ad that broke the Internet for a couple days where basically the owner. It was this sort of absurdist thing where the owner like came out, he's like, are. Was like, are our razors good? No, they're fucking great. And like walked around and talked about how you get so overpaid.

C (17:45)

I watched that video like four times yesterday as part of my research for this. You guys, we don't just Throw this.

B (17:51)

Joke together, you know, And I'll tell.

C (17:53)

You what, you know, it really reminded me of Animal House. Like, I swear to God, that guy. Is it frat humor?

A (17:59)

Is that what you like? He's a very charming frat bro.

C (18:02)

It's so my, like, my family is obsessed with the movie Animal House. It was like some people send their kids to church. My father made me watch Animal House.

B (18:08)

Did you make your teenage sons watch these ads?

C (18:13)

I made my teenage sons watch Animal House because I felt it was like part of my family's heritage. But it's like that. Remember when they get double, double secret detention and they, they try to argue their way out of it? There's that mock trial that is the. This guy who's the CEO and found of Dollar Shave Club could have been in that, you know, in that shot and nobody would have found him.

A (18:35)

So like, most razor companies, like, try to like, sell you on, you know, the tech in their blade or whatnot, or God only knows what tennis player is, you know, hawking or the kind.

C (18:47)

Of women you would date.

A (18:48)

Yeah, exactly. Whereas this guy just kind of showed up in an ad and he was like, yo, I'm a bro, just like you. I'm funny. I don't want to pay a lot of money for my razors. Neither do you. And so what, do you have a following?

B (18:58)

So what you guys are saying is that this is a marketing that they just did a very new and different kind of marketing, which is totally. Because, I mean, Amazon is actually really good now. You know, any kind of cpg, which you're likely to want, instead of pressing I want this, you just press send this to me once a month. And Amazon will do that just as well as anyone else.

C (19:19)

Yeah, no, it's, it's. This is. Has a personality. And by the way, the second follow up video, not sure you guys saw that because it was. Didn't go as viral. Was about wipes for your. For men's bottoms.

A (19:28)

Yeah.

C (19:29)

And I'm just. Two questions about that. Why only men's bottoms? Seriously, why. Why are wipes only good for men's bottoms? Second of all, does that clog up the plumbing?

A (19:37)

It actually does that. I lived in a house where that happened because one of my, my roommates was doing that.

B (19:42)

This is actually famously a big problem in certain neighborhoods in certain cities. Suddenly you get really into the whole like, use baby wipes instead of toilet paper thing. And then the plumbing just gets massively clogged.

A (19:55)

I had sewage come up through my.

B (19:56)

Tub because, okay, enough of this.

C (19:59)

The last thing I want to mention in terms of their unique marketing is that they, you know, they. They have this Bathroom Minutes magazine which comes with the razors, and it's like this kind of funny comic strip. So anyway, the point is.

B (20:11)

Yeah, when are we getting onto the big data?

C (20:13)

Yeah, sorry. The point is that what are they really buying? What is Unilever really buying? Unilever, who owns Margarine? They're really buying this email list. The people who, like, were taken with a social media campaign and bought into it and they're young and they have extra money because, I mean, presumably. And, you know, and so Unilever is trying to get jump into the big data social marketing business direct to consumers.

B (20:40)

Can you. The first thing I want to say here is that an email list is not big data. But the second thing I want to say is this was a very interesting and smart move by Dollar Shave Club. Now everyone knows that the standard model of selling razor blades is you basically give the handle away for free and then you charge a fortune for the replacement blades, Right?

C (21:06)

Yeah.

B (21:07)

And Dollar Shave Club has just like moved that entire thing up a level in that they're basically giving their razors away for free and then they're making money on a whole bunch of other things that aren't razors that they sell to the people who get the razors.

C (21:23)

Like, like cream to put on your face before you shave, that kind of thing.

B (21:26)

Or it doesn't even need to be shave related. It could be, you know, shorts to wear in the summer. It could be anything. But the point is they have this voice. They have an audience which trusts them and likes them. They have this ability to do marketing. And so once they have this kind of captive audience, they then use their. That captive, you know, the existence of this captive audience to sell that captive audience a whole bunch of other stuff that isn't razors. And that's where the profit margins.

C (21:51)

Absolutely. But I would push back a little bit. 3.2 million members, by the way. They're not considered subscribers, considered members of this club. That is big data. Big data is anything that doesn't fit into an Excel spreadsheet. I mean, it's a lot of people, and they're only at the beginning, I feel like.

B (22:07)

I feel like when we talk about big data, we talk about what Jordan was talking about in terms of Palantir, which is there is this enormous amount of data and I don't know what to do with it, which is kind of different from. I just have an email list with 3.2 million names.

C (22:20)

Well, of course they're not, they're not going to stop there. They're not going to just like spam that email list. What they're really going to do is create sort of attributes for these members, which of these members, when do they sign on, what else have they bought from us, et cetera. They're going to create profiles.

B (22:34)

That. And that is actually, that's the thing which I noticed after I bought a pair of Warby Parker glasses once, is that the marketing messages I would get from Warby Parker were so unbelievably personalized. It wasn't like we're just going to send every single person on our list the same email and see how it performs or maybe AB test and see which one does better. Like they would personalize everything. And if you have the ability to do that, then that is where you start getting into big data.

C (23:03)

And that's why they paid a billion dollars for it.

B (23:05)

So I want to end this little trio of big data anecdotes by talking about Elon Musk, who's along with Peter Thiel.

C (23:16)

Can I just say something? I'm sorry, but I don't know why, but I had a dream last night that Peter Thiel and Elon Musk were making out on the stage of the rnc and I woke up and I was like, no, that didn't really happen.

B (23:30)

Were they there with Reid Hoffman and Max Levchin and all the other PayPal mafia types? Yeah.

A (23:35)

I'm trying to pick my job off the the floor right now in case one case listeners are wondering why I went silent for a little there.

B (23:42)

So. So the, so the point is that Elon and Elon and Peter go way back. They founded this company together. They both complete nerds and slightly insane. Peter then went off and did his kind of investor thing. Elon went off and started just founding companies and wanting to change the world and created this company called SolarCity because he's really into sustainable energy. And also created this company called Tesla, which was all about cars. And 10 years ago in 2006, he wrote a blog post when Tesla was a really, really young company, basically saying and then title of the blog post was Tesla's secret master Plan. And it's kind of awesome and that's kind of awesomely Elon thing to do. And he explained what he was going to do because people didn't understand Tesla and he more or less did it over the subsequent 10 years. He's like, what we're gonna do is we're gonna make an expensive fast sports car, and then we're going to use the revenues from that to make a cheaper family four door car. And then we're gonna use the revenues from that to make an even cheaper entry level car. And he went ahead and more or less did. Oh, and by the way, and this is right in like the first paragraph of the ten year master plan. We are going to do this with solar power.

A (25:04)

Yeah, yeah.

B (25:05)

And he kind of did all of that except for the solar power bit. And then a month or two ago, he announced that Tesla was going to buy SolarCity, which is his other company, the solar power company. And everyone said, what is this? You never told us about this. And he's like, I told you about this 10 years ago.

A (25:22)

Which is actually kind of the equivalent of not telling anyone about it. Like, if you think about it, it's like, yeah, there was a blog post 10 years ago and no one knew who the hell I was. Like, it's all in the fine print.

B (25:31)

In any case, he has now come out with his second secret master plan. He's like, master plan part de.

C (25:36)

Part.

A (25:37)

Yeah.

B (25:37)

And, and so now we get to know what he sees Tesla doing in the next 10 years. And the solar power thing, he explains by basically saying that, you know, there's this important Tesla product which people haven't been paying a lot of attention to, called the power wall, which is a battery inside your house. The thing about powerwalls is you need to recharge them. And the obvious way to recharge them is to put solar panels on your roof so that those two tastes do kind of taste reasonably good together. Tesla is a battery company. You know, it makes batteries on wheels connected to computers. And so all of these things do kind of fit together. What people want to know is, are you just going to keep on making more and more different types of cars? And he's saying, yeah, I'm not gonna make another car which is even cheaper than the Model 3, which is the new one coming out.

C (26:31)

How cheap is the Model 3?

B (26:33)

35,000.

A (26:35)

It's still an expensive car by most American standards. But it's for a, you know, a pure electric. That's for a nice pure electric. That's, that's pretty cheap.

B (26:42)

But we're gonna get onto the reason why he thinks that that's dirt cheap in a minute, right? He's saying that the next thing he wants to do is make a truck, interestingly a big like semi and a futuristic bus. And. And then after that he's Going to make a futuristic bus. And though. And that more or less covers the. Oh, and the pickup of some description.

A (27:06)

Basically all major forms of transportation that get used in the U.S. but that's it.

B (27:09)

Like, he's going to do the semi, he's going to do the bus, he's going to do the pickup truck, and then he's basically like, that's, that's going to be the range. I'm not going to keep on making, you know, a billion different models. But yeah, what he is doing, and this is where the big data comes in, what he is doing is really setting his sights on our favorite company, Uber. And he wants to compete with Uber and he wants, because he already has this thing called Autopilot, which works a little bit like the autopilot on a, on a plane which is like yours, you have to be there as a pilot in control, but you can press a button, the car kind of drives itself and it's kind of like uncanny.

C (27:45)

Are we going to talk about that?

B (27:47)

And Autopilot. Autopilot is based on millions and millions of miles of driving data that Tesla cars have. And Elon Musk credibly says that it is already significantly safer than like human beings driving.

C (28:04)

I just, I'm just going to jump in there because we don't have that evidence. You know, as far as I understood it, human beings die about once every 100 million miles of driving. And the Tesla death, which happened a couple weeks ago when the Tesla computer didn't, didn't see a white truck when it was looking into the sun turning onto the road, that was after 110 million miles for Teslas. I'm getting the my units wrong. But the point is that it was just very, a very little bit more than the typical thing for humans. But if it's just one data.

B (28:39)

If one data point, so. Yeah, exactly. So. So you can't extrapolate anything from.

C (28:45)

He's claiming.

B (28:46)

No, he's not.

C (28:47)

Yeah, he's.

B (28:48)

No, he's not. He is not taking that one data point and extrapolating from that one data point what he's saying, what he was saying before there was a death point, he was saying. After there was a. He's saying deaths are random. You can't predict deaths. They're going to happen in some kind of stochastic way. He's saying that looking at the way that cars drive in Autopilot and the way that humans drive, you can examine those two things and you can conclude that the way that cars drive is safer. Now, we don't have the data that he's looking at. We don't know how right he is. But he's not just taking that one data point and saying because of this one data point.

C (29:23)

Well then I don't then. Okay, then he needs to show us the data.

B (29:25)

Right. So. But what he is very clearly saying is that Autopilot needs to be 10 times safer than human driving. Not just a tiny bit safer, but he's saying it's very, very, very early days right now, that right now it's a little bit safer and it can save lives probably at the margin perhaps, but it is improving every day. And this is one of the interesting things about Teslas is it's not just like you buy a car with Autopilot in it and then you know you have to buy a new Tesla in order to get the better Autopilot. These things are updated over the from the cloud every day. And so the Autopilot is improving absolutely every time, every week you drive it.

C (30:09)

And I'm by the way total of it over time. I feel like in 20 years we're absolutely going to be having.

B (30:14)

And what he's saying is that eventually when the Autopilot is literally 10 times better than it is now, then at that point what we have is a self driving car.

C (30:26)

Sure.

A (30:27)

So, well, and do we get to the last point which is when he said he wants to take on Uber, he literally wants people to be able to rent out their cars when they're not using it. And that's your point about why it would be very cheap to or to essentially send out their self driving car as a cab when they're at work. So that, that's the final part.

B (30:42)

People don't use their car for 95% of the time that they own it. And so rather than just having it sit in the driveway, people, other people can just order it on their phone.

C (30:52)

I totally think that's brilliant.

B (30:53)

It makes sense.

C (30:54)

And it's like somehow combining Uber and Zipcar. So like Zipcar you reserve the time when you want it. Right. So owners can reserve the time for they want their car.

B (31:02)

Now of course Uber has had this idea for just as long as Tesla has. Like Uber is using human drivers right now because there are no self driving cars. But Travis Kalanick, the CEO of Uber has been incredibly open about the fact that he can't wait for self driving cars to come along because that will make his life a lot easier as well. So then you just have head to head competition between Uber and Tesla and that is genuinely the kind of competition which is good for consumers and good for traffic accidents and good for lots of people.

A (31:34)

I think, you know, coming back to the timing of this is interesting and obviously I think it has something to do with the accident also, you know, he, to some extent this is pr. This is him saying, oh, there's been all this negative publicity around the, you know, these, you know, couple deaths we've had now, I think two total involving self driving. There were some questions about whether or not Tesla had withheld some pertinent information about one of those accidents before selling off some shares to shareholders. There's also the fact that it's still losing money. So he's kind of coming out now with something to say, okay, look at my grand vision for the future again. So I think we should also just emphasize the timing of this. You know, there's a big PR element. There's been a lot of negative attention on, on Tesla because of these. There have now been two deaths involving Autopilot. There has been the fact that he may or may not have purposely withheld that information before selling some stock in the company which, you know, Fortune and him have been at war over whether or not he was duping shareholders. And then finally there's the fact that it's still losing money. So, you know, he's coming up this grand vision at a moment where I guess maybe he does feel misunderstood again. I don't know.

B (32:43)

So this is, we come back to this question of what is a startup. Tesla fails one of the criteria and it is a public company, but it kind of looks and feels a bit like a startup because it's very much a founder driven company which is still losing money after 10 years. And one of the interesting things about the master plan of 10 years ago is that 10 years ago what he didn't say because it was a public company or it was about to go public, what he didn't say was we are not going to make money for the next 10 years and in 10 years time we're still going to be losing money. It turns out that that was actually quite a smart way of running the company because it doesn't matter if you lose money just as long as your share price is going up, people believe in your vision. And he has been able to raise an enormous amount of money in the stock market, using the stock market as a primary funding mechanism and using that money to continue to invest in factories. I mean, one of the things he says in his new blog post is that mainly what Tesla is going to be is a factory company. It's going to make the best factories in the world and that's where the real value is going to be. So he's been very good at selling his, the future of his company to the stock market. And that is in a way the best and most positive thing that I can say about Elon Musk is that in a world of stock buybacks where companies are making huge amounts of money and they don't know what to do with it and they just wind up buying back their own stock because they have nothing better to do. Elon Musk is one of the very, very few people who's using the stock market in the way that God intended, which is to raise money, to invest that money in the future.

C (34:29)

Yeah, yeah. And by the way, the big differ between Elon Musk's vision and Uber is that he really wants it to be solar powered. If that really happens, good on him.

A (34:40)

Yeah, I mean he has a whole like, I mean also there, there's an element of kind of locking people into an ecosystem there. Right. Like he want, it's almost like an Apple idea where he wants to have, you know, a solar city, you know, you know, essentially Tesla solar roof now on your home. That's going to be beautiful.

C (34:54)

It's like a huge Disneyland.

B (34:56)

But it's not. There's, there's no sense in which that locks you in. Electricity is the, is even more fungible than money. You get electricity from the grid, the grid gets electricity from a million different places. Yes, your solar panel on your roof can make your needs from the grid go down or it can even be a profit center if you then sell that electricity back to the grid. But it's not like once you enter your. Once you've bought your solar panel from Tesla, then suddenly that's the, you know, you're locked into that and you can't get electricity from anyone else.

C (35:28)

One dystopian science fiction fear I have about this. One of the things that many of the people say when they talk about self driving cars is how much better traffic will move because every car will be aware of every other car, et cetera.

B (35:39)

But it's called convoying and it already exists. Volvo. This is one of the things which no one knows. Volvo already has this on its trucks. If you have five trucks that you want to get from A to B. If you, if they're all Volvo trucks and they're in Sweden, I think they only do this in Sweden or maybe in Germany as well, they will all get onto the highway together and they will drive like just maybe a foot or so away from each other. And they're all connected by computer so that they all brake at the same time and they all accelerate at the same time. And that makes them much more aerodynamic and much more efficient and it really saves a lot of money.

C (36:19)

Okay, so yes, it works in that sense, but I'm just, my stupid point is, once it's like solar powered and self driving, people will be like, oh, I'm going to go to Chicago for the weekend and I'll just sleep in my car. And basically my fear is that everyone is going to eventually just live in a car being driven around to the next person they want to see.

B (36:39)

This is conceivable.

A (36:40)

On which note, we could all live in a Tesla Winnebago or something.

B (36:43)

Exactly. Yeah. I'm going to, I'm going to wait for the, the Tesla pickup truck to come out and then I'm going to attach a really, really old school Airstream trailer to the back of my Tesla pickup truck. And then I'm just going to drive around the country in my Tesla powered S3.

C (36:59)

Oh, it's going to drive you.

B (37:00)

It's going to drive me. As ever, the numbers round. Kathy o', Neill, what is your number?

C (37:05)

I'm so proud to say my number.

B (37:06)

Guys, what is your number?

C (37:08)

10 million. 10 million. That's the number of dollars a year that women in New York State will now save because the tampon tax has been. Yes.

B (37:17)

Kathy wins.

C (37:18)

High five. My lawsuit.

B (37:19)

We remember that. This is Kathy as a plaintiff in this lawsuit. She sued New York State saying stop charging sales tax on tampons. And guess what? New York State stopped charging sales tax on tampons. Congratulations. You win.

C (37:31)

Yes.

B (37:32)

Jordan, what's your number?

A (37:33)

My number's two. Two. There were two lawsuits filed by the Justice Department this week seeking to stop some major health care mergers. This is the kind of extremely boring, extremely important economic news that once in a while we like to try to highlight here at Slate Money, possibly in vain.

C (37:50)

And sex them up a little bit.

A (37:51)

And sets them up a little bit. So basically, Aetna wanted to buy Humana and Anthem wanted to buy Cigna. You may, one of these companies may provide your health care. They're four of the five biggest insurers in the country. And, you know, you can talk about the economics of health care and all this here, but really what I think is just interesting to reflect on is this growing sense among Democrats and kind of progressives that antitrust is really gonna be a key thing going forward. And I think you're just gonna see if there is a Democratic administration and at the tail end of the Obama administration, just more and more of these gigantic mergers getting held up by the Justice Department, being interfered with, getting scuttled. I think there's a sense that big is not better so much anymore for the economy. And this has been. And competition is good and competition is good. And that's actually kind of a change over the past 30 years. You know, it's not all just about, you know, they're questioning the efficiency gains of these massive mergers. And one day I would love to wonk out about this for a full segment.

B (38:47)

Okay, that's enough. Walking out for the numbers round. My number is $32 billion, which is the amount of money that SoftBank, the mysterious Japanese company, is paying for. ARM, which is an English company which designs chips for mobile phones and Internet of things and that kind of stuff. And it is kind of a Brexit number. Like it. The SoftBank is paying in pounds and the pounds became a little bit cheaper. And ARM services, because they're denominated in pounds, are a little bit more affordable now. And also it's a bet on the future of phones and Internet of things and all of this kind of stuff. But I feel like ARM is more or less the only company in all of Britain where you can really say that, where you'd be able to point to it and say, ah, you're going to really benefit from Brexit. I feel like it is the one and it has now been bought by SoftBank and so it's over. Nobody else and everyone else like, does, you know, needs trade deals and stuff like that. ARM doesn't need trade deals. It just sells intellectual property. It doesn't make any chips, it just designs the chips. Everyone else is either selling goods or services. And I think there was this little brief glimmer of hope when this deal got announced that, hey, look, this means that Britain is an attractive place for investment. But I kind of think this is a very unique deal.

A (40:14)

This is the exception that proves that we're talking.

C (40:15)

We'll keep our eyes out.

B (40:18)

Keep your eyes out, listeners, please. If you hear any more of these kind of deals, do send us a email. Our email address is, as ever, slatemoneylate.com and that's it for us this week. All it falls to me to do is to thank Veralyn Williams, the producer, the executive producers, Steve Lichti and Andy Bowers, and to point you to all of the other Panoply podcasts, which you can find@itunes.com panoply so we'll talk to you next week on Slate Money.