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Unknown A
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 modes back because he looks like he is so hyped and he is talking to retail investors during the call.
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Unknown B
Palantir is here to disrupt and make our the institutions we partner with the very best in the world.
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Unknown A
Okay.
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Unknown B
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 and we're really happy.
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Unknown A
So that escalated quickly. So we're here to scare our enemies and then.
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Unknown C
And we're gonna kill them too. Like retail investor enthusiasm to screw the analysts to go USA to kill people.
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Unknown D
This week in Startups is brought to you by Gusto. Gusto is easy online payroll benefits and HR built for modern small businesses. Get three months free when you run your first payroll@gusto.com Twist Oracle Oracle Cloud Infrastructure, or OCI is a single platform for your infrastructure, database, application development and AI needs. Save up to 50% on your cloud bill@oracle.com Twist and Horatio Customer experience can make or break your business. Horatio provides top tier outsourcing solutions to support and delight your customers so you can focus on growth. Visit HireHoratio.com twist and get $2,000 off your initial setup.
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Unknown A
All right everybody, welcome back to this week in startups. Alex Wilhelm, Jason Calacanis 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 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 founder 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.
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Unknown A
I know it's good for some people. I have. I'm losing my mind. I need to be with people.
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Unknown C
So I actually have been there. When I was living in San Francisco, I joined Techcrunch 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 like the socialization of it. Yeah, so I hear you.
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Unknown A
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 what I got done. Five minutes at the beginning, 10 minutes at the end. It creates like a bookend. 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.
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Unknown A
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.
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Unknown C
I gotta ask a different topic, different question. Severance. People are talking about the show. Do I need to watch it?
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Unknown A
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'm. I've been courting Ben Stiller. I've got like a little bromance going. It's. It hasn't consummated with going to a Nick game together yet, but we kind of, you know, talk once in a while over. 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 Innie and an Audi. So right now, this is Our Audis, 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 life is.
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Unknown A
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 innie does for a living. Your innie doesn't know what your outside person does.
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Unknown C
Oh, so it's literally like you are now two people. Ah, okay.
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Unknown A
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.
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Unknown C
It's, oh, well, that's me.
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Unknown A
It's a little bit of work. And you have to think, what are the themes here? What are they trying to express?
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Unknown C
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.
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Unknown A
I mean, if you want to watch like a Tyler Sheridan like Landman, which I think was a really great series, I, I consider that like going and getting some barbecue.
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Unknown E
It is what it is.
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Unknown A
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, it's just some nice barbecue. But severance would be like going to a Michelin starred 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'm just started the first two episodes here.
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Unknown C
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 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.
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Unknown A
Well, what do we have on the docket? Let's get right into the first news story. What's the most important thing happening in the technology industry right now?
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Unknown C
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, around the stock market 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.
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Unknown A
Yeah. Disconnected from reality.
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Unknown C
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 line. 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, it's growing pretty quickly. I got to say, Palantir has impressed me. Shall I run people through the results?
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Unknown A
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 were, remember correctly, trending towards 3 billion a year run rate.
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Unknown C
Yes. So according to their latest earnings drop is actually 828 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 count grow 43%. And here's the thing, plus 13% from 1/4 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.
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Unknown A
Yeah, a company that's making a couple of billion dollars a year to add $1 billion 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. Like as an example.
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Unknown E
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Unknown E
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Unknown A
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 valuation, not their earnings. Their price to earnings ratio is over 500.
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Unknown C
Yeah.
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Unknown A
So that's kind of crazy in and of itself.
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Unknown C
It's absolutely nuts. But here's the Palantir clip that you tweeted out. Let's give it a run. And by the way, if you're watching the video of this, Karp is in the middle. He's the guy in his T shirt.
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Unknown A
Yeah. 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?
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Unknown B
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, our 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 talk. Stop talking about it. I'm very happy to have you along for the journey and you are partners for us.
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Unknown A
Let it keep going because you haven't.
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Unknown B
Hit everyone else listening. We are dedicating our company. We have dedicated the west in the United States of America and we're super proud of the role we play, especially in places. And we love our success in the US and globally. Also, you know, we are doing in the United Kingdom and many other places, Palantir is here to disrupt and make our. The institutions we partner with the very best in the world. 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 okay and we're really happy.
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Unknown A
So that escalated quickly. So we are here to scare our enemies and then.
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Unknown C
And we're going to kill them too. Like retail investor enthusiasm to screw the analysts to go USA to kill people.
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Unknown A
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.
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Unknown C
That's interesting. I got the opposite vibe because I remember when Elon tweeted that out 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 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 worst of the company, given its very strong financials. And here's a. I think a good explanation of what we're talking about. This is the price sales ratio that you mentioned earlier of Palantir in Orange if you're watching the the video or purple for Nvidia, a very expensive stock in many people's eyes that some people consider to be overvalued.
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Unknown C
In the last couple of quarters, the price sales ratio of Palantir has shot so high above Nvidia zone, 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.
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Unknown A
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 him a couple of months ago, like, yeah, I guess I gotta 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 Palantir to Nvidia, when you get these sky high price to sales ratios, it's typically indicative of, of high growth, like hyper growth, 35%, 25% growth year over year, you know, is great. That's, that is high growth. It's not hyper growth though.
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Unknown C
No.
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Unknown A
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 Zurb era, to bring it back to startups.
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Unknown C
Yeah.
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Unknown A
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 $1 billion 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 you know, put your kids 529 fund and, and their, you know, whatever you're going to do for them, you know, do it quick because things do not go to the moon.
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Unknown A
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.
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Unknown C
In poker, I think taking money off the table is called going south.
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Unknown A
And you're not allowed to do it.
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Unknown C
Not allowed to do that. Startups are not poker. There's not. The decorum of the poker table does not kind of translate over. 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.
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Unknown A
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.
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Unknown C
I. That makes perfect sense to me. But at the same time, and to be clear, twist 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 chunk of it. We're enjoying the upside. I just wouldn't personally triple down on my exposure.
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Unknown E
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Unknown A
It in the industry.
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Unknown A
Well, that is actually a really interesting point. 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 R 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. 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 Temu and Sheen, they work because of a weird 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 since on the docket, so can we maybe talk a little bit about Temu and Sheen and that hack and what the latest status is of Eco directly being dropshipped from China?
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Unknown C
Absolutely. So Temu and Shein 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 a thousand bucks in some markets. Some countries it's low as $5. In the US currently, it's 800. It's gone up over time. I think it was $1 back in like 1930. Anyways, Temu and Shein have been taking advantage of this because they ship very inexpensive things and they just keep the shipments below 800 bucks. 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.
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Unknown C
So people immediately thought, well, you know, there goes Temu and Shein because their prices can't be maintained at that level. We'll see. I've been tracking pdd, which owns Temu and 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.
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Unknown A
Wow. So the U.S. postal Service is suspending accepting these parcels from China, Hong Kong, etc, because of the trade war.
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Unknown C
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. Then it all got taken 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 out 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. Yeah.
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Unknown A
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.
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Unknown C
Yes.
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Unknown A
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.
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Unknown A
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, if you had waited 48 hours from Saturday, Sunday, when all the Sunday shows were losing their mind over tariffs, if you waited till today 72 hours, it was all resolved and the market didn't need to crash. Right.
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Unknown C
How much do you think that's Trump, you know, going out there and, and saying what he wants to do and then his administration going, ah, 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.
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Unknown A
I mean, 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 it. 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?
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Unknown C
Yeah. On the Temu Sheen point, I mean, we haven't seen, in the case of Sheen, 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, of a trade war. Also.
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Unknown A
Just, I guess, just first principle should that $800 exception exist if it's generating 4 million. Is that number correct? 4 million packages into the United States.
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Unknown C
I'm, I'm just going to double check my, my number here, but I'm very, very nearly personally confident.
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Unknown A
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, that seems like a really large number, but maybe it's not. Maybe it's not.
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Unknown C
According to the U.S. customs and Border Protection Agency, on average, CBP processes over 4 million de minimis shipments into the US 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 US under de minimis went from 208 million in 2018 to 640 million in 2023. Now, we don't have full fiscal 2024 numbers yet, blah, blah, blah, but I think that they're mostly from China.
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Unknown A
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 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.
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Unknown A
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.
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Unknown C
Answer to your question about, you know, which way we should think about this just comes down to about trade. And as a, 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, huzzah. But a lot of folks are more protectionist 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 US just because it's going to be.
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Unknown A
Harder to make and ship things in today's market.
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Unknown E
Your business is judged by its customer service, right?
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Unknown A
We all know that.
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Unknown E
One bad experience, that's it.
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Unknown A
Kaput. Customers gone for life. And you know what?
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Unknown E
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 deployment.
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Unknown A
It's actually your entire business.
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Unknown E
Right, that makes sense. And Horatio is the trusted outsourcing partner for hundreds of startups and fast growing companies looking to deliver exceptional customer experiences. Horatio provides dedicated teams who act as an extension of your brand, delivering world.
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Unknown A
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Unknown E
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Unknown A
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Unknown E
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Unknown A
Right?
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Unknown E
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Unknown C
That's higherheratio.com/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% year over year. It's a big number. Trips 3.1 billion in the quarter. I had to go back and double check that cause 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 in its current form today is healthy and kicks off mountains of cash. Just solid business.
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Unknown A
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?
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Unknown A
And it was, I think for UberX, 30 bucks for a half hour ride. And I was like, wait a second, so I can. My car cost me 30 bucks a day in, you know, payments or whatever. And it's 30 bucks to park, that's $60. I could have been driven in an Uber X 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.
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Unknown A
It's going to take me 10 minutes when I leave to pay for my valet. I got to give him a tip. It's going to be 35 bucks with the tip. You get the idea. And so that's what's going 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 BYD 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 don't. 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.
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Unknown A
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.
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Unknown C
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 your pocket. 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, 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 were 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 they impact its growth trajectory here and that you've really made it when that's a problem.
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Unknown A
And if we look at the, you know, that same exercise we were doing versus Palantir, what was the Uber revenue for the quarter?
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Unknown C
It was 12.0 billion.
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Unknown A
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 yeah, under three times their top line revenue. Which means buy back your stock. If, 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's going to be 15 people selling their self driving cars to Uber and there'll be two who maybe don't.
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Unknown A
And so that's actually you could see Uber's 10, 20,000 cities they operate in. Uber just buying BYD 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+ Waymo or Uber + Tesla or.
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Unknown C
Uber + BYD best of us.
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Unknown A
I think they become the number one player.
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Unknown C
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. 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 out my my ass here but like a 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 if Uber had its own self driving stock that was at least as good as the market average, that risk to me would be lower. So my p parentheses doom for Uber would be much lower in that case even though it'd be less profitable right now. But you know Dara has done a great job so far. Be it for me to to cast too many aspersions on his choices in Austin.
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Unknown A
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 Waymos 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% a year. The number of rides goes up 20, 30, 40% year over year and then it will be those two folks splitting those incremental new rides.
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Unknown C
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 majority and I would say 20 for all. To me the major car companies are at risk of being essentially replaced by you know, BYD Fleets, Tesla Fleets, Waymo Fleets, etc because I 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 per. My 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.
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Unknown A
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 want to get a Ford Mustang or maybe a BMW, you know, like a European car. A Saab 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 ride sharing is going to win the day 100%.
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Unknown C
Yeah. 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's shaped like a tennis shoe, has 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 minds a day.
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Unknown A
That's a lot of rides.
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Unknown C
A lot of rides. Waymo is doing 150,000 rides a week. Google repeated that number in its earnings call, so that's 21,429 rides per day. So today Waymo is doing 0.065, the number of rides of Uber. And I, I almost want to bet you on how long it takes to get to 1%.
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Unknown A
I mean, three years.
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Unknown C
Oh no, 18 months.
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Unknown A
18 months, okay, sure, yeah, 18 months, three years, something like that.
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Unknown C
Yeah, yeah.
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Unknown A
So yeah, and 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?
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Unknown C
Well, in China, yeah.
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Unknown A
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 US or other places, Europe, South America, et cetera. And then 36 months from now, I think what happened to Deep 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 could be sitting here in five years and you could create a self driving company in a city like that, comma AI company is doing, right? Yeah, Like I think it'll be, I don't 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.
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Unknown A
Right. So that, that's the other problem for Waymo and Tesla, I believe, is this technology becomes commodified and then Toyota and Nissan and BYD and everybody else has it. Okay, what's your competitive moat then if.
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Unknown C
It'S, you know, if it gets commodified? I mean, the point here is that Deep Seeks V3 and R1 models were, I think for nearly everyone out in the market, good enough compared to maybe the absolute state of the art, whatever the newest expensive model from OpenAI 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 it wouldn't become commodified in time. So yeah, I think I agree with you.
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Unknown A
I mean, if you look at cloud computing, AWS was the leader and then Google Cloud, Oracle, Azure and Rackspace and DigitalOcean and a long tail of folks are now providing cloud services. Core weave, obviously, for H1 hundreds. Yeah, that business is that a commodity business? Kind of feels like. 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?
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Unknown C
I think we'll see. I'll just say that AWS's operating profit continues to impress me. And actually Google's cloud business is now relatively profitable, even for Google. I think its 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 that.
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Unknown A
My point is AWS does not own cloud computing. Right.
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Unknown C
I think you can say that today.
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Unknown A
Yeah, yeah. It's not a winner take. All right.
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Unknown C
Absolutely right.
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Unknown A
There are three or four major. There are four major players now in the cloud space in the United States. And globally. So, yeah, it's, you know, this is a very interesting strategic chessboard 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, BYD 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.
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Unknown C
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.
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Unknown A
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 is. 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?
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Unknown A
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, you know, a different format could make it. And then with Lyft, Uber, DoorDash, Postmates, in that whole battle and Instacart, you know, there's some reasons why you might use DoorDash over UberEats, and it might be your specific restaurant that you like is got an exclusive with one.
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Unknown A
So there are reasons that, you know, you can compete. Winner take most or you know, duopoly take most is the likely scenario. In self driving, it'll be three players being 80%.
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Unknown C
Some people actually will pull up like a restaurant on Uber Eats and then on DoorDash and try to compare. And I'm very impressed by how much time they have. But I do think the point about scarcity is clutch because when I was living in San Francisco, I think back in the day Mission Chinese was only on doordash and not anything else. So I had to become a doordash customer because I wasn't going to not eat Mission Chinese because, you know, come on, what are you going to do?
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Unknown A
So what's going on with this Kalshi and Robinhood 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 Kalshi or Polymarket and other platforms.
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Unknown C
Yeah. So the big news this week was that Robinhood, 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 Kalsi and Polymarket really rose to prominence during the last election as a place for people to wager. And Jason, I think you said this is a way to track maybe the smart money, if you will. And this was a big deal, very exciting. And then suddenly Robinhood 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 Robinhood, better for Kalshi, because Robinhood's bigger but interesting and a fun way to play around the super bowl if you're into betting.
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Unknown C
But they got shot down and that, that to me is the second time we have now seen, going back to the DOJ hpe 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.
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Unknown A
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, the downside to you is people lose their money, you lose your job, you're responsible for people losing a bunch of money and, 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.
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Unknown A
Okay, but that's typically what consumers want. What do businesses want? We want more freedoms and more flexibility. So this is the give and take of our society.
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Unknown C
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.
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Unknown A
If you were going to reclassify all the drugs, alcohol would be way up there in terms of damage. And so.
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Unknown C
Yes, and, and my point is that if we're going to allow FanDuel 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 Kalsi should be allowed to play. If we're gonna let alcohol sports betting, then we should allow cannabis cowshi. Maybe not great for society, but I. Look, people get to make choices and that's one of my fundamental beliefs.
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Unknown A
So, 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 Robinhood act or they do polymarket or Kalshi, I want people to be able to do it and I want them to sit through and explain their 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 Robinhood, 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.
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Unknown A
If you want to get like 20% extra show, you can go to YouTube.com and you can subscribe to this week in startups or follow me on x.comjason 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 BYD Densa Z9GT EV? Hey BYD, can you just call it the Densa? 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.
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Unknown C
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.
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Unknown A
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 DK says, it's already been 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, 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 like by drawing like they're playing Fruit Ninja or something on their iPad. And my lord, this is impressive.
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Unknown C
That's straight up incredible. I'm kind of obsessed because I grew up in a place where there was plenty of 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 half rides, I just think it's going to be faster. I think this stuff just accelerates and compounds.
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Unknown A
The only thing that is going to stop this is when sadly, tragically people die in a self driving car which has happened. That's 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 killed 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 you know, 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 is supposed to work. Like it's not a crutch for drinking and driving. But I do think people are starting to thing, you know, hey, the technology is perfected.
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Unknown A
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, 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.
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Unknown A
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 us through a construction zone. You know, even if it's good with cones, I'm going to just do it myself because I'm conservative.
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Unknown C
No. When it comes to safety and driving, I'm a big fan of conservativism. I just want to grab your friend who's going to FSD at home. Be like, no, dear God, not yet, not yet. Just before we sign off, because I know we're about to leave one thing I notice startups founders out there, people who are posting a lot of growth numbers. I love that. I got some cool stuff from Dub Co Glean, dropped some numbers. If you want us to pay attention to you, we'd love to know how fast you're growing. So Alexwaunch Co 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 ARR growth. Just hit me up and we'll talk.
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Unknown A
Awesome. And we'll see you next time on THIS WEEK in Terms. Bye. Bye.