This Week in Startups - Is Palantir's Surge Just Hype | E2081

Episode Date: February 6, 2025

This Week in Startups is brought to you by…Gusto. Get three months free when you run your first payroll at http://gusto.com/twist*Gusto pricing shown in ad is based on pricing prior to March 2025Oracle. TWiST listeners can try OCI and save up to 50% on your cloud bill at ⁠⁠https://w⁠⁠⁠⁠ww.oracle.com/twist⁠⁠⁠Horatio. Visit https://www.hirehoratio.com/twist and get $2,000 off your initial set up.Today’s show: Jason and Alex cover Palantir’s surge (is it all hype?), Temo and Shein and the de minimise loop hole, Uber’s earnings and the future of self-driving technology and much more!Timestamps:(0:00) Episode Teaser(1:38) New studio space and remote work productivity challenges(4:02) "Severance" vs. "Landman" - TV shows comparison(7:07) Palantir's valuation, financial performance, and stock analysis(9:49) Gusto. Get three months free when you run your first payroll at http://gusto.com/twist(11:27) Alex Karp talks up Palantir to investors(14:36) Price-sales ratio: Palantir vs. Nvidia and founder advice(19:33) Oracle. TWiST listeners can try OCI and save up to 50% on your cloud bill at ⁠⁠https://w⁠⁠⁠⁠ww.oracle.com/twist⁠⁠⁠(21:46) Temu, Shein, and the de minimis loophole in trade(30:06) Horatio. Visit https://www.hirehoratio.com/twist and get $2,000 off your initial set up.(31:34) Uber's earnings, market performance, and self-driving technology future(38:33) Waymo's growth and the commodification of self-driving tech(44:11) Market dominance, platform switching, and competition mental models(47:18) Kalshi, Robinhood, prediction markets, and regulatory challenges(52:17) BYD's self-parking technology and the future of self-driving cars(56:43) Final thoughts and request for startup growth dataSubscribe to the TWiST500 newsletter: https://ticker.thisweekinstartups.comCheck out the TWIST500: https://www.twist500.comSubscribe to This Week in Startups on Apple: https://rb.gy/v19fcpFollow Alex:X: https://x.com/alexLinkedIn: ⁠https://www.linkedin.com/in/alexwilhelmFollow Jason:X: https://twitter.com/JasonLinkedIn: https://www.linkedin.com/in/jasoncalacanisThank you to our partners:(9:49) Gusto. Get three months free when you run your first payroll at http://gusto.com/twist*Gusto pricing shown in ad is based on pricing prior to March 2025(19:33) Oracle. TWiST listeners can try OCI and save up to 50% on your cloud bill at ⁠⁠https://w⁠⁠⁠⁠ww.oracle.com/twist⁠⁠⁠(30:06) Horatio. Visit https://www.hirehoratio.com/twist and get $2,000 off your initial set up.Great TWIST interviews: Will Guidara,Eoghan McCabe, Steve Huffman, Brian Chesky, Bob Moesta,Aaron Levie, Sophia Amoruso, Reid Hoffman, Frank Slootman, Billy McFarlandCheck out Jason’s suite of newsletters: https://substack.com/@calacanisFollow TWiST:Twitter: https://twitter.com/TWiStartupsYouTube: https://www.youtube.com/thisweekinInstagram: https://www.instagram.com/thisweekinstartupsTikTok: https://www.tiktok.com/@thisweekinstartupsSubstack: https://twistartups.substack.comSubscribe to the Founder University Podcast: https://www.youtube.com/@founderuniversity1916

Karp is the CEO, and he is the most based, like, excitable. I mean, he makes Elon, I think, look quaint in terms of his enthusiasm for Tesla, like as an example. I saw a clip yesterday, and I tweeted it like Founder Mode's back because he looks like he is so hyped and he is talking to retail investors during the call. Palatier is here to disrupt and make our institutions we partner with the very best in the world. Okay. And when it's necessary to scare enemies and on occasion kill them. And we hope you're in favor of that. We hope you're enjoying being a partner.

And we're really happy. So that escalated quickly. So we're here to scare our enemies. And then on occasion. And we're going to kill them too. Wow. Retail investor enthusiasm to screw the analysts to go USA to kill people. This weekend startups is brought to you by Gusto.

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Visit hire Horatio.com slash twist and get $2,000 off your initial setup. All right, everybody, welcome back to this week in startups. Alex Wilhelm, Jason Calcanis here again on a Wednesday, February 5th, a lot on the docket. And yeah, I'm in the new studio space we have. This is our temporary studio space at a place called Capital Factory. Capital Factory in Austin's kind of a little Y Combinator. my friend Josh founded it. And so he gave us, you know, basically a closet here that we've turned into a studio so I can record.

And then we're in the process of looking for a 10,000 square foot warehouse space, grungy, dirty, somewhere maybe out in hill country, driftwood, dripping spring, south of Congress area to have our founders come together for Found University, have two or three different studios for podcasting. and then our eight-person team here in person every day because I cannot work from home anymore. I've decided I've lost my mind working at home. I know it's good for some people. I'm losing my mind. I need to be with people. So I actually have been there.

When I was living in San Francisco, I joined Tech Runch, and I just never went in because it wasn't required. And then there was this morning. Maybe it was an afternoon. I was ordering a pizza and I came and I was like, I haven't left my house in days. And I said, okay, that's enough.

So I started going in literally just to clear my head. I would love to go to an office once a week, twice a week, three times a week, for a little bit of time. Like, I, I like the socialization of it. Yeah. So I hear you.

You know, the thing I'm, the challenge I have with remote work and I was like talking to my wife about it today and, you know, we built all these really great systems. So we have a stand up in the morning. We have this little device I've written about before start of day, end of day.

I just created a device where at the start of the day, while you're having your coffee, you just say in the general chat room, here's what I'm going to accomplish today in five bullets. And at the end of the day, you say, here's where I got done. Five minutes at the beginning, 10 minutes at the end. It creates like a book end. So hopefully you have a start of the day and an end of the day, as opposed to this bleeding work never ends, dystopian zoom window,

which is what I'm feeling is happening to so many people these days, is that they have this dystopian. My life is like severance or something. It's just a little window where I am living in a Zoom window. I think it's damaging people. I got to ask a different topic, different question. Severance, people are talking about the show. Do I need to watch it?

You know, it's a very high concept, beautifully designed, really interesting, you know, Ben Stiller, who I've now got a virtual relationship with, We like DM and we're both Knicks fans. And so I've been courting Ben Stiller. I've got like a little bromance going. It hasn't consummated with going to a Nick game together yet. But we kind of, you know, talk once in a while over DM on Twitter X.

And I think he made something incredibly high concept with a really great cast. And it delves into the issue I'm sort of alluding to here, which is the separation between your personal life. and your corporate life. The premise of the show, which is in the first episode, is you have an iny and an outy. So right now, this is our outies, I guess. We're out in the real world, you and I. But we would have our lobes separated, our brain separated with some sort of procedure, a medical procedure, so that when you go to work, you don't know what your Audi's life is. you only work, and then you develop work relationships, and you're in like this very corporate environment.

When you get in the elevator, your mind transitions to work. When you leave, your mind transitions out of work, your outside person doesn't know what your in he does for a living. Your in he doesn't know what your outside person does. Oh, so it's literally like you are now two people inside and outside. Oh, okay. As opposed to what I was just referencing in the remote work era, where it never ends.

We are constantly, you know, one thing, which is this never-ending back and forth. It's a little disturbing at times. It's a little high concept. It's, I would say it's not for people who are not intellectually curious or thoughtful. It's a little bit of work. And you have to think, what are the themes here? What are they trying to express? Yeah.

So essentially, it's the opposite of watching HGTV with your spouse, in which you don't need to have any mental faculties engaged whatsoever. I mean, if you want to watch like a Tyler Sheridan, like, Landman, which I think was a really great series, I consider that like going and getting some barbecue. It is what it is. You get some brisket and, you know, you get some sides and you just, it is what it is.

You know, it's not healthy. It's not bad for you. It's just some nice barbecue. But Severance would be like going to a Michelin-Star restaurant and considering what is the point of this deconstructed Caesar and what is the intent of the chef, right? You're thinking about the intent of that show. And I just started the first two episodes here.

I don't know. You got to stop with the delicious food comments at the start of the show because I don't eat lunch before we record so my throat doesn't get all scratchy. And you're only talking about brisket and sides. And I'm just like, can you just get this over with? Because I want to go get some lunch. Well, what do we have on the docket?

Let's get right to the first new story. What's the most important thing happening in the technology industry right now? I think the most important thing in the technology industry happening right now is the hype and excitement around Palantir, which is at once earned and also a little bit out of control. I think it touches on a lot of the themes that we're seeing in and around the stock market today.

So let's talk about this. It's top of mind for you. I think just because the company's valuation has gotten to be so stretched, you might say. Yeah, disconnected from reality. Yeah. But I thought we should start with just a little bit about what the company does

because I feel Palantir is a company. It's a little bit ephemeral to folks. So I went back through their product lines. So if you don't know, essentially Palantir is data analytics for big companies and the government. And they also have a pretty big AI business. This breaks down to four main kind of product lines. They have a thing called AIP, Jason, which is essentially using LLMs inside of private networks. You can think why that matters for governments.

They have a thing called Gotham, which is data-driven decision-making and analysis for commercial use. They have Foundry, which is similar, but for government. And then they have Apollo essentially continuous software updates for hardware platforms around the world. And it's growing pretty quickly. I got to say, Poundier has impressed me. Shall I run people through the results? Sure. Yeah. I mean, I think they were growing 25% year over year, which would put you as a public company in high growth. And I think they were in the, if I remember correctly, trending towards $3 billion a year run rate. Yes. So according to their latest earnings drop,

it was actually $8.28 million in revenue for Q4, up 36%. That was way in advance of the $776 million that was anticipated. And the company saw its customer account grow 43%. And here's the thing, plus 13% from one quarter to the next. So a lot of momentum there. And the company does expect to have between 3.7 and 3.75 billion in revenue this year. So it'll end theoretically just under a $4 billion run rate at the end of 2025. Impressive.

36% growth is great for a public company. For, yeah, a company that's making a couple of billion dollars a year to add a billion dollars in revenue, you know, year over year would be super impressive. The issue is it's become a meme stock. And so sometimes stocks will get disconnected from reality and, or valuation metrics. This happens to have,

Karp is the CEO and he is the most based, like, excitable, I mean, he makes Elon, I think, look, quaint in terms of his enthusiasm for Tesla, I guess, an example. All right, you didn't start your company to run payroll. Did you? Of course not. We all know that. Gusto is here to help. Gusto is going to help you run your payroll and handle all your benefits onboarding and HR all in one place. The market agrees. 300,000 businesses. Trust Gusto today. And you can too. As your startup scales, Gusto is going to grow with you.

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up. So here's your quick call to action. Do you want all Gusto has to offer with no hidden fees? Well, how about a discount? Try Gusto and get three months free. Gusto.com slash twist. That's G-U-S-T-O.com slash twist. I saw a clip yesterday and I tweeted it like Founder Mode's back because he looks like he is so hyped and he is talking to retail investors during the call. So he's like for retail investors and he kind of like says something to the effect of if you're excited about like killing bad guys and like working with like three letter agencies or whatever and this is like the company for you. If you were to look at the actual reality of the value of the company, it's a $230 billion market cap. They're making $4 billion. So that is 60 times or so.

or if you did trailing, it would be 80 times. But let's call it 60, 70 times their sales is their evaluation. Not their earnings. Their price to earnings ratio is over 500. Yeah. So that's kind of crazy in it of itself. It's absolutely nuts. But here's the Pallinger clip that you tweeted out.

Let's give it a run. And by the way, if you're watching the video of this, carp is in the middle. He's the guy in a T-shirt. Yeah. Alex, as always, we have a lot of individual investors on the line. Is there anything you'd like to say before we end the call? We're doing it.

We're doing it. And I'm sure you're enjoying this as much as I am. Let's not talk to analysts about the burden of being right. Our burdens of investing in ontology are burdens of actually looking at the math, the burden of reading what the rule of 40 is, the burden of being honest about what an enterprise software company is, or the burden of explaining to your friends that you're, really happy maybe we should just start talks up talking about i'm very happy to have you

along for the journey and you are partners oh okay every now let it keep going because you haven't hit everyone else's listening uh we are um dedicating our company we have dedicated our company this is the service of the west in the united states of america and we're super proud of the role we play especially in place okay and we love our success in the u.s and globally also you know we are doing way in the united kingdom and many other places uh Palleteer is here to disrupt and make our institutions we partner with the very best in the world. Okay. And when it's necessary to scare enemies and on occasion kill them.

And we hope you're in favor of that. We hope you're enjoying being a partner. And we're really happy. So that escalated quickly. So we're here to scare our enemies. And then on occasion. And we're going to kill them too. Like retail investor enthusiasm to screw the analysts to go USA to kill people.

What can you do, right? I mean, what can you do if your stock gets disconnected from reality as the founder? I mean, there were times Elon said that the valuation of Tesla didn't make sense, right? He said, like, I think this valuation does not make sense. It's probably too high. He literally said that 10 years ago. People can look it up. And that's, I think, kind of what he's saying here.

That's interesting. I got the opposite vibe because I remember when Elon tweeted that up. And I recall what happened to Tesla stock price, which is it went. down. But here to me, I think, I think Alex Garp is, um, hyping it? I think he's having a deep sip of his own Kool-Aid. And if I was the founder of a company that has seen the appreciation that Palantir has had, I think I too would be that exciting. I want to give people some context, though, about why we're surprised by the worth of the company, given it's, uh, it's very strong financials. And here's a, I think, a good explanation

of what we're talking about. This is the price sales ratio, which you mentioned earlier, of Palantir in orange if you're watching the video, or purple for Invideo. A very expensive stock in many people's eyes that some people are considered to be overvalued. In the last couple of quarters, the price sales ratio of Palantir has shot so high above Nvidia's own. It's now more than 3x. And that, that to me is where I go. This company is great, but the market is, I mean, high. Yeah, I mean, I know insiders who, you know, were like the original backers of this or maybe people who were in, you know, LPs and funds that invested.

And they said to me at a poker game a couple of months ago, like, yeah, I guess I got to sell into this because this is disconnected from reality. Price to sales, again, just to let people know is, hey, what is the price of the company, the valuation, $230 billion or so in this case? And then what is the sales? not the earnings, not the profitability, just the top line sales. How much did you sell? And so here, you know, when you compare Pallantir to Invidia, when you get these sky high price to sales ratios, it's typically indicative of high growth, like hyper growth. 35%, 25% growth, year over year, you know, is great. That is high growth. It's not hyper growth, though. No. And so that is, I think, you know, says to me that this has to come back down to earth, but who knows? I mean, when that happens

and momentum stocks make no sense. This is why as a founder in a company, if your stock becomes overvalued, and I've seen this during the ZERP era, to bring it back to startups, if your company is making $10 million a year and somebody decides you're worth 100 times that number, it's a billion dollar valuation, and they want to own a bunch of shares in your company and you're the co-founder and the two co-founders own 30% each. So you're 60% of that billion dollars. I would very, very much recommend that you sell 10% of your position. So if you had 30% ownership, sell 3% of your position, which would be $30 million in a billion dollar company, why not trim your position? Instead of having 300 million, have 270, take that 30 million,

diversify, put it into, you know, paying down your student. loans, your mortgage, buy a house, and just put your kids 529 fund and they're, you know, whatever you're going to do for them, you know, do it quick because things do not go to the moon and you have to diversify at a certain point. You know, being concentrated means you have a chance at, you know, extraordinary wealth. But at a certain point, you kind of want to trim your position. So if this happens to you and you're making, you know, you've got your net worth tied up in one of these things, I do recommend starting to trim your position. Yeah, in poker, I think taking money off the table is called Going South.

And you're not allowed to do it. Not allowed to do that. Startups are not poker. There's not the decorum of the poker table does not kind of translate over. No, no. But we're not the only people that are looking at this stock and going, what's going on. Forbes had a great quote from Deutsche Bank analyst named Brad Zelnick. And he said, history suggests this is nearly impossible to grow into, especially at

this scale. And then he said the earnings were, quote, very impressive and put a sell rating on the stock. Got it. Yeah, I mean, it's absolutely a fantastic company. I think this also speaks to how memes spread and how financial markets spread. And this is where crypto as another example, and enthusiasm, meme stocks with GameStop and other AMC theaters, we have the ability in today's market to spread the word about something interesting in the world and then people can go crazy, whether it's meme coins like Trump and Melania coin and other ones, or it's a meme stock like Palantir has become. There could be some reality in the case of meme coins. I don't think there's any reality, but in this case, there's a reality and then there's the disconnection

from reality. And the more you embrace that disconnection from reality, the more over your skis you are. and the more it could come back and bite you. So nobody ever regretted selling a little bit too soon in my experience. That makes perfect sense to me. But at the same time, and to be clear, Quist is not investment advice in any capacity. But I wouldn't short Palantir right now because I would be worried about getting my face ripped off by sheer momentum trading.

So to me, I'm just looking at it. And frankly, Jason, it got added to the S&P 500 last September. So our index funds own a jump. of it, we're enjoying the upside. I just wouldn't personally triple down on my exposure. Hey, everybody, it's 2025, and AI is officially everywhere from medicine to self-driving cars. If AI hasn't hit your industry yet, well, you know, it's coming fast. But AI needs serious computing power. So, how do you stay competitive without breaking the bank? And what if you could cut your cloud bill in half? That's right, 50%. Well, it's time to upgrade to Oracle Cloud infrastructure,

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The way these indexes work is, you know, when you hit a certain valuation, I think you get added and then things get taken out and valuation is part of it. So you can, as they say in the meme stock or stonks thing, we can stay our word longer than you can stay solvent kind of situation is what can happen. And now these companies get added to an index. They get programmatically bought. Then what happens from that point forward is also super interesting. You know, the other thing I was really interested in was this, we saw the Trump tariffs earlier this week or over the weekend. And I know Timo and Sheen, they work because of a weird, a duty exception where you can send internationally a product if it's like under a thousand bucks or something. I know that

you and I have been talking about this on the docket. So can we maybe talk a little bit about Tymu and Sheen and that hack and what the latest? statuses of e-cop directly being drop-shipped from China? Absolutely. So, Temu and Shien have been enjoying the de minimis loophole. In the United States, that means that if you bring in something that's less than $800 in declared value, you don't pay duties on it. And this number does vary around the world.

I think it goes up to $1,000 in some markets. Some countries, it's low as $5. In the U.S., currently, it's $800. It's gone up over time. I think it was $1. $1 back in, like, 1930. Anyways, Temu and Shian have been taking advantage. of this because they ship very inexpensive things and they just keep the shipping

below $800 and then they don't have to pay tariffs. They don't get inspected. Packages flow quickly to the tune of 4 million packages a day going through this system. It's enormous. It's a lot of commerce. Now, the Trump tariffs came out regarding China, an extra 10% on Chinese imports and that included a closing of the de minimis loophole. So people immediately thought, well, you know, there goes Temu and Xi and because their prices can't be made. maintained at that level. We'll see, I've been tracking PDD, which owns Temu and its public company, hasn't actually seen that much of a loss in value yet. So I don't know what the market's thinking. The latest, though, and this is where the USPS comes in, is that yesterday,

USPS said it was going to stop accepting parcels from both China and Hong Kong, effectively precluding this. Yeah. Wow. So the U.S. Postal Service is suspending, accepting these parcels from China, Hong Kong, et cetera, because of the trade war. Because of the trade war. And I think in particular, the fact that they don't have the personnel, robots, machines, computers, whatever to check that many more packages. You'd have to have a lot of people looking at them because right now, if they're just going straight through, they don't have to be processed.

But if you're going to have that many packages, they're going to need to be looked at. Then it all got taking away. And the USPS said today, just kidding, we're not going to do that. And Jason, I'm struggling a little bit because I feel like every time I figure out what's going on, the carpet gets yanked down from underneath me the next moment. And that's fine because I'm just a little nerd on my podcast. But for business, it's not good to have this much irregularity and uncertainty. This is, as I told folks, you know, if you elect Donald Trump as president, as I used to call him in the first term, he has this captain. chaos mode where he will saber-rattle or do an executive order and it can create chaos. He is

the stir in the drink. So when the drink gets mixed up, he's the blender, he's the stir, he is captain chaos. Now, Trump 2.0, sometimes he's really on message and I like what he's doing. And then there's these chaotic moments. What you have to do with Trump and I think world leaders have figured this out, companies have figured it out, he's going to stir. the drink and you have to just pause and wait to see the next day, two days later, what actually happens. He wanted to get more security at the borders. This is his, you know, what he won was largely, winning was largely based on the border. And so he wants more people there. He wants to have record low, you know, border crossings. And so he's using these tools. It will create some kind of chaos,

but I think waiting 48 hours is probably a good default, right? Just wait 48 hours and see what if that story is still actually accurate. And in this case, you know, if you had waited 48 hours from Saturday, Sunday, when all the Sunday shows were losing their mind over tariffs, if you waited until today, 72 hours, it was all resolved and the market didn't need to crash, right? How much do you think that's Trump, you know, going? out there and saying what he wants to do. And then his administration going,

and pulling him back and trying to find something that's a little bit less combative with either allies or other countries that we are less close with when it comes to trade. I don't know. I don't think you need to. I just think you need to take everything he says and let's put a 72-hour rule on. Is this edict, is this statement under 72 hours or over 72 hours? If it's over 72 hours, what is the reality of the statement?

You know, like I saw a clip go by. Everybody wanted to know my opinion on Gaza being the Riviera of the Middle East. And that was a statement last night. Here we're taping on Wednesday. Absolutely on Monday. Let's see what the reality winds up being. There's no reason for us to debate it right now, I don't think, because it could be just a trial balloon that was being floated. and there is reality of startups and technology companies doing great things in the world.

Let's focus on things that are reality, right? Yeah. On the Temo-Sien point, I mean, we haven't seen in the case of Shian, it's been thinking about going public. I think it was looking at the UK as a possible listing place. I think probably this is going to slow that down. I don't think you want to go public in the middle of a trade war. Also, I guess just first principle, should that $800 exception exist if, It's generating four million.

Is that number correct? Four million packages into the United States per day? I'm just going to double check my number here, but I'm very, very nearly personally confident. Yeah, I mean, that number seems really interesting to me because there's 330 million Americans.

That means 1% of the country is ordering something every day through this loophole. Now, that seems, or maybe it's 2%, or something, that seems like a really large number, but maybe it's not. So according to the U.S. Customs and Border Protection Agency, on average, CPP processes over 4 million de minimis shipments into the U.S. each day. Now, that's not just China. That's global. And then also the House, one of the House GOP committees pointed out that the number of Chinese imports coming into the U.S. under de minimis went from 208 million. in 2018 to $640 million in 2023.

Now, we don't have full fiscal 2004 numbers yet, blah, blah, blah. But I think that they're mostly from China. So I guess there's two issues here. One, is this too much of a hack that's been exploited and it should be taxed and, you know, there's revenue to be had here? Or is this a great feature for the American public to get really sweet deals and pay a small amount of money? And this is just globalization at its best.

And I guess the third point would be, is this a security concern that these things don't get inspected all that much because there's so many of them? And is this how fentanyl or other things are getting into the country as well as knockoffs? And so if we're looking at IP protection, it does seem to me that this has now become an exploited hack. And maybe they should add $10 for every one of these coming in, which would be $6 billion. a year and just put $10 on each one of these, get that $6 billion, put it into our sovereign wealth fund or pay down our debt or any number of things, put it towards education for people who early education, for people who don't have access to pre-K. I think the answer to your question about, you know, which way we should think about this

just comes down to what you think about trade. And as a big free trade guy, I think it sounds fantastic. I think comparative advantages in manufacturing and other parts of the international economy are good for us. We get cheap stuff, huzzan. But a lot of folks are more protectionists these days across the political spectrum. And that is the thing for startups to keep in mind if they're doing production, manufacturing, anywhere else in the world, it's getting harder, I think.

And I think e-commerce in particular is going to maybe struggle with this. I don't think this entire saga is going to be net good for e-commerce companies that are based in the U.S. just because it's going to be harder to make and ship things. In today's market, your business is judged by its customer service, right? all know that. One bad experience, that's it. Caput. Customers gone for life. And you know what? They may start saying negative things about you online and they have the power to do that. So stop thinking about customer experience as just a department. It's actually your entire business, right? That makes sense. And Horatio is the trusted outsourcing partner for hundreds of startups

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So here's your call to action. Heratio isn't just outsourcing. It's seamless integration with your team. And the best part, their solutions are cost effective and completely tailored to your business needs. Visit higherheratio.com slash twist to learn more and get $2,000 off your initial setup. That's higherhoratio.com slash twist. So Uber dropped their earnings this morning. I think it was before the bell started today, Jason. A couple of high-level notes here. Gross bookings of the company, 44.2 billion, up 18% Eurovere. It's a big number.

Trips, 3.1 billion in the quarter. I had to go back and double check that because I was like, what? That's a huge number. Revenue was just about 12 billion up 20%. And then the company had operating cash flow of $1.8 billion. So, Jason, the way that I read this is that Uber and its current farm today is health. and kicks off mountains of cash. Just a solid business.

And the stock was down, which is crazy. But I do think this overhang of, you know, self-driving and when to self-driving actually, you know, become a headwind for Uber because in the markets where Waymo exists, San Francisco primarily, they said they were growing. So the number of rides is growing, even with Waymo taking some amount of share in San Francisco proper. So this speaks to my assessment of the situation, which is the TAM is going to increase massively.

The number of rides is going to increase massively. Today, I drove, you know, into the office. And I just for giggles, opened up Uber and said, I wonder what it would cost me, you know, I tend to take Uber Black, but, you know, if I took business or UberX and I know my parking is going to be 30 bucks in Austin. So what would it be if I wanted to be driven? And it was, I think, for UberX, $30 for a half hour ride. And I was like, wait a second.

So my car cost me $30 a day and, you know, payments or whatever. And it's $30 to par. That's $60. I could have been driven in an UberX for the same price. And I was like, wait a second, maybe I should just be driven every day and recapture that time. and I think that's what a lot of Americans are going to do when self-driving happens. I like to drive myself. I love having my own car.

I love my model Y. But literally today, I said, huh, I have a dinner after, man, maybe it would be nice to just be driven and just get out at the doorstep and not have to park and not have to give the valet my ticket.

It's going to take me 10 minutes when I leave to pay for my valet. I got to give them a tip. It's going to be 35 bucks with the tip. You get the idea. And so that's what's going to, to happen with this. And then there's going to be so many people who have self-driving technology all at the same time. I do think Tesla and Waymo will be, you know, the top two players in America. But B-YD and all these other folks, they're all going to be there at the same time. And that's what

Dara said on the call. And so this is like really one of these great moments in time when analyzing a space. And listen, I'm diversified. So I'm not like talking my book here. The lesson here for founders is sometimes the Tam just keeps expanding. And you, when you look at the Tam expanding, it's very confusing for people that it's not zero sum. Waymo could be growing and Uber could be growing in the same market. And what's actually happening is people are getting rid of owning their car. So both parties are benefiting at the same time. This goes back to my point about trade. Not everything in economics is zero sum. Not everything that I do takes a dollar out of pockets, sometimes we both get a dollar, and that's fantastic. On the Uber case, it was, I think,

concerns about self-driving to some degree. Also, an interesting kind of international currency point. So the company did miss on profitability for the last quarter, but it grew more so I don't really care about that. But it's gross bookings for the current quarter where a little bit light, in part because of how strong the dollar is and how that makes its international revenue less valuable in dollar terms that it reports. And so it's such a big company now and so international that we really do have to pay attention to currency fluctuations and how the impact its growth trajectory here. And that you've really made it when that's a problem. And if we look at that same exercise we were doing versus Palantir, what was the Uber revenue for the quarter?

It was 12.0 billion. So 12 billion, 50 billion a year, basically, 50 billion a year. And if it's trading at 150 billion or 130 billion, it's trading at two and a half times or, you know, or three times their top line revenue, which means buy back your stock. If it's that cheap, keep buying back your stock if you're growing 15, 20, 25% year over year, and you've got that free cash flow. You just buy your shares back. You know, I see a question came in from our live audience, Casey saying, hey, Uber is going to die unless they get bought. I do think self-driving is going to be the majority of rides 15 years from now. And you're correct if Uber did not have any partnerships with self-driving car companies. That would be problematic.

But there is going to be 15 people selling their self-driving cars to Uber, and there'll be two who maybe don't. And so that's actually, you could see Uber's 10, 20,000 cities they operate in. Uber just buying B-YD cars all over China and Europe and South America, where the majority of rides are, India. And so Uber could just own those cars and finance them very easily. So, yeah, I do think it will get merged, and that's going to be super exciting. Uber plus Waymo or Uber plus Tesla or Uber plus B-YD. That's what I was about to say. I think they become the number one player.

I think you'd probably want to be vertically integrated here. That's my take. I like that Uber's partnering with Waymo in, I think it's Austin and maybe also Atlanta. I forget the other city. But I mean, to me, it always did feel like a little bit of a, and I know I'm talking about my ass here, but like, I miss, to move away from self-driving after the money that was spent because to me, there is now a risk that Waymo eats Uber. And if Uber had its own self-driving stack, that was at least as good as the market average, that risk to me would be

lower. So my P-pranthesis, doom for Uber would be much lower in that case, even though it would be less profitable right now. But, you know, Dara's done a great job. So it probably had for me to cast too many aspersions on his choices. In Austin, they've already started taking an interested list inside the Uber app. So, and I saw literally last night driving home after dinner with our team, I saw a Waymo with a safety driver. So the Waymo's with safety drivers are in Austin right now and you will be able to order them inside of the Uber app.

And I think that's going to be the big war of the next decade. It's going to be Tesla doing it on their own and then Uber and Waymo and the pie. expands 20, 30, 40 percent a year. The number of rides goes up, 20, 30, 40 percent year over year. And then it would be those two folks splitting those incremental new rides. Well, I think also we're going to see companies like GM and Ford sell specialty vehicles to people who have specific needs. But I just think to you back to your 15 year time horizon, I would say 10 for a majority and

I would say 20 for all. To me, the major car companies are at risk of being essentially replaced by, you know, B-YD fleets, Tesla fleets, Waymo fleets, etc. Because once I can do what you just said and you spend less money to have less hassle and get to the same place, why would I...

I guess personally, I don't have a lot of my self-worth tied up in what car I drive. I know a lot of folks love that. Shout out to them. It's all good. But that's not the majority of the market. Young people, I don't think, define themselves by the car they drive. And when I was growing up,

you wanted to get into a beamer You know, you probably were going to start with a Toyota, Honda, Ford. And then eventually you wanted to get a Ford Mustang or maybe a BMW, you know, like a European car, a sob was like considered, oh, you've made it if you can order a European car. I do think that's gone. Now it's just what's the most convenient, what's easiest. And that will be ride sharing. So right sharing is going to win the day 100%. Do you know why that's the case?

It's because we ended up making the same car everywhere. It's the same crossover SUV that shaped like a tennis shoe has no. no personality. They're all automatic. They're all, you know, they just became the same. So I don't care if they get replaced. Before we move on, though, really quick. So I did some math. So Uber says they're 33 million minutes a day. That's a lot of rides. A lot of rides. Waymo is doing 150,000 rides a week. Google repeated that number and it's earnings call. So that's 21,429 rides per day. So today, Waymo is doing 0.065. That's the number of rides of Uber. And I, I almost want to bet you on how long it takes to get to 1%.

I mean, three years? Oh, no, 18 months. 18 months? Okay, sure. Yeah. 18 months, three years, something like that. Yeah. So, yeah, if it gets there in 18 months, it's 1%.

And then in another 18 months, it gets to 5%. Then the question is, is ride sharing growing? And then is Waymo in the Uber app? And I think that's what we'll see is Waymo will not want to be in the management of the fleet business. They're going to want to have a partner for that. And then if that takes 18 months, how many more players will have self-driving technology 18 months from now? Well, WOMO's in China.

Yeah. Yeah, Waymo's on the road now. There's six or seven players in China, and Tesla's not on the road yet. So in 18 months, let's assume Tesla's on the road and BYD is on the road in the U.S. or other places, Europe, South America, et cetera. And then 36 months from now, I think what happened to deep sense, seek is going to happen to self-driving, which is to say, you know, everybody, as hard as it is to make self-driving work today, we can be sitting here in five years and you could create

a self-driving company in a city, you know, like that comma AI company is doing, right? Yeah. Like, I think it will be, I don't want to say easy, but it will be a lot easier when NVIDIA, is giving people free, real-world APIs of how a robot or a car or a drone navigates the real world, which they're building into their AI stack, right? So that's the other problem for Waymo and Tesla,

I believe, is this technology becomes commodified and then Toyota and Nissan and BID and everybody else has it. Okay, what's your competitive moat then? I mean, if it's, you know. If it gets commodified, I mean, the point of here is that Deepseeks V3 and R1 models were, I think, for nearly everyone out in the market, good enough compared to maybe the absolute state of the yard, whatever the newest expensive model from Open AI is. But I do think I care a little bit more about differential quality when it comes to self-driving than just general AI models for personal use, just because family safety and so forth. But if it's commodified, I think that means the minimum level of quality is high enough that it's safe. I guess my thought is, why wouldn't that happen?

And I don't have a good argument for why wouldn't become commodified in time. So, yeah, I think I agree with you. I mean, if you look at cloud computing, AWS was the leader. And then Google Cloud, Oracle, Azure, and Rackspace and DigitalOcean in a long tail of folks are now providing cloud services. CoreWeave, obviously, for H-100s. Yeah. That business, is that a commodity business? Kind of feels like it.

It feels like a great business, but it feels like the technology stack has been commodified. And when I talk to founders, they're like, how many credits do I have with this company? How many credits do I have with this company? And then they work from there, right? I think we'll see. I'll just say that AWS is operating profit continues to impress me. And actually, Google's cloud business is now relatively profitable, even for Google. I think it's operating income was over $2 billion in the last quarter.

And they missed on growth there. but I mean, it's growing quickly and it's more profitable every quarter, so it's hard to be too bearish on them. My point is, AWS does not own cloud computing, right? I think you can say that today, yeah. Yeah.

It's not a winner take-all, right? Yeah, absolutely. Right. There are three or four major players now in the cloud space in the United States and globally. So it's, you know, this is a very interesting strategic chess board to examine,

and keep examining, when do things become winner take all, winner take most, or are commodified? And that's what we're seeing with the Uber, Waymo, Tesla, B-Y-D competition and Lyft, you know, to a lesser extent is, is that going to be a winner-take-all or winner-take-most or three winners take most? I think it's going to be three winners take most. Do you have a working mental model for determining when a market is, winner-takes all, winner-takes most, or just becomes kind of a space with a lot of players

like groceries? Because hearing you say that, I realized I don't. And I should probably have one. It's rare that a winner take all. So if we look at search, that happened. Winner took basically all 80, 90% of search revenue goes to one player. But if we look at smartphones, you know, it's a duopoly between Android and Apple. Apple has 50% of the market.

And then Android has the other 50% and Android is split between Samsung. and HTC and pixel and any number of people. So I think that's actually a way to look at it, and also the PC itself, laptops, PCs. That's a pretty fragmented market. You have some amount of Windows, some amount of Chrome and some amount of Macs. It is typically, if it's a big enough market,

there'll be multiple players competing, and that competition will eventually result in three or four players. And the top two might be 80% and then the rest. I think another mental model is, is there a reason to swap back and forth between one player or another? And that is part of the mental model. There is a reason to leave one cloud computing provider for another. You can get a better deal.

You can negotiate a better deal. There is a reason to leave Android and go to iOS or go from iOS to Android. Your friends, there's some app you like. There's some format of phone like the pixel fold that I'm using. I'm finding that's good, you know, about 20% of my behavior on my phone. and then my iOS device is 80. So that's actually kind of compelling in and of itself, is that a different format can make it.

And then with Lyft, Uber, DoorDash, Postmates, and that whole battle in Instacart, you know, there's some reasons why you might use DoorDash over Uber Eats. And it might be your specific restaurant that you like, is the out of exclusive with one. So there are reasons that, you know, you can compete. Winner take most or, you know, duopoly take most. most is the likely scenario in self-driving.

It'll be three players being 80%. Some people actually will pull up like a restaurant Uber Eats and then on Dordash and try to compare. And I'm very impressed by how much time they have. But I do think the point about scarcity is clutched because when I was living in San Francisco, I think back in the day Mission Chinese was only on Dordash and not anything else. So I had to become a Dordash customer because I wasn't going to not eat Mission Chinese because, you know, come on.

What are you going to do? So what's going on with this Cal She and Robin Hood and prediction markets? I know that is a really interesting space and it's been a little contentious and we have a new administration that I think is more open to sports betting and maybe more open to trading on Calci or polymarket and other platform. Yeah. So the big news this week was that Robin Hood, everyone's favorite free stock trading platform, now public, was going to team up with Kalshi to do essentially bets on the Super Bowl. And Kalshi and Polly Market really rose to prominence during the last election as a place for people to wager.

And Jason, I think you said, like, this is a way to track maybe the smart money, if you will. And this was a big deal. Very exciting. And then suddenly Robin Hood came out today and said, oh, we're actually not going to do that. And the reason is interesting. So they said the Commodity Futures Trading Commission, or the CFTC, has formally requested that we, quote, not permit customers to access sports event contracts. I did not think this was going to happen. I saw the news.

I thought that's good for Robin Hood, better for Colchie, because Robin Hood's bigger. But interesting and a fun way to play around the Super Bowl if we're into betting. But they got shot down. And that, that to me is the second time we have now seen going. going back to the DOJ, HBE Juniper deal, that we've seen the Trump administration in power do things in a regulatory basis that seem, Jason, less fun, if you will,

than we expected them to be. I'm actually kind of shocked about this. Yeah, I think regulators are not going to just act unilaterally. They're going to cover their asses, obviously. And until it's super clear, What the rules of the road are, you know, you want to take a conservative position if you are one of those bureaucrats working in some building because what's the upside for you to be like, yeah, you can do self-driving. Yeah, you know, you can, you know, wager or do prediction markets on the Super Bowl. Well, the downside to you is people lose their money. You lose your job. You're responsible for people losing a bunch of money and, you know, other shenanigans that could occur.

So almost always, you know, the SEC or the CFTC or pick your regulatory agency, FAA, I think they're by default going to be conservative, which might be what we want in, you know, a functioning society for when people's safety, health, and wallets are concerned. So that's typically what consumers want. what the businesses want, we want more freedoms and more flexibility. So this is the give and take of our society. I want to make an analogy to cannabis and alcohol. Because one thing that I've always been kind of shocked by is, you know, we allow alcohol advertisements on television,

alcohol sports sponsorships. You can buy alcohol in San Francisco at every single little mart there is. And then cannabis was banned for a long time. And I've always thought that alcohol is a more dangerous drug. But hey, whatever. If you were going to reclassify all the drugs, alcohol would be way up there in terms of damage. And so, yes. And my point is that if we're going to allow fan tool and all these other sports books to have television advertisements and let people gamble on their phones at work with money they may or may not have, then to me, Robin Hood and Kalsh should be allowed to play.

If we're going to allow alcohol, sports betting, then we should allow cannabis. Cal She. Maybe not great for society, but look, people get to make choices. And that's one of my fundamental beliefs. Yeah, I'm with you. I like people being able to make choices. I also like education and I like certifications, lightly done. So in this case, when people go into the Robin Hood Act or they do polymarket or Cal She,

I want people to be able to do it. And I want them to sit through and explainer video, take a quiz, make sure they understand diversification, et cetera, make sure they understand the wager or the bet or the investment, depending on what they're doing, that they're making.

If you go and you want to trade options inside of Robin Hood, my lord, it is awesome how they educate you. Because I don't trade options. I've never traded options, but I want to learn and I was going through it

and I was like, my God, this is like rattling my brain. One thing that was interesting, one of our live viewers, and we do the show live if you want to get like 20% extra show.

You can go to YouTube.com and you can subscribe to this week and startups or follow me on x.com

slash Jason or LinkedIn. But somebody named DK shared with us a link to BYD's latest parallel

parking, self-driving. I put it into our private chat there. And he said, guys,

did you see the new B. YD DENSA Z-9G-T-EV? Hey, B-Y, can you just

call it the So it's like, oh my lord. I mean, what did we do? Put the serial number in here. I think the Chinese have a little bit of work to do on branding. The Chinese car names have always been garbage. I don't know why that's the case, but it just is.

I'm going to pull the video up now for everybody so we can take a look. Yeah. So this is their parallel parking with autopilot. And if this is any indication of where we're going, it's as he says, as D.K. says, it's already being commoditized. So here is this car parallel parking, but it's, doing it with like some weird process of parallel parking and I guess the wheels are spinning in different directions as opposed to how you might parallel park.

So look at it swinging its tail in. Oh, you know what? It's because the back tires also have the ability to rotate. So as you can see on the screen, the person just uses their finger to parallel park the car by drawing, like they're playing Fruit Ninja or something on their iPad. And my lord, that is impressive. That's straight up incredible. I'm kind of obsessed because I grew up in a place where there was plenty of space at Oregon.

So I never really learned a parallel park. And I now live in a city where there's no space at all. So that would save my life. But I just think that goes to show how fast things are improving. And that's why when you said, you know, X time to get to have. I just think it's going to be faster. I think this stuff just accelerates and compounds. The only thing that is going to stop this is when, sadly, tragically, people die in a

self-driving car, which has happened. It's known twice, I guess. Here in the United States, we had the cruise accident where, I don't, do that person die or they survived? I think they survived. But it was a disaster for cruise and kill. the company and then Uber tragically had a safety driver playing

candy crush and killing a pedestrian. I see it with my friends here in Austin. I was talking to somebody and then a mutual person was talking and they were drinking a whole bunch and I was like, oh, you know, and

they're like, yeah, yeah, I'm just FSDing at home. And I'm like, that's not how FSD's supposed to work. Like, it's not a crutch for drinking and driving, but I do think people are starting to think, you know, hey, the technology is perfected. I could have a couple of extra drinks and I could use self-driving. I do think it will solve that problem, but not yet. So, folks, don't use your autopilot self-driving, whatever car it is because this exists on every car.

You still have to be able to take over. And I would say in my hardware three Tesla Y, I take over every 30 minutes. Typically, it's not because the self-driving is terrible or something. It's because it's like not doing it the way I want to do it. Like it's doing a traffic circle wrong. It's doing a left turn, a little shaky. And it's just not smooth enough yet for my taste. And I'm just like, I'm taking this over.

And then I would say every night, I would say every. 60 to 90 minutes, it does a legit disengagement that is terrifying and or could have been life-threatening in some way. Typically, like, it's on the highway I'm finding FSD doesn't do a good job with construction where it gets challenged and there's so much construction in Texas that I'm like, you know what, do not trust this through a construction zone. Even if it's good with cones, I'm going to just do it myself because I'm, conservative.

No, when it comes to safety and driving, I'm a big fan of conservatism. I just want to grab your friend who's going to FSD at home and be like, no, dear God. Not yet. Not yet. Just before we sign off, I know we're about to leave. One thing I noticed startups founders out there, people who are posting a lot of growth numbers. I love that. I got some cool stuff from dub.com.

Glean dropped some numbers. If you want us to pay attention to you, we'd love to know how fast you're growing. So Alexw. W. Launch.comcoe or just tweet it out and I'll find it. But we're adding the back half of the Twist 500 right now. So let's get some more companies out there that are growing fast and are outside of the public eye. Tell me how fast you're growing. I love fast AARR growth.

Just hit me up and we'll talk. Awesome. And we'll see you next time on this week and serves. Bye-bye.