Episode January 25 , 2023

Book discussion “Checkout 19” by Claire-Louis Bennett. 1/5 Society has an imposed hierarchy of we think, what we think, how we behave and what we value and not. 2/5 Who is imposing this hierarchy? Men? Women play their part, men are instrumental in imposing the hierarchy. Feminist view of the world but Clair doesn't feel feminist. 3/5 Poetic, voluptuous description of reality. Compulsory attention to detail and physical reality gives it importance. 4/5 Picture of women sawing until her hands turn into threads. Now she has nothing to hold on to, no purpose. But where does purpose come from? 5/5 It comes from your own agency. This is not discussed in the book. This is my conclusion. Nietzsche has a point. What comes after God? Popper/Deutsch have the answer: Agency. Creativity, solving problems. Authority is an oxymoron. You are the only authority for yourself. The rest is war games.

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Episode January 24 , 2023 II

Additional thoughts on Tesla Earnings Call. 1/1 When will the other businesses reach 50% of the whole company. Other businesses = Semi, Cyber, FSD, Energy, Humanoid and...

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Episode January 24 , 2023

Thoughts on Tesla earnings call tomorrow. 1/4 Reiterate cost leadership. Volume and expect 2023 margins in mid 20s. Explain long term drivers of superior cost structure. Reiterate desire to return to being cost leader. 2/4 Progress in Semi. What are engineering advantages that drive costumer value. 3/4 Launch of Cybertruck on track. 4/4 China competitive situation and what is long term plan in Shanghai.

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Episode January 21 , 2023

In our annual results we discuss what’s good and what’s bad? Good: Tesla is cost leader again. Bad : US Debt and deficit. US recession good and bad.

 

Episode January 19 , 2023

Discussing Vivek Ramaswamy on Bitcoin Standard podcast. 1/2 ESG is a scam because asset managers take other peoples' money to push a political agenda. That is disregarding fiduciary duty and unlawful coercion. What you can't get through the front door you seek to achieve through back door. Supreme Court issue. 2/2 Bitcoin should stick to hard money and not try to solve other societal problems such as government misappropriation of power. If we take away the ability of government to confiscate through printing press, they'll find another way.

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Episode January 18 , 2023

Discussing our essay “When Popper meets Musk.” Drawing parallels between Karl Popper, Nick Lane and Clayton Christensen. Applying their findings to entrepreneurs like Elon Musk.Niches evolve, they’re not found. Customer value is the oxygen of business. Validation is the oxygen of evolution. Startups evolve new niches. Creativity is accelerated evolution. Creativity is when solutions are found by trial and error. Crucial question is: What is a solution in business? Answer: Customer value.

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Episode January 17 , 2023

Darwin meets Peter Thiel. Competition is for losers. Evolution is when species evolves new niches. It’s not about survival of the fittest (Darwin never said that). It’s about evolving niches. Competition is for losers in bio as well as business.

 

Episode January 15 , 2023

Find a niche? Niches are not found. They are created. First, you create a beachhead and then you evolve with the niche. Disruption is a reciprocal process of iteration and error correction where the disruptor first adapts to the environment, then the latter adapts to disruptor. Repeat. Example. New type of living organism finds a way to absorb more Oxygen, then releases CO2, changes the environment by emitting more CO2, then environment changes, then species adapts to higher CO2 levels. Repeat.

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Episode January 13 , 2023

Tesla did what feels right. They lowered prices to pre Covid levels. Disruptive innovation is defined by cost structure. Wealth is created by increasing customer value. Tesla is doing exactly that. We are excited. This is the right move and will drive volume, margins and the mission. Investments are best when they follow predictions as corollary of our principle stack. See essay on "The Math of Tesla's Price Adjustment"

 

Episode January 11 , 2023

Book discussion “The Vital Question” by Nick Lane. Evolution is about energy harvest. Mitochondria is central because that’s where respiration happens in cells. Respiration = intake of oxygen to harvest energy from food. DNA matching in mates is about combining optimal mitochondrial DNA. In other words, mates choose each other based on optimal DNA match to produce best possible mitochondrial DNA. Henry Ford goes to junkyard, sees parts that are still good, orders to reduce their quality to lower cost. Manufacturing is about optimizing for quality and cost. Goal is to synchronize quality across whole car. Archeological intermediary. Pioneer species. Usually don’t survive, like Plug in Hybrids.

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Episode January 10 , 2023

Discussing essay “Play the Game, don’t let the Game Play You.” We argue that active industrial policy doesn’t work and often results in unintended consequences that weaken the very companies it is intended to support. Biden wants to slow Tesla with EV tax credit to help UAW. Tesla will adapt, react and get out of this stronger. In the fight between platitudes and economics, economics always wins.

 

Episode January 9 , 2023

Reaction to Mikey Musumeci on Joe Rogan. Drilling vs. training. Drilling vs. conditioning. Look at challenges as problems that can be solved in iterative ways. Drilling = solving specific problems and internalize solutions. Create new problems, then new solutions. Repeat. Solving problems maximizes dopamine = makes you happy.

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Episode January 7 , 2023 II

The biggest threat to Western freedom comes from within. It’s our government's propensity to spend. It’s not rogue dictators from Eurasia, it’s Western nihilism, anti-freedom, and pro-collectivist tendencies that are used to justify misguided industrial and social policy. We might have a problem with the outside world. But we have a much larger problem on the inside.

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Episode January 7 , 2023

Focus on Customer Value not Shareholder Value. We discuss Clayton Christensen’s “The Capitalist Dilemma” in context with Tesla’s recent price reduction in China. Wealth creation happens when companies find ways to increase customer value = (Value delivered to customers)/(total cost of ownership). Work on both sides of the line. Tesla is doing exactly that. Price reduction in China is increasing customer value. RoW will follow. Short-term margins down, longterm cash flows up.

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Episode January 5 , 2023

It’s the Government stupid! Inflation is abating in the financial markets but not in the labor market. Problem is the government spending more than it can afford. Biggest risk to innovation.

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Episode January 4 , 2023

Industrial policy is political fallacy. Preliminary discussion of upcoming essay. Biden hindering Tesla in support of UAW is rational political pork barrel. But it won’t work. Government is too slow to react. Active industrial policy typically comes with unintended consequences.

 

Episode January 3 , 2023

Discussing our essay “I was on top when this shit meant a lot”. A review of 2022. Understanding the fundamental driving forces of wealth creation is crucial for come back. Three vectors of wealth creation are 1/3 Interest rates 2/3 future prospects and 3/3 competition. Large market * share of profit = wealth. Share of profit is driven by ratio of (value delivered)/(total cost of ownership). Tesla needs to lower price to reflect superior cost structure.

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Episode January 1 , 2023

Discussing my essay “Fusion is Illusion, Abundant Energy is not”. Why don’t we have a Moore’s Law in energy? Too much government and not enough disruption. Start with talent. Lay fertile ground and seeds will come.

 

Episode December 30 , 2022

Discussing the performance this year. Most of the value of our stocks is determined by the prospect of future cash flows. If future means a lot to investors then the stocks are valued high. If not, they drop. That's what happened this year. Hence" the title of our year end essay: “I was on Top when this Shit meant a lot." Just replace Shit with Future.

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Episode December 28 , 2022

Discussing essay “Academia adopts the Language of Cowards” 

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Episode December 27 , 2022

Suggestions to improve Tesla. 1/3 IR weekly podcast with internal guests discussing problems they are solving. 2/3 Adjust board to needs of a global manufacturing company. Make it work more effectively by adding experience and practical know how in different geographies. Pay them well. 3/3 Streamline sales process. Areas of improvement are trade-in and financing. More interactive and solution driven. Every order should be treated as an interaction with customer with goal to close the deal.

 

Episode December 25 , 2022

Book list for 2022. Four books stand out. 1/4 Lenin 2/4 Magic Mountain 3/4 Great Circle 4/4 Grapes of Wrath. See the list of notable books I read in 2022 on youtube notes. 

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Episode December 23 , 2022

Reaction to Twitter spaces appearance by Elon Musk. He sounds like an observer of Tesla not the CEO. Instead of blaming the Fed he should have answers and announce actions to adapt. For example, why isn’t Tesla picking up some of the interest tap consumers face. Or communicate price reduction as giving costumers something back. Decisions like that require a full time CEO who’s got mental and financial skin in the game. Currently Musk doesn’t seem to be one of those.

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Episode December 21 , 2022

Define Woke Mind Virus. It's the thing that coerces a majority to behave in a certain way both verbally and physically. It's top down coercion by a cabal of unelected ideologically aggressive subgroups. Fighting Woke Mind Virus is removing authority from the cabal. Freedom is voluntary exchange of people under sanctions of the law. Let's keep it like that.

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Episode December 19 , 2022

Tactical repositioning of portfolio. Productivity in US too low. Fed wants increase in productivity. Employees need to produce more or make less or both. Power shift back to ownership capital and risk. Fed will change stance when productivity bottoms. Vectors for recovery 1/3 US productivity bottom 2/3 fear of job losses high in US 3/3 China reopening brings back productivity and consumption.

 

Episode December 16 , 2022

Reacting to Jay Bhattacharya’s appearance on “Into the Impossible Podcast”. Follow science not scientists. Truth is not tied to authority. Science is form of inquiry not conclusion. Pushing back on collectivist tendencies by rouge bureaucrats is the most important fight of our generation.

 

Episode December 15 , 2022

Book discussion “We Begin at the End” by Chris Whitaker. Book written like a social graph with people and their relationships in focus. Book doesn't have a linear narrative. Hence the title. Narratives reflecting social graph.

 

Episode December 14 , 2022

Tesla shareholding feels like dating a crazy girl. You’re embarrassed to justify to friends. How can we still justify? Fundamentals. Mission. CEO must align his intention to TSLA mission or separate.

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Episode December 13 , 2022

Language models such as ChatGPT will transform writing like any other technology. Boring stuff will be done by machines, interesting work will be done by humans. Language models are good at writing the “boring stuff” such as marketing collateral, scripted speeches, generic history essays etc. Interesting writing has always been about the unique human approach, special skill, emotional dagger. Interesting writers are Zero to One writers. Humans should focus on Zero to One type stuff. Become your own monopolist. Leave the rest to machines.

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Episode December 12 , 2022

Tesla shareholders are conscripted freedom fighters. When hot air is out, numbers matter. That's a good thing. New CEO announcement should come again soon. That's a good thing. Drivers of company fundamentals 1/4 Demand (cyber, semi, models) 2/4 FSD 3/4 Energy 4/4 Robotics.

 

Episode December 8 , 2022

Why has Tesla been underperforming recently? 1/3 Musk doesn’t want to be CEO anymore. We infer that from his actions, in particular he prefers fixing Twitter than running Tesla. Tesla is an execution story for now, AI, 4680, Ramp in Berlin and Austin, Cybertruck, Semi, Humanoid Robot. Those are big vectors but can be solved by a COO or administrative CEO. Musk needs to stay on was visionary CEO, making visionary technology decisions such as car without steering wheel, DOJO, Inference chip etc. 2/3 China demand is weak. China car market his year only around 17 Million, lowest in years. Big question about volume production, should we drive volume or preserve margins. We believe best is to preserve margins as long as we keep expanding market share. 3/3 Credit tight in US and Europe strain on financing.

 

Episode December 6 , 2022

What went wrong this year? What were the sings? Inflation. Why? 1/2 Workers want more flexibility which means less productivity. 2/2 Shift towards totalitarian thought across the world. Less freedom  means higher risk of even more suppression. Stakeholder capitalism is Bolshevism in disguise. Ownership capitalism is only driver of wealth. Wealth creation is best way to increase freedom.    

 

Episode December 2 , 2022

Tesla first Semi delivery reminds us of the disruptive nature of Tesla. Average estimated savings per truck around 500k. Fuel and maintenance. Expand market. Take share from rail. High margins. Same with Cybertruck. High potential for disruption.

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Episode December 1, 2022

Competitive advantage comes from culture of iteration, culture of not making mistakes (=science and technology focused) and culture of reducing cost of error correction. Culture = people. Natural Sharpe Ratio is driver of wealth creation.

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Episode November 28, 2022

Why is the Fed raising rates now? Because the Fed balance sheet is meant for Wall Street not Main Street. As long as printing money is helping prop up Wall Street, ok. In last two years Fed balance sheet was used to prop up Main Street. Not OK. Now Fed has to stop. Sharing power is not in the interest of Wall Street/DC decision makers. Power over money allocation is not meant to be shared with public. Occupy Wall Street turned into occupy Main Street.

 

Episode November 25, 2022

What’s the purpose of a company? Reaction to conversation on Capital Isn’t podcast about book “Woke, Inc.” by Vivek Ramaswamy. Companies deserve limited liability if they do something risky, which is they try fundamentally new concepts and engineering practices to increase value to costumers at lower cost. Yardstick is profit under constraint of R&D expenses. Interestingly most companies associated with crony capitalism spend zero $$ on R&D. Those companies should be treated differently. Woke Inc. is a form of mission creep. It’s dangerous.

 

Episode November 22, 2022

Book discussion "Blood Meridian or the Evening Redness of the West". Existentialist. Men in nature, man is nature and nature is men. "War was there before men and found its ultimate practitioner." Purpose is nature + imagination. Conjecture ads to the existentialist and makes him human.

 

Episode November 21, 2022

The history of Tesla dying. 1/2 When Model 3 was delayed. Stock dropped 60% from highs. Recovery driven by solving Model 3 manufacturing problems. 2/2 Musk in trouble with SEC following failed attempt to take Tesla private. Selloff 40%. Today stock underperforming due to 1/2 Twitter distraction and 2/2 China risk. Fundamentals good. Stock still not value territory. EPS 3.3, PE 35ish, Stock 120 Value territory = 25% downside.

 

Episode November 20, 2022

Rational Choice theory is a good approach to decision making because it allows for parsimonious modeling of complex systems. Refuting it because of behavioral biases (Kahneman/Tversky) is wrong because it doesn't alter the usefulness of rational choice theory. In fact, it augments it. Quiet frankly the so called "behavioral approach to decision making hasn't yielded much useful innovations in decision theory. To the contrary, It made the field more politically charged which is unfortunate. We suggest adding Popperian iterative conjecture to rational choice theory. In other words, it's no just about how we make decisions but also about how we "guess" which is at the core of science and knowledge creation.

 

Episode November 17, 2022

Proposal for Twitter. Goal is to develop a decentralized validation platform for tweets. It's not about Free Speech. Free Speech is not a good problem to solve because it's not clear what it actually is. Decentralized validation is good problem because it's clear = find a way to decide in a decentralized manner. Various solutions for decentralized decision making have been developed over time. 1/5 Financial Markets 2/5 Scientific Process 3/5 Democratic Vote 4/5 Bitcoin Protocol 5/5 GitHub Consensus. Blockchain approach: Tweet is posted and validated to be added to block then block gets added to Blockchain. Twitter issues native token or uses Bitcoin through lightning network to incentivize validations. Financial markets approach: Tweets carry value and gain value based on usage, retweets etc. tweets can be shorted, so that bad tweets loose value and get marginalized. Fundamentals of validation network are 1/3 skin in the game, ie validators gain value if tweets proliferate through network and loose value if tweets don't get validated or get marginalized once posted to the network. 2/3 Blockchain is decentralized database where tweets are stored 3/3 legal and moral issues are outsourced to authorities by solving for identity. For example if a tweet is considered illegal, warrant is issued by judge, Twitter assists police and perpetrator is subject to legal persecution.

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Episode November 16, 2022

Exiting TWST. Why? Cost growing higher than sales. Subsidizing sales with high sales and marketing expenses is not a business we want to be invested in. If you don’t know where the profits come from, then maybe you are the profit. Always remember that.

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Episode November 15, 2022

If you don’t understand where the profit comes from, then maybe you are the profit. Investors need to understand where and how companies make money. If they don't, then maybe the only money made is investors financing lavish lifestyles for entrepreneurs and managers. Investing = investing in profits.