Investing With Geniuses
So the Uber CEO was on “Good Morning America” yesterday to talk about how the ridesharing company plans to introduce autonomous flying cars, or flying robot taxis, or whatever you want to call them. Apparently this is where we are in Tech Land these days...
If I had to guess, I'd say this Uber guy definitely went to the same CEO school that Elon Musk went to. Let's call it Ringling Brothers’ Barnum & Bailey Business School. And why shouldn't I guess? These guys clearly aren't playing by any established rules I'm aware of.
I mean, Tesla's Elon Musk has said he's going to Mars. He's started a company that makes and sells flamethrowers. He said he's going to make robot dragons, presumably with a flamethrower so it can breathe fire, you know, like real dragons do.
Just the other day he said he wants to start a candy company...
OK. I guess geniuses can do what they want. Seems to me, getting Tesla to the point where it can turn a profit and maybe even raise production estimates once in a while instead of always lowering them would be a good idea. I feel like Musk should try channeling his inner Charles Emerson Winchester III...
But what do I know. Me + my brain = not a genius...The thing about these geniuses that I actually do admire is the vision, the imagination. The ability to dream something up and make it real and consumer friendly so that it changes the world. Like iPhones.
Everybody knew smartphones were coming, but dang. Steve Jobs just crushed it. Now Apple is ~10% from being a ONE TRILLION-DOLLAR company. Yep, investing in the Steve Jobs genius has worked out pretty well.
I don't think Elon Musk investing is going to turn out so good. The stock has probably already seen the highest prices it ever will.
Now, in Elon Musk's defense, Tesla's achievements are pretty amazing. I think it was genius to realize that the first electric vehicles (EV) shouldn't be for the mass market. They should be luxury items, toys for the wealthy. Ford and GM didn't figure that out. They were stuck in an economies-of-scale mindset, trying to design electric cars that everyone could afford.
I also think Musk cut the timetable for EV acceptance by a huge amount. And the ramifications of this — things like innovations in battery tech and fast-forwarding peak oil demand — have indeed changed the world. That's a pretty good legacy right there.
I don't know why he's going total wingnut and using margin to buy Tesla stock on the open market to try and burn the shorts and keep the price up around $300.
It's dysfunction on a Shakespearian scale. He's King Lear (doesn't know what he has), Macbeth (driven by ambition), and Julius Caesar (stabbed). OK, Musk probably won't get stabbed. But I bet at some point he will be uttering his "Et tu, Brute" to the Tesla board when they oust him to save the company. Kind of like what happened to Uber's former CEO...
Now, I'm not about to call anybody at Uber a genius. Because, flying taxis. This is bluster. I'm not going up in one of those infernal contraptions. And definitely not in the two years they say it will take to have them ready to roll, er, fly.
I am completely unconvinced that flying taxis is something people want (unlike robot dragons). But hey, if flying taxis can make it, maybe my network of catapults and big nets stands a chance.
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In March, one of Uber's autonomous cars killed a lady who was crossing the road with her bike in Tempe, Arizona. Investigators have just this week announced why this tragedy happened. Apparently the cars are programmed to ignore some objects in their path. The example of "like a plastic bag" appeared in several articles.
No jokes, this is a serious screw-up. Perhaps even criminally negligent.
I firmly believe that autonomous cars will be standard fare within the next decade. Ford is already planning for it, as my man Jason Stutman pointed out in a terrific Wealth Daily article last week. And there are going to be radical changes for finance and insurance companies as ownership patterns change. Imagine commuting to work in the Starbucks car — the ride is 50% off if you buy a macchiato...
But can we just make sure this whole autonomous software thing is seamless in cars before we attach it to a helicopter? You know, do ONE thing at a time and do it VERY WELL? Thanks. Really.
The $200 Billion Problem
Of course, getting the autonomous car software to work right is one thing. But we will also need a whole new wireless network so the cars can communicate with each other. You simply can't have dropped calls when you're passing a truck at 70 mph on the highway.
As a Wealth Daily reader, I expect you're probably pretty well informed about what's coming down the pike. You're probably nodding your head and saying, "5G will take care of that problem." And you're right, it will. But how long will it really take? And how much will it cost?
We are supposedly going to see the first 5G service out later this. Full rollout is estimated for 2020. And Bloomberg says it may cost $200 billion a year (though it didn't say for how many years).
Do you know how much debt Verizon is carrying right now? $117 billion. That's billion, with a "b."
Sprint is a $20 billion company with $36 billion in debt. AT&T is a $194 billion company with $165 billion in debt.
Given how much it will cost, I do not see how Verizon et al. is going to roll out 5G in a timely enough fashion to make driverless cars a reality in two years, let alone flying taxis.
Yes, there's talk that the government might help foot the 5G bill. Trump has suggested it. And driverless cars may use onboard communications systems instead of cell networks to avoid the whole dropped call thing. We'll see...
Point is, you gotta be careful when you invest in the promises of geniuses. The promise is sometimes far more exciting than the returns you get.
Until next time,
P.S. Later this week, I'm sending around an invitation to witness the unveiling of a brand new investing strategy I've developed. This is unlike anything Angel Publishing has done before. I'll give you a hint: think algorithms. You'll learn more this week, so keep an eye on your email.
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