Articles/megaposts by DaveT

[EinSV]

I was recently interviewed by Rob Maurer of the Tesla Daily podcast.

Enjoy.

09.25.17 – Interview (DaveT, Long-Time TSLA Investor) – TechCast Daily

Hi Dave,

Really enjoyed the thoughtful interview -- thanks for posting.

On some of the business lines you are more skeptical about -- TE for example -- Tesla's ability to innovate rapidly and effectively may continue to provide an edge that makes it hard for the competition to catch up, even without fundamental breakthroughs of the kinds you mentioned. For example, given how late to the party they were and the strength of the competition they really had no business getting out ahead of the industry on autonomy. Yet somehow they managed to pull it off. Similarly, the vast improvement between Powerwall 1 and Powerwall 2 in just one generation resulted in the competition being far behind on price/value proposition, which is showing up in something on the order of 80% of new California residential installs subject to the SGIP going to Tesla.

The intense pace of innovation and speed with which innovations are turned into compelling commercial products is a competitive edge I don't see being matched by anyone any time soon in Tesla's main businesses. Assuming they can continue to innovate at a breakneck pace as they grow into a large entity (not a foregone conclusion but likely with Elon in charge), IMO it is likely that Tesla will continue to put distance between themselves and the competition in EVs, batteries, solar roof and Semi, rather than the competition closing the gap.

I really liked your description of the value Tesla's non-auto product lines bring in terms of building the ecosystem, etc. But I think you may be underestimating how valuable they will turn out to be in their own right. Time will tell one way or another.

 

[SBenson]

@DaveT what other stocks are you currently investing in? if none, are you considering/researching any?

 

[wdolson]

Very insightful interview. Thanks!!

Question about Tesla Network:

A lot of people believe that an ICE-AV is fundamentally uncompetitive to an EV-AV... Even if Google, Apple etc want to give the AV tech away for free to automakers, unless automakers are fully into EV making they will still remain uncompetitive right. So for others to put up a fight, they would have to 1) Google/Apple/etc have to develop the AV tech 2) Automakers have to fully integrate into their manufacturing processes (this can take a long time) 3) Develop EVs, fast charging networks or battery swap stations 4) Someone will have to build/operate a network to use these (maybe Uber/Lyft can short circuit this)... It still feel like Tesla has a potential lead of substantial magnitude.

Even if others come in with their own AV networks and try capitalising through ads and content, instead of fares, in theory Tesla could do the same. So an av network can be as lucrative to Tesla as it might be to other big players... Going to your FB example that's what happened right. FB became a behemoth in online ad market, despite Google being there already. So Google/Apple/Uber etc being already there in an AV network doesn't preclude Tesla from making it big there.

Overall I'm having hard time believing that Tesla may not benefit substantially from this. The key risk to Tesla as I see is the risk that it won't be able to attain FSD in a reasonably competitive time. As it stand right now, Tesla seems to be limping. But if it does attain in a good competitive time then Tesla has a fair chance of monetisation I feel.

For the record, I do agree with the Tesla Energy part.

If AVs are going to be used for commercial taxi-like purposes, EVs eat ICE's lunch on the cost per mile. EVs are significantly more energy efficient, the cost of energy per mile is usually much cheaper, and EVs require a lot less maintenance. EVs also promise to have more trouble free miles than ICE. They have many fewer moving parts.

 

[andrewt3000]

So for TSLA we all know it is insanely overvalued based on past/current fundamentals.

Elon Musk:

Exactly. Tesla is absurdly overvalued if based on the past, but that's irrelevant. A stock price represents risk-adjusted future cash flows.

I think you're on the right course. You need to predict the future to some extent, which is extremely difficult to do if need accuracy. One can say in 10 years more GPUs will be sold than today, but that's so general that's it not helpful. But to get an idea of what the market for GPUs will be in 10 years, one needs to deeply understand the companies and industries that will be in need of GPUs and what their needs will be. Also, one needs to understand NVDA's competitive advantage and if that competitive advantage will be sustainable... not only among current competitors but against future ones too. Also, I think it's important to understand what NVDA is doing to create certain AI platforms. Many startups building AI are building on top of what NVDA provides. But, why? And is that advantage sustainable over time? Another thing with NVDA is the need to understand their data centers and when and if their data center growth plateaus, and what kind of margins they carry.

The problem is that most NVDA investors can't answer even 1/2 of these questions (or even 1/3 or less?).

Give me an hour with a super knowledgable NVDA investor and I'll draw out all this info from that person, if that person really knows what they're talking about.

I have struggled with this problem on NVDA. I am a programmer and I know a little bit...

NVidia was a sleeper hit... they make graphics cards that seemed like an unimportant PC subsystem... but it's turning out to be more important than the cpu... It can be used for games, crypto-currency mining, AR, VR and machine learning. The opportunity in front of them is huge. They may be bigger than Intel down the road.

Their advantage imho is CUDA. It's a proprietary api that runs on their cards and is considered superior (faster) to competitors and open standards like openCL/GL. A lot of open source machine learning software uses cuda at the lowest levels.... So it has an ecosystem around it that is going to be hard to overcome, much like windows operating system.

However, there may be competition. Currently AMD is their main competition. Intel also recently bought Nervana to compete with them.

Google has written TensorFlow, an open source machine learning library, which runs on cuda or on their own proprietary chips called TPUs. These chips are not available for sale but you can use them in the Google cloud. Google cloud has not really taken off yet and I dont know if it will.

Also, Tesla has been hiring people with expertise in chip making... so they may also build their own chips to process their self driving/machine learning apps. Tesla is buying chps from Nvidia in 2 ways. One way is in the cars... to do the self driving (inference) and the other way is the presumably have a data center that processes the (training) data from all the cars and generates the program that is downloaded to the cars. I suspect Tesla will also need the same chip technology in their factory automation.

Elon recently said that it was close when deciding between NVidia or competitors... I assume that was a bullshit statement for negotiation purposes... Here is a thread where machine learning programmers bemoan NVidia's dominance and links to papers that indicate CUDA is 4x faster than OpenCL

Deep learning is so dependent on nVidia. Are there any alternatives even on the horizon? • r/MachineLearning

 

[andrewt3000]

I was recently interviewed by Rob Maurer of the Tesla Daily podcast.

Enjoy.

09.25.17 – Interview (DaveT, Long-Time TSLA Investor) – TechCast Daily

This was an insightful interview... I often have thought that TE faces a tough competition and may not have huge margins like their auto business... I think that is a good way to look at it... That TE is part of their ecosystem.

However, I am more optimistic about Tesla and their self driving program.... I don't think there will be a lot of winners in that space, and I doubt it will be a commodity. The reason is.... data.

Tesla has a good technical team... people like andrej karpathy, but so do other companies... Google, Apple, Mobile Eye, Uber, GM Cruise, Baidu. But Tesla is the only company that also has access to a large fleet that tests and inexpensively sends back data. I don't see a path towards anyone else collecting this data.... why? Only another car company could do it. It took google years to collect a million miles of data, but Tesla gets back hundreds of millions of miles of data from their fleet every year and it's growing as their fleet grows. The tech (Google/Apple/Baidu) and ride share (uber and lyft) companies fleet's consists of their own vehicles which are expensive... Tesla has access to a fleet and the customers are paying for the privilege of sending them data. The car companies... at least for now... are dragging their feet on connectivity to their vehicles. I don't know if it's privacy or that they don't want to do updates without forcing you to go to a service center... or they don't want to update software on old model cuz of planned obsolescence .... but they just aren't doing it. Plus many of the car companies depend on mobile eye for their self driving tech so the feedback loop could have integration challenges.

So.. Tesla, for now, is the only one with a viable strategy to collect large amounts of driving data (billions of miles). I can't overemphasize how important data is. Sharing data was one of the deal breakers for Tesla and MobileEye. Peter Norvig, an AI luminary at Google, said (in reference to their search engine): "We don’t have better algorithms. We just have more data." Google is a search engine monopoly... the data about what people are searching for sustains their monopoly. I think it's likely that Tesla will end up in a self sustaining monopoly based on data acquisition... especially if Tesla Network is launched... where the cars are running virtually non-stop and collecting data.... if they do that before anyone else gets a good data collection strategy... it will be game over.

As the economist said... "The world’s most valuable resource is no longer oil, but data"

 

[DaveT]

Elon Musk:

Exactly. Tesla is absurdly overvalued if based on the past, but that's irrelevant. A stock price represents risk-adjusted future cash flows.


I have struggled with this problem on NVDA. I am a programmer and I know a little bit...

NVidia was a sleeper hit... they make graphics cards that seemed like an unimportant PC subsystem... but it's turning out to be more important than the cpu... It can be used for games, crypto-currency mining, AR, VR and machine learning. The opportunity in front of them is huge. They may be bigger than Intel down the road.

Their advantage imho is CUDA. It's a proprietary api that runs on their cards and is considered superior (faster) to competitors and open standards like openCL/GL. A lot of open source machine learning software uses cuda at the lowest levels.... So it has an ecosystem around it that is going to be hard to overcome, much like windows operating system.

However, there may be competition. Currently AMD is their main competition. Intel also recently bought Nervana to compete with them.

Google has written TensorFlow, an open source machine learning library, which runs on cuda or on their own proprietary chips called TPUs. These chips are not available for sale but you can use them in the Google cloud. Google cloud has not really taken off yet and I dont know if it will.

Also, Tesla has been hiring people with expertise in chip making... so they may also build their own chips to process their self driving/machine learning apps. Tesla is buying chps from Nvidia in 2 ways. One way is in the cars... to do the self driving (inference) and the other way is the presumably have a data center that processes the (training) data from all the cars and generates the program that is downloaded to the cars. I suspect Tesla will also need the same chip technology in their factory automation.

Elon recently said that it was close when deciding between NVidia or competitors... I assume that was a bullshit statement for negotiation purposes... Here is a thread where machine learning programmers bemoan NVidia's dominance and links to papers that indicate CUDA is 4x faster than OpenCL

Deep learning is so dependent on nVidia. Are there any alternatives even on the horizon? • r/MachineLearning

Wow, this is immensely helpful. Probably the best thing I've read on TMC in a long time.

Helps me understand what Marc Andreesen was saying in this article:
The New Intel: How Nvidia Went From Powering Video Games To Revolutionizing Artificial Intelligence

"We've been investing in a lot of startups applying deep learning to many areas, and every single one effectively comes in building on Nvidia's platform," says Marc Andreessen of venture capital firm Andreessen Horowitz. "It's like when people were all building on Windows in the '90s or all building on the iPhone in the late 2000s.

"For fun," adds Andreessen, "our firm has an internal game of what public companies we'd invest in if we were a hedge fund. We'd put all our money into Nvidia."

 

[austinEV]

On the topic of "breaking off and forming a walled garden of hand picked geniuses", this comes up all the time, after a big run up when people are feeling smart. Here are the old break-out websites you can check where people have tried. They are dead ghost towns if you don't want to click. Being attached to the actual enthusiast community (What TMC is supposed to be) provides a constant stream of new people which is vital for the successful, albeit messy, investor community.

The Contrarian Investor Discussion Board
Investnaire.com

 

[Lump]

I don't have a problem with a "hand picked geniuses club" (it will be entertaining), I would ask all members be Tesla owners, people who actually picked up a pen & wrote a check to Tesla, that would eliminate many.
@MitchJi can you share your ownership experience with the rest of us?

 

[EinSV]

I don't have a problem with a "hand picked geniuses club" (it will be entertaining), I would ask all members be Tesla owners, people who actually picked up a pen & wrote a check to Tesla, that would eliminate many.
@MitchJi can you share your ownership experience with the rest of us?

@MitchJi has made many valuable contributions to this board, including some very helpful work on battery costs. Perhaps you will contribute something equally useful at some point rather than taking endless potshots at other members.

 

[Lump]

@MitchJi has made many valuable contributions to this board, including some very helpful work on battery costs. Perhaps you will contribute something equally useful at some point rather than taking endless potshots at other members.

Are you in favor of a "hand picked geniuses club"?

 

[EinSV]

Are you in favor of a "hand picked geniuses club"?

Not really. I learn useful info from lots of members and as others have said people come and go so I am not sure it would work. I make liberal use of the Ignore button which helps.

 

[austinEV]

The HPGC would quickly fail once the 10 posters said everything they knew to say, then people would stop checking it. Human nature of a club. If you kick out the least popular members of the wine club to make it better and close off new entries the wine club is dead. People will quit, drift away, you have heard everyone's stories and it dies very quickly. You have to put up with Janice and her annoying laugh if you want the club to keep going, because next month Janice brings in her sister-in-law who is awesome and expands the network thereafter.

 

[JRP3]

I don't have a problem with a "hand picked geniuses club" (it will be entertaining), I would ask all members be Tesla owners, people who actually picked up a pen & wrote a check to Tesla, that would eliminate many.

Guess I'm out until I get my Model 3. Unless a credit card deposit counts.

 

[DaveT]

On the topic of "breaking off and forming a walled garden of hand picked geniuses", this comes up all the time, after a big run up when people are feeling smart. Here are the old break-out websites you can check where people have tried. They are dead ghost towns if you don't want to click. Being attached to the actual enthusiast community (What TMC is supposed to be) provides a constant stream of new people which is vital for the successful, albeit messy, investor community.

The Contrarian Investor Discussion Board
Investnaire.com

I largely agree with you if you want an online community/forum the most important thing is the constant flow of new members. In marketing terms, it's called funneling. You need a large funnel (ie., visitors, viewers) in order to get people who actually post. Thus, any site/community that doesn't have a large funnel will likely experience a lot of difficulty sustaining the community as members always leave for various reasons and you need more new members to sustain growth/activity.

However, there are actually a lot of ways to create a large funnel, and having a online forum is just one of many ways to do so.

 

[DaveT]

The HPGC would quickly fail once the 10 posters said everything they knew to say, then people would stop checking it. Human nature of a club. If you kick out the least popular members of the wine club to make it better and close off new entries the wine club is dead. People will quit, drift away, you have heard everyone's stories and it dies very quickly. You have to put up with Janice and her annoying laugh if you want the club to keep going, because next month Janice brings in her sister-in-law who is awesome and expands the network thereafter.

Actually there are a ton of private mastermind groups out there and they do quite well. For example, there are very small groups of people who have succeeded in online marketing and have an exclusive private group where they share and help each other. They usually aren't publicly viewable. And they usually are quite small (ie., under 10 people). Some work very well, some might fade and disappear. A lot of it depends on the leadership of who's leading the group. It helps if the group has face-to-face activities as well (ie., once a year they get together). There are some global business leader networks that have monthly face-to-face meetings in small local groups as well.

FYI, more info on what a mastermind group is, What is a Mastermind Group? A Definition, plus articles, classes | The Success Alliance. That said, I'm not really interested in a typical online forum, or even private forum, or even mastermind group. I think all of them have some inherent flaws/challenges, as well as benefits.

I'm mostly interested in what would significantly help me in regards to my next 3 or 4 big investments over the next 15 years, and if it can help others as well that would be great.

 

[MitchJi]

Are you in favor of a "hand picked geniuses club"?

You are the person who suggested a hand picked geniuses club.

What I suggested is using moderators who would work together to place destructive posts in one or two dedicated threads. And break off long "the sky is falling" discussions into dedicated threads. I think quite a few members of this forum could handle that. The main difference would be that the posts that many of us ignore, and the associated replies would not be in the main threads. I haven't seen any reasons posted for why that would not work.

Since you seem to be more interested in personal attacks than providing solutions or advice ("lump being lump") you are probably not a good choice for a moderator.

No bad feelings towards you!

 

[Lump]

You are the person who suggested a hand picked geniuses club.

What I suggested is using moderators who would work together to place destructive posts in one or two dedicated threads. And break off long "the sky is falling" discussions into dedicated threads. !

How many Mods have signed up so far & have they gotten approval from the board owners?

 

[MitchJi]

Thank you!

@MitchJi has made many valuable contributions to this board, including some very helpful work on battery costs. Perhaps you will contribute something equally useful at some point rather than taking endless potshots at other members.

He started the personal attacts after I made posts documenting trumps corruption and Bernie's statements that trump is a pathological and delusional lier:

Stupidity or he just doesn't care?

Donald Trump’s Worst Deal
The President helped build a hotel in Azerbaijan that appears to be a corrupt operation engineered by oligarchs tied to Iran’s Revolutionary Guard.

<snip>
A former top official in Azerbaijan’s Ministry of Tourism says that, when he learned of the Trump hotel project, he asked himself, “Why would someone put a luxury hotel there? Nobody who can afford to stay there would want to be in that neighborhood.”

The Azerbaijanis behind the project were close relatives of Ziya Mammadov, the Transportation Minister and one of the country’s wealthiest and most powerful oligarchs. According to the Transparency International Corruption Perception Index, Azerbaijan is among the most corrupt nations in the world. Its President, Ilham Aliyev, the son of the former President Heydar Aliyev, recently appointed his wife to be Vice-President. Ziya Mammadov became the Transportation Minister in 2002, around the time that the regime began receiving enormous profits from government-owned oil reserves in the Caspian Sea. At the time of the hotel deal, Mammadov, a career government official, had a salary of about twelve thousand dollars, but he was a billionaire.
<snip>
Wrage told me that, in 2009, an American entrepreneur was successfully prosecuted for his part in a corruption conspiracy in Azerbaijan. Frederic Bourke, the co-founder of Dooney & Bourke, the handbag company, had invested in a project in which a foreign partner paid bribes to Azerbaijani government officials and their family members. Bourke was sentenced to a year in prison for violating the F.C.P.A.; he appealed the conviction, claiming ignorance of the
corruption. Two years later, the U.S. Court of Appeals for the Second Circuit upheld the conviction, saying that, regardless of whether he had known about the bribes, “the testimony at trial demonstrated that Bourke was aware of how pervasive corruption was in Azerbaijan.” The F.C.P.A., they said, also criminalized “conscious avoidance”—a deliberate effort to remain in the dark about any transgressions a foreign partner might be involved in. After Bourke’s conviction, Wrage said, U.S. companies were well aware of the dangers of making careless deals in Azerbaijan.

Even a cursory look at the Mammadovs suggests that they are not ideal partners for an American business. Four years before the Trump Organization announced the Baku deal, WikiLeaks released the U.S. diplomatic cables indicating that the family was corrupt; one cable mentioned the Mammadovs’ link to Iran’s Revolutionary Guard. In 2013, Radio Free Europe/Radio Liberty and the Organized Crime and Corruption Reporting Project investigated the Mammadov family’s corruption and published well-documented exposés. Six months before the hotel announcement, Foreign Policy ran an article titled “The Corleones of the Caspian,” which suggested that the Mammadovs had exploited Ziya’s position as Transportation Minister to make their fortunes.
Good summary here:
Rachel drops another shoe. Right on Trump's head.

I guess that lump doesn't have the necessary descrimination to see those things.

I believe that part of his problem is that he can't see the relevance on an investment forum. Many of us don't share that problem:

This seems to be the culprit this morning

Trump Says Military Gathering Might Be ‘Calm Before the Storm"

My immediate reaction too. On macro thread I plan a response comparing Kremlinology to Trumpology. I think based on his fuller remarks the guy is pissed because he can't get the military to plan for war with N. Korea. Whenever your military is opposed to war but the commander in chief is not, that's a formula for disaster. Should scare the crap out of the S. Koreans and Japanese.

 

[wdolson]

The HPGC would quickly fail once the 10 posters said everything they knew to say, then people would stop checking it. Human nature of a club. If you kick out the least popular members of the wine club to make it better and close off new entries the wine club is dead. People will quit, drift away, you have heard everyone's stories and it dies very quickly. You have to put up with Janice and her annoying laugh if you want the club to keep going, because next month Janice brings in her sister-in-law who is awesome and expands the network thereafter.

I've seen this dynamic on a lot of forums. To survive long term, there has to be a steady stream of new contributors as well as old hands and there has to be a bit of disagreement. Too much and the forum rips itself apart in arguments, but too much agreement and everyone shuts up after they had their say. I've seen forums die both ways.

 

[DaveT]

Thank You ! Your thoughts about the M3 and testing the M3 are excellent! Should be required listening! On the other hand I believe that your logic on FSD was incorrect (not necessarily your conclusions) and I believe both your reasons and your conclusions about TE are incorrect. If you are interested I'd be happy to (eventually) post my opinions about that.

Yes, would like to hear.

I believe that the reason that Tesla is trying to limit testing (FDA friend-DA's) is because they believe that the M3 is either equal to or better than the current MS and they are trying to wait for a more upgrades to the MS-MX before they allow that information to come out. In other words it's probably not a good time to buy an MS or MX.

Some questions about your opinions on testing the M3:
Do you believe that if the M3 is equal to the MS or very close that's sufficient for you to be satisfied?

Why do you believe that the MS will have a more comfortable ride? Is a longer wheelbase required for a comfortable ride?

This question is related but not particularly directed to you, unless you happen to know the answer. I would love to have the suspension automatically raise the car for our driveway but I'd prefer not to lose out on ride or handling. How will the (optional on the M3) air suspension effect the ride and handling?

I know the Model S has a more comfortable ride than a Model 3 because in both the times I've ridden in the Model 3 it was my first major reaction (can feel the road more in the Model 3). Also, a couple Tesla engineers who were giving Model 3 test drives also said the same thing... basically Model S is a more comfortable/smoother car, but the Model 3 is heck of fun to drive.

I think the Model 3 and Model 3 are just going to be very different cars. Model S will be better fit and finish, and smoother ride and more tech. Model 3 will be more barebones, less smooth, yet it will be a more fun car to drive because it's smaller. When the Model 3 gets air suspension, it will make the ride a bit smoother but won't be as smooth as a Model S. The Model S has a longer wheelbase and also better/more expensive parts (ie., suspension, etc).