I asked Cathie Wood the question no one else will

Transcript from https://podmenti.com/t/e74d1986fabba5b2

Manage more money than any other woman on earth. Across the company, we're closing in on forty billion. She's called one of the most disruptive and innovative forces. The Arc Innovation ETF soared over the early pandemic.
If I'm a believer in AI.
What's the number one stock?
That I should own.
I think everyone knows about NVIDIA. We always try and answer that question with stocks people are not thinking about in the right way. So here's the tough question. If somebody else had your track record, would you invest in them?
Well
I feel like I can rule the world, I know I can be what I want to
I'm putting my all in it like my day's all on the roll, let's try to get the black. Kathy Wood, you're here. I appreciate you doing this.
You're a pretty remarkable person. I've been watching you for a long time.
And there's a good chance that you
manage more money than any other woman on earth as a fund as an active fund manager. I don't know if that's exactly true, but you're maybe top five.
Yeah, probably. I don't know. I don't know myself. I don't I don't have those members.
I'm curious actually where what's the humble origin? So what was Kathy Wood's first job?
McDonald's.

Ha.
What were you doing? Fucking burgers?
No, I wasn't. I was at the register. I was sixteen.
I also worked at a supermarket. I uh first girl allowed to push in carts.
At Vaughn Supermarket in Southern California.
Do you remember roughly what you were making when you worked at McDonald's?
Hourly.
Uh.
I know well, right before that I was babysitting for a quarter an hour.
So you went from maybe a quarter of an hour
to managing something like twenty, thirty billion dollars in a fund. And I think this is interesting. The reason I ask is because
In the world of entrepreneurship, we always hear these hustle stories.
And I don't think you go from McDonald's to to you know the top where you're at without hustles. So
What's the
Hustle story you pride yourself on.
Well the first big break
was getting into the business. Art Laffer. I'm not sure if you know lafer, lafer curve, supply side economics, regenomics, uh
He was my professor at the University of Southern California.
He was like an advisor to presidents, right?
Oh, every president since Richard Nixon.
Except for
Presidents Obama and Biden. And you know, he
He was agnostic if if
Anyone, didn't matter what party wanted to hear what he had to say about
uh taxes, deregulation, uh monetary policy.
He wanted to
Give his point of view.
And um
You know, we've come full circle, Art and I.
Because
I and my team introduced art in two thousand fifteen to Bitcoin.
And
When he read our paper
He said
This is what I've been waiting for.
Since the US closed the gold window.
In nineteen seventy one.
A global rules based monetary system. Wrong rule.
Quantity theory of money.
you know, limited to twenty one million units.
But we'll get there.
And
Of course, he was talking about stable coins.
So now we have introduced him to stable coins, tether, circle, and so forth. And he said
Ah, the right rule.
Have you seen this website?
Um WTF happened in nineteen seventy one.
It's amazing. I there's an entire website basically saying what the F happened in nineteen seventy one and it shows like
a series of charts where something happened in nineteen seventy one and the world was never really never the same. And it's just a it's a very compelling
Case, it makes you want to go look at it and obviously I think that's the year that we went off the gold standard, right?
Yeah, it's the year we went off the gold standard and all hell broke loose in monetary policy.
We went into massive inflation. So anyway, it was in the late seventies that
While I was in his class that art introduced me to Capital Group.
I walked into Capital Group, I didn't even know what the investment business was. I had been a a waitress. I was interested in economics, but I didn't know this business.
And Capital was the premier ph uh firm in Southern California at the time.
Sounds like that might be a tough job to get.
Art recommended me highly to Don Conlan.
Who was the chief economist of
Capital Group.
And uh I walked in there and
Uh Don was losing
A person who was going on to Harvard business school.
So this woman, her name was Claudia Huntington.
She was so good at what she did, he was looking for one and a half people to replace her.
I was the half.
But I I didn't want to be the half.
I want it to be the one and a half.
So let me ask you a question about that.
'Cause I think everybody in their career
You know, we'll have an opportunity. I had one when I I moved to San Francisco when I was twenty four. I didn't know anybody, but I wanted to be an entrepreneur. I wanted to be in Silicon Valley at this billionaire was hiring for this role. I don't know how I got the job. I was they literally told me
You're not qualified for this, but we like you. We'll bring you on. We'll still hire somebody else.
qualified for that role, but we want you here anyway. So I had like a my foot in the door.
And I think everybody has this opportunity to work hard, but it's
There's one thing to put in hours. So I think there's a lesson in like
First one to be there, last one to leave, like put in a sheer number of hours.
But what else goes into kinda like
making an impression during that like sprint phase of your career when you can just like fully go full force. What else
besides sitting in the chair for a lot of hours matters, uh do you think? Yeah, what's the mindset?
Sitting in the chair.
Uh
Maybe matters, but I think the most important thing.
Is and my objective
was to
Bring new technology into the firm. I was using economics time sharing system. We're back in time sharing.
All the charts that you just
Brought up?
D.
Um back then
Th each one
Would have cost
In today's dollars.
Five.
To ten thousand dollars?
So that just gives you a sense of how far we've come. Uh but sparingly, uh, I was able to
Use charts for uh you know, ones we made up.
So original.
And then you know, call them from people we trusted and
Um
really develop little economic books for uh and presentations for
Done.
To use
Yeah, you you'll get what you want when you help other people get what they want. So the fastest way to getting what you want is just to give other people what they want. And I I like what you're pointing out, which is that as a young person, you're coming in without the experience, without the network, without maybe the the track record or any of those things. Those are your disadvantages, but my maybe your advantage is
tech and new things might be easier for you to pick up'cause you have time and maybe you grew up with those tools and it you're less set in old ways. And so you bring something to the table and you that can be your thing.
Hey, real quick, our sponsor for today, HubSpot, actually did something pretty cool. If you like money stuff like this, you like investing wisdom like Warren Buffett or Monash Pabry.
Well they actually put together a nine investment principles document.
There's a free document you can have.
of frameworks that they've shared when they came on the podcast.
Uh you can get it right now. It's actually just a mental model that separates, I guess, the elite investors from the average investors. So you can get it right now, scan the QR code or click the link in the description. All right, let me get back to the episode.

I'm just curious, like what is a day in the life of Kathy Wood look like? What's your actual
Day to day
main thing that you focus on.
I hold sacred in terms of from the moment I get up in the morning.
Until ten thirty.
Uh
Uh that time is
All about research.
And so
We have our uh research meeting from nine in the morning.
Two ten thirty.
First uh
First half of it is
Just the entire
Research team together and investment team.
Portfolio management teams.
Together
uh really sharing information and then we focus on
in the last half hour on one of the
Four teams. So we have uh we're broken up into
Uh Autonomous Technology and Robotics Team
A I and Cloud, which
Um
has forked another team which is
consumer internet and um
FinTech.
Then we have our multi omics team, which is
really all about life sciences and
How profoundly AI is going to transform health care, and I think that's the most inefficiently priced part of the market.
And then we have our blockchain technology team on Fridays.
At uh ten thirty.
We have
А брайстор.
And the brain storm is all our teams coming together or staying together.
But we have
Another
I'm going to say another forty people who who have followed us over the years.
And are passionate about innovation.
And uh we invite them to what's called a brainstorm.
And that is where we we try to get out of this not invented here. We really want pushback.
So
Viz are venture capitalists, they're entrepreneurs.
The retired engineers.
They're retired professors.
There people teaching
In universities today.
And
They are very vocal because they're ever all o all of us they
Probably more for their personal accounts.
But we're all trying to figure out how
The world is going to work.
And
We're trying to push the frontiers of knowledge forward.
As fast as we can, anticipate what the next set.
of topics are going to be that people are discussing.
And trying to figure out where we should position ourselves.
That's pretty interesting. Do d is that common? Do you do other firms do this kind of Friday open door brainstorm with like external folks? That sounds pretty unique.
No, um
They don't
I and I've done this.
Since two thousand one when I was at my last firm, I
I just thought it was really important not to get stuck in our own research.
but to have it battle tested and and we took that to another l level
When
I founded Ark.
With this notion that we're gonna give our research away.
We're gonna give our research away.
Not when it's finished, because it's never finished.
But as it is evolving and we push it out now at the time two thousand fourteen.
Twitter was for tweens, teens, and celebrities, right?
So I didn't think that was going to be our primary social network.
We thought maybe LinkedIn would be
Instead, X has become the most important social network, even for crypto.
Uh I thought Telegram
was where all of that was going to live. And yeah, there are all kinds of conversations, but the ones
That we need and that I need to see, they are on X.
Uh and sometimes we stir the pot.
You know, with our research and
And get debates going. So
Uh I feel that w the world is moving
So quickly today. It's not like it was.
In nineteen seventy seven. Back in nineteen seventy seven, as I described, the
It was really expensive to get information.
and to travel places
uh to pull information from management. And so research departments like the one at Capital.
They were closed and that was their secret sauce.
Today
Information is ubiquitous.
Uh it is all over the place. In fact you have to figure out is it real or fake.
You know, so you know, so th that takes another skill.
Uh so
I I thought you know
The closed world is
Probably.
Not where we are best suited for for what we want to do.
And that is
Focus exclusively on
Technologically enabled disruptive innovation.
That's all we want to do.
Well
There's so much information out there.
And uh we knew we could harness it.
And it's how you put it together.
And what you
What what you place priorities on in terms of the kind of information
Uh and the kinds of assumptions that you're making uh that become more important.
And you um this might be a dumb question, but like you will go on TV and you'll say
I think Tesla's going to two thousand dollars a share, whatever your target price is.
And everyone says, Oh my gosh, that's
really bullish, and you say, here's why we believe, here's what what, you know, here's what we believe the future looks like. And I hold Tass on I hope that that all comes true.
But you are very active. Like you're buying and selling Tesla all the time. I looked at the last like twenty four hours your firm has made like
twenty trades or something like that. Like millions of dollars in and out of these positions. If you believe Tesla's going to, you know, some two thousand dollars a share.
Um
Why don't you just buy it and hold it? What what is all the active trading for? And like are
Are you day trading? I mean I'm I'm not from the f invest world, so I'm trying to understand
You know, you have sort of the buffet mentality and then you know, you have you're very, very active. I don't really get that.
Yeah, that's another great question. I know it must seem confusing.
Uh so
And we often do describe ourselves
few people believe this, but we believe it, uh, as a deep value manager like a Warren Buffett, if you give us five years.
Um
And uh you know, Warren Buffett
He

I don't invest in technology. He made a few good ones, like Apple was great, IBM not so, but
Um
He knew where his strengths were.
Works.
Or he knows where his strengths are. He's still with us. Um
Uh and he did not feel that
technology was where he was h where he had an edge.
That's where we do have our edge.
And so you can say we're a great compliment to the Warren Buffett strategy if you give us a five year investment time horizon.
So
Why do we trade so much? Well
Because of what has happened to the markets in
R really since I got into the business.
Um
It I think more than seventy five percent of the trading is algorithmic.
and high frequency trading.
There's a huge amount of volatility in the market itself.
But especially in our stocks.
So if you look at our trading in Tesla.
We are using it.
We're using the volatility.
to our advantage.
So
Rarely has Tesla dropped below the number one position in our flagship portfolio, ARKK.
What has happened.
It has gone from
One hundred to five hundred dollars.
And becomes
You know,
thirteen, fourteen percent of the portfolio
Se from a portfolio management point of view.
We are effectively rebalancing. That's a lot of hard work, one hundred to five hundred.
And we know, we know, we know, we know.
Tesla is a controversial stock.
Elon Musk is a controversial individual.
And we are going to have opportunities at lower prices.
To move back in.
And so that's the kind of trading that you see
Uh around our high conviction stocks.
Okay, so let's take what you just said. So you said
Give us five years, right?'Cause we're betting on these sort of long term technology
S curves that we're we we think are playing out.
So here's the tough question. Um of the last
Ten years you've been making hundreds of millions in fees.
But haven't
outperformed the simple index like QQQ.
Do you think that's a fair criticism?
So
Can I can I give you a reset here? I love the question. You're giving me an opportunity to answer a question that I I know is on many people's minds, even if they don't ask it. So thank you.
So
Our objective
As uh as a firm.
is to deliver
A minimum.
Fifteen percent compound annual rate of return.
Over five years.
So you are
Absolutely right. We have not done that.
We have done that since inception.
So since inception, our compound annual rate of return
is over fifteen percent.
Now what happened?
In the middle there, because you're this y you're focused on endpoint sensitivity, and I understand why people use five years, ten years, all of that. If you use ten years.
Uh and you look at Morningstar.
And uh
Just their quantitative metrics.
Which have no human input. They just have their rules based system.
Based on the benchmark they selected for us. We didn't choose the benchmark. We are benchmark agnostic.
We are in the
Fourth.
Percentile.
of performance for that benchmark на да бенчмарк
Is mid cap growth.
Right. Uh which kind of fits because we consider ourselves all cap, but
You know, if you average, you'll get mid to mid midish cap, let's say.
So
That's good.
You know, that's
That's actually saying something. The space we've been in.
Anything less than large cap and especially mega cap.
Growth, especially in the tech space.
has been very tough.
Okay, so that's another marker.
Now
What about the last five years?
Well
We had
Covid.
In twenty twenty
Uh because th this is when we blew up. Uh I'm I'm not sure if you know
Uh this part of the history, but
Because we were the only investment firm putting our research out on social media.
And the only one posting our trades every day.
We went viral during Covid because everyone was sitting in in front of their computers trying to figure out what to do with their time.
But and their extra money, by the way.
Yeah.
And they're extra money.
We were actually
And
Really one of the few out there teaching.
People about investing.
Uh bringing them along on our journey.
In twenty twenty, we were up a hundred and fifty percent.
And at the end of that year
Remember, we're five years away from that. This is what we're comparing against.
At the end of that year, I was on
Eric Shatsker's show on Bloomberg. It was a holiday show.
And they gave us a lot of time, and uh one of my main messages was
Hey, kip some powder dry.
This we know what goes up like this.
Is going to come down.
It's just too much capital chasing
Chasing the opportunity.
Perhaps too soon and
The re and
That
That last point I probably should have
Said more loudly to myself and to our team because
Even though
Our
Modelling.
Stock by stock.
got us to a fifteen percent compound annual rate of return over the next five years, which was very low. Normally we're
Normally
We we're expecting twenty five to forty percent compound annual rate of return. So it had dropped because of the appreciation in stocks.
to fifteen percent.
But what also had happened and what we did not appreciate
Enough.
Was
Many people think oh the interest rate increase.
That wasn't as much the problem.
The problem
Was supply chain.
Bottlenecks.
Our models
Are driven
By unit gross.
And when there's an interruption in unit growth
Our uh our model
our the the rate of return expectations come down.
Mm-hmm.
I
I thought and we thought
We were gonna come out of this um

Crisis
In a V shaped recovery, and we did. That was correct.
But
We didn't catch.
How long it was going to take supply chains.
Two
Reorient.
And that
That I think
Was
Uh
Big, big lesson for us.
Um
If I had just
Focused on that one variable.
I would have said
Um
All right, let's move more into larger cap tech stocks with a big cash position.
That are innovating. And it would have been the Mag Six and and all of that.
We did not do that. What we did, we owned them, and as we uh because that we had started doing that in the bull market, we always diversify
as a bull market extends because
Ar stocks do tend to go crazy.
to the upside. So we were already doing that.
But then in twenty one
Uh those stocks kept going up.
And our stock, so smaller cap and mid cap stocks.
Started going down.
And so what we always do is rebalance. We took profits there, we bought
That was just way too soon. It worked out.
And I think history will show
That
Everything is fine.
We had to have people stick with us, and there are so many people.
Who piled in at the top, even though we're saying
Uh your horses.
And
Who left us at the bottom, which is clasic. It's clasic.
And so
We're gonna be out there in this cycle a lot more saying along the way.
Rebalance.
Sell.
Take profit so that when our strategies go through a weak spot.
A sinking spell.
Then you'll have the psychological wherewithal.
To buy it's called rebalancing and it's a basic investment concept.
Today's episode is brought to you by HubSpot.
Being a know it all used to be considered a bad thing, but in business, knowing it all, it's everything. Because right now, businesses are only using about twenty percent of their data unless you have HubSpot.
That's where they take data that's buried in emails and call logs and meeting notes. They become insights that help you grow your business because when you know more, you grow more. You see, being a know it all isn't so bad after all. Visit hubspot.com to learn more today.
Betting against you as betting against
A combination of things that I would never want to bet against. It's betting against AI, it's better against crypto, it's better against innovation, and it's betting against Elon Musk.
Those are just that's not who I you know, that's like
The monsters in Space Jam. I'm just not trying to bet against that. You might even be right on some
on any one of those individual things, maybe for a period of time. It's just not where I would want to be positioned against long term.
Yeah.
Like I'm a normal person and it's pretty crazy when
Uh like I this is in venture capital too, by the way. Inventure capital VCs, it's a rigged game. I heard this a long time ago and I it never left me, which is venture capital is a rigged game. You make
two percent annually on on your fees, regardless of whether you make money or lose money. And I think what you do is very similar, right? Like if you have
Well like I don't let's just use a round number. Twenty billion in assets across your ETFs, is that about right?
Across the company we're closing in on forty billion.
Okay, that includes the digital assets, private funds, everything. So we do have a venture fund. So I know what you're talking about. Uh we're doing ours uh a little differently. We don't have a carry, so that anyone with five hundred dollars
Can
Can get onto the captables of SpaceX, open AI.
Neurink and so forth. You don't have carry, so how do you make money in that?
So what we do is we do have a high fee.
So
I think it's um
Two point seven five percent
And what we did to arrive there is we said, Okay
What do the
Best venture capital firms in the world.
Delivery.
Over time
in terms of compound annual rate of return for their clients.
And how much
of the benefit do they derive?
Uh and
The the best ones and and maybe they're gonna be north of two point seven five percent per year on average, and especially in this kind of a market where
AI is just
Out of sight.
But uh the best ones if you do a very long term historical retrospective, uh uh the h historical is re retrospective, uh two point seven five percent was the landing point. But we are offering direct to cap.
table. These are not SPV. Right. Not SPVs. So there are no fees or Pon fees or Pon fees.
Right.
And so y you know, I think that the challenge is basically on a
Twitter, forty billion dollars in total.
assets. There's a guarantee as a f this is why finance and fund management is like one of the best businesses in the world is
You get a you know, hundreds of millions in fees guaranteed, regardless of whether you're up, whether you're down. And then, you know, like the more you go up, maybe you you have additional carrier. There's other things that uh you know in venture capital that that you benefit from.
And so I think that's the that's the um the challenge, right? Like Munger used to say, you know, show me your incentive, I'll show you your outcome. It's like
I think all all finance and fund management is generally suited towards
grow assets under management, we make money either way, and then like try to do your best in terms of the performance. And in the long run
You know, you will be judged on the performance, but in the short run, it's hard to tell, right? Like uh what what's what's working, what's not, which is why
When Buffett I think started, he he basically said
I'll take nothing.
For the first six percent, which I think was like kind of the
sort of the index standard at the time and he said but above if I beat
If I beat market.
Then I want twenty five percent of profits. And I thought like, you know
That was a a great structure. And I think the world of finance has moved away from that, because why would you if you could t I I would do it too. If I could take the guaranteed fees, I'm gonna take it. Well, you know it's interesting from the uh
I'm gonna say from the eighties on, when I saw hedge fund structures and venture capital, I said
I'm an economist. I'm say I I said, Uh that game's gonna end. That's you know, that

Excesses, excessive return, shall we say.
They they go away with competition.
But in the venture world.
Uh and there's a huge amount of competition, but if you look at where the real money is made, it's in the top.
You know, ten.
The top ten.
Is where a disproportionate amount of the returns are. And of course that's what we're aspiring to. And of course everyone is aspiring to it, but there's
Some kind of network effect and and I think it has to do with
The the network effect is
is not a viral app. It is the community. Venture has one different property than what you do, uh outside of your venture stuff, which is in startups, it's the only asset class where
The um the security selects the investor. So you know, for Buffett or any public stock market, I get to just pick what I want to be in and I push a button, I'm in I'm in the stock.
Whereas in Venture.
The hot startups wanna be with the hot funds and only the hot funds get to be on the cap table. So the security selects the the investor, not just the investor selecting the security. So it has this like
That's where the network effect comes in. That's where the brand effects come in. And that's why Sequoia
And Benchmark and these other guys will keep showing up in the top because
If I'm one of the top startups, I want them and so they get the they get the access. Even if another investor was totally right in their thesis, they just can't get them together.
There is self selection, you're seeing in the hedge fund world.
Big changes though in that world.
The fee structure is changing.
Passive the the indexes
were outperforming active it was a a self fulfilling prophecy because the pendulum was swinging there.
I believe that that pendulum swing
I think
I think
Yeah.
And
Consider the source.
Right.
But I think the pendulum swing the final
Swish.
In that direction.
Was in the last few years towards the Mag Six.
And now they're so con one of the reasons they're such concentrated parts of the
Now are they all gonna benefit from all of these new technologies? You know, our focus on robotics.
Energy storage, AI, blockchain technology, multi omics.
Uh some of them will.
Apple, we've been watching for a long time.
Finally it's out.
They don't know what they're doing in a a in AI.
Uh now I think they're scrambling a bit. So you know, we'll see what happens.
Uh each one of them
Has a weakness. Each of the mag six
has a weak a weak spot.
Uh sure. They'll participate in the wave, but they also have some weaknesses caused by the disruptions.
Associated with these new ways of doing things.
Uh, and I think we're at the beginning of that pendulum swing in the other direction. As I just said, consider the source. That would be great for us. Because we don't own the Mag Six in our top ten. It's not like we won't own them.
But we don't own them for the most part in the top ten.
If I'm a believer in AI.
What's the number one stock?
That I should own.
To benefit from
The oncoming AI wave.
Well
I think everyone knows about NVIDIA. We always try and
Answer that question with stocks, people
It either they don't know or they're not quite thinking about them in the right way.
Uh Yeah, misunderstood. Maybe not maybe not unknown, but misunderstood or mispriced in if you yes, as we were selling in NVIDIA and and we got all kinds of flack, no nobody bothered to notice that we put it in the portfolio in 2014 because of autonomous
Driving at
I think twenty cents.
On the current stock.
Uh uh stock spaces at twenty cents per share.
Um
And we held it for years and no one would listen to us. No one. I talked about robotics, talked about autonomous driving, talked about uh nope. It was a PC gaming chip company and that's all it was.
And then it explodes with chat G V D and
You know, we we start selling it and
And and we sold it
Too soon in the uh
In the flagship, I mean meaning we exited it. We're back in it now when it dropped during tariff turmoil.
But
What did we put the m in portfolio management you have to
Not look at what
But just what was sold.
But what did you do with the proceeds?
How about
Palantir.
Which I think from that point has done better than NVIDIA. I I I don't know. It was
That was the case at one point.
How about Coinbase when the SEC was suing it? That's one of the
That that's what we use some of the NVIDIA for.
It has done pretty darn well. Um, I think almost as well as NVIDIA. So you have to do so today, of course NVIDIA still I mean we we it it still has a a a very important role. Palantir still has.
a very important role. It is the premier uh platform as a service company.
We think embodied AI is
Under appreciated, what is that? Embodied AI is physical AI, physical and digital worlds meeting.
You know what I'm gonna say next.
Tesla.
is the largest AI project on earth.
And it's not just robo taxis anymore.
It is humanoid robots.
It is humanoid robots and
According to our research, while the robotaxi opportunity
Globally for everyone, including China.
is an eight to ten trillion dollar revenue opportunity in the next five to ten years.
From maybe a billion now. So think about that. A billion.
To eight to ten trillion the whole ecosystem.
With the platform companies like Tesla getting half of that.
So that's four to five trillion.
That's a big market.
Uh according to our
uh estimates
Uh the humanoid robot market?
Will be
a twenty six trillion dollar market
In the next
I'll say
Seven
to fifteen years.
So me and Tyler, the CEO of Beehive, came up with a little challenge for you.
It's the newsletter challenge. Now, if you know me, you know that I'm a big fan of newsletters. I got my own newsletter. I also had a business that was a newsletter business that was amazing. I wrote this newsletter about crypto, we grew it to quarter million subscribers, and we ended up selling it after a year for millions of dollars. And I want you to be able to do the same thing in your business. So we're doing a challenge. 10 grand is on the line.
Plus, me and Tyler will actually be in your corner as growth advisors. You just need to go to bhyive.com slash MFM and you either start a new newsletter or you move your current newsletter over there and five finalists will get picked to pitch me and Tyler sort of like Shark Tank and the winner gets 10 grand. So go to bhyive.com slash MFM. That's bhy.com slash mfm to enter the challenge today.
I wanted to ask you about this because you you put out this great deck or Ark put out a great deck.
Um, and I love this slide. So uh if you're on YouTube you'll be able to see this. If you're on audio, um sorry. Yeah, go go to YouTube and or Spotify and check this out. So
On the slide, I'll just describe it.
So it's basically the cost per mile. Like how much does it cost to travel to transport?
A human being one mile.
And you started like in the eighteen hundreds like horse and carriage, and you know, adjusted for
Inflation and all that. It's not it looks like it's two dollars and ten cents to travel a mile when you're bet when you're on horse and carriage.
Then you know you get the
The Ford, uh you know, Henry Ford era.
And you're at a dollar ten. And basically for like
I don't know, almost a hundred years, it's been roughly the same number. It's been a dollar ten to travel a mile.
And then your estimate is that with self driving cars where you don't have a driver in there and you're on an electric self driving car
that the cost per mile could drop to your estimate is a quarter. So
Uh, you know, four times cheaper.
Then
what it currently costs or what it has cost for the last hundred years. Did I summarize your slide correctly?
That із корект, да із корект, а не ферстід.
We too were astonished with that. Wait a minute, it cost the same inflation adjusted.
Uh that that and then one of the reasons for that is
Because the the automobile matured fairly quickly, right?
And we're all about rights law.
Right's law tries to understand okay, you've got this new technology
You're starting from a low base.
For every cumulative doubling in that base, so from one to two, two to four, four to eight, for every cumulative double doubling
Costs decline at a consistent percentage rate for each technology.
Well the internal combustion engine is
Mature.
And
So
It has no shot.
against EVs.
Even though I not I know that's not the prevailing wisdom
Uh in this political climate, or I'm just using economics and and learning curves, so technology. Sorry what do you mean by it has no shot? You mean like um no shot in what sense? The cost comparative comparison or just
Of the chart.
You just showed.
You can't get that cost down any lower.
The m there there are no more cumulative doublings.
Everybody's got one.
You know, uh it's a bit of an exaggeration in the emerging markets they don't, but uh they're not gonna be paying up for for uh internal they're gonna be looking for the cheapest solutions to cars and those are gonna be electric.
And the part that the part that I didn't get was um so okay, great. The cost is gonna go down because it's a self driving electric vehicle.
Okay, I get that. Uh I could see why the cost goes down.
Uh and I assume when the cost goes down, the demand goes up. Oh it's cheaper to travel, more people travel, it's
get selected over all the other s more expensive ways to travel.
Um
But the
Estimate you have where it's like the cyber taxi revenue.
I think you had the autonomous revenue is sort of like in the
Uh what did you say? You said ten trillion or something like that? Yeah, yeah.
Totally.
Right now, if I just take Uber, Lyft, DoorDash, like kind of the
The revenue of all those companies, which today I would say ride sharing is not like
A new idea. It's pretty
Pretty prevalent.
I think Uber's at forty billion, you add Lyft, that's another six billion, and then DoorDash it does about ten billion.
So like
The total of all three of those companies is only in the like fifty, sixty billion range.
But you're saying that but that is even different from what we're talking about here.
They are not autonomous and they are not in the poll position. I mean, DoorDash w harness autonomous. That's very interesting one because we think delivery
Is
with e especially with drones and rolling robots and everything, it's very interesting use case. But
Uber and Lift are not in the pole position for this new world.
Right, right. But I guess what I'm saying is
That's what's spent today on taking rides from a a ride like a push a button get a ride service.
Um I see. Why would why is self driving gonna be twenty times more revenue generated? Why is it gonna be ten trillion when all of those add up to sixty billion. Right.
What we're doing is moving from a very narrow uh subset of transportation called Ride hail today.
To all of transportation.
I so we're
We're moving the entire market to autonomous.
to get that number.
They're a very small slice. Very, very, very small slice. And in fact, what's so interesting in San Francisco
Um, I think that Waymo
Uh we're finding research is showing
That uh people are willing to wait longer and pay more for a Waymo.
Right.
And
I believe this has already happened.
The number of miles, even though
In San Francisco, Waymo is geofenced and lift is not.
Uh the number of miles in San Francisco, the San Francisco M metropolitan area that Wamo is
Driving.
Per day has surpassed
Lift and is heading for
Uber.
Isn't that remarkable?
People are willing to pay up. No, that's not in our eight to ten trillion. We assume
That sure they'll start maybe right
At or below
The
Prevailing prices for Uber and Lyft.
But they will drop over time.
To that twenty five cents. So starting
In the two dollar when it's surge pricing, you know, it can be eight dollars per mile.
Um
Starting
Two ish dollars, two fifty maybe.
And
dropping to twenty five cents. Twenty five cents is at scale.
Right. So that's the eight to ten trillion dollar. And
You know
Just think about it.
I mean
I would prefer
to take an Uber today, even though I have I have two Teslas.
And and I love them, but I still have to pay some attention.
On the road, right?
Right. I'm curious, uh how much
of the Tesla market cap. I think Tesla's one point three or one point four trillion.
How much of that is Elon? Meaning if I took Elon off the company, if Elon went to sleep for the next twenty years and we we weren't gonna have Elon running running the company, would you keep your position the same way? And and how I guess just a pie chart, right? Of that one point three trillion, what do you think that number goes to?
If there's no Elon.
Like five years ago, the answer would have been different.
But I think what has happened and one of the reasons Elon
Has spent so much time.
doing other things, m some of which people didn't agree with.
Is because I think he feels
They have pretty much solved the last mile.
In F S D.
And if they have done that.
Then they're going to capture the robo uh taxi opportunity. They're going to be able to scale.
We would not, however.
Uh start incorporating humanoid robots in the way we
We haven't done much yet in our twenty six hundred dollar price target.
Uh uh and we'll update that. We usually update it each spring.
uh for public consumption.
Uh and so we have very little for humanoid.
We'd probably
uh be be much
Less optimistic on humanoid robots.
So we wouldn't put
As much in
As we perhaps will with Elon at the helm.
Right.
Wonderful. Well, Kathy, I appreciate you coming on. Uh it's fun to hear some of your stories. It's good to hear, you know, your take on some of the tougher questions. So I appreciate you doing this.
Yeah, thank you, Sean. And thank you for the tougher questions. They're important. I thank you for giving me a platform on which to answer uh those questions because it is important. It is important. Great. Well thank you to do it again.
I feel like I can rule the world, I know I could be what I want to
I'll put my all in it like my day's off on the road, less travel, never looking back. Alright, let's take a quick break because as you know, we are on the HubSpot Podcast Network, but we're not the only ones. There's other podcasts on this network too, and maybe you like them. Maybe you should check them out.
One of them that I want to draw your attention to is called Nudge by Phil Agnew. And whether you're a marketer or a salesperson and you're looking for the small changes you can make, the new habits you could do, the the small decisions you could make that will make a big difference, that's what that podcast is all about.
Check it out. It's called Nudge.
And you can get it wherever you get your podcast.