I asked Cathie Wood the question no one else will

Get the free investing playbook to invest like Warren Buffet: https://clickhubspot.com/rme Episode 760: Shaan Puri ( ⁠https://x.com/ShaanVP⁠ ) talks to Cathie Wood ( https://x.com/CathieDWood ) about her fund’s performance, her biggest bets on AI, and the most misunderstood stock on earth. — Show Notes: (0:00) McDonald’s to Managing Billions (8:54) A day in the life of Cathie Wood (17:29) ARK’s Performance Review (30:00) Cathie’s #1 stock pick — Links: • ARK - https://www.ark-funds.com/ • The MFM Newsletter Challenge - https://www.beehiiv.com/application/mfm — Check Out Shaan's Stuff: • Shaan's weekly email - https://www.shaanpuri.com • Visit https://www.somewhere.com/mfm to hire worldwide talent like Shaan and get $500 off for being an MFM listener. Hire developers, assistants, marketing pros, sales teams and more for 80% less than US equivalents. • Mercury - Need a bank for your company? Go check out Mercury (mercury.com). Shaan uses it for all of his companies! Mercury is a financial technology company, not an FDIC-insured bank. Banking services provided by Choice Financial Group, Column, N. A., and Evolve Bank & Trust, Members FDIC — Check Out Sam's Stuff: • Hampton - https://www.joinhampton.com/ • Ideation Bootcamp - https://www.ideationbootcamp.co/ • Copy That - https://copythat.com • Hampton Wealth Survey - https://joinhampton.com/wealth • Sam’s List - http://samslist.co/ My First Million is a HubSpot Original Podcast // Brought to you by HubSpot Media // Production by Arie Desormeaux // Editing by Ezra Bakker Trupiano

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Shaan Puri?

  You manage more money than any other woman on earth.

• 0:03Speaker 01

  Across the company, we're closing in on 40 billion.

• 0:05Speaker 02

  She's called one of the most disruptive and innovative forces. Kathy Wood making some big headlines.

• 0:11Shaan Puri?

  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?

• 0:20Speaker 01

  I think everyone knows about Nvidia. We always try and answer that question with stocks. People are not thinking about in the right way.

• 0:29Shaan Puri?

  So here's the tough question. If somebody else had your track record, would you invest in them?

• 0:35Speaker 01

  Well.

• 0:46Shaan Puri?

  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 may be top five.

• 1:02Speaker 01

  Yeah, probably. I don't know. I don't know myself. I don't, I don't have those members.

• 1:06Shaan Puri?

  Yeah, I'm curious, actually, where, what's the humble origins? So what was Kathy Wood's first job?

• 1:12Speaker 01

  McDonald's.

• 1:15Shaan Puri?

  Cassier, what were you doing? Flipping burgers?

• 1:17Speaker 01

  No, I wasn't. I was at the register. I was 16. I also worked at a supermarket. I, uh, first girl allowed to push in carts at Von's supermarket in Southern California.

• 1:29Shaan Puri?

  Do you remember roughly what you were making when you worked at McDonald's hourly?

• 1:33Speaker 01

  Gosh, I know. Well, right before that, I was babysitting for a quarter an hour.

• 1:39Shaan Puri?

  So, so you went from maybe a quarter an hour to managing something like 20, 30 billion dollars in fun. 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 hustle. So what's the hustle story you pride yourself on?

• 2:00Speaker 01

  Well, the first big break was getting into the business. Art Laffer, I'm not sure if you know Laffer, Laffer Curve, supply side economics, Reaganomics. He was my professor at the University of Southern California.

• 2:14Shaan Puri?

  He was like an advisor to presidents, right?

• 2:16Speaker 01

  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 taxes, deregulation, monetary policy, he wanted to give his point of view. And, you know, we've come full circle, Art and I, because I and my team introduced Art in 2015 to Bitcoin. And when he read our paper, he said, "This is what I've been waiting for since the US

• 3:00Speaker 01

  closed the gold window in 1971. A global rules-based monetary system." Wrong rule, quantity theory of money, you know, limited to 21 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."

• 3:27Shaan Puri?

  Have you seen this website? WTF Happened in 1971? It's amazing. There's an entire website, basically saying, "What the F happened in 1971?" And it shows like, a series of charts where something happened in 1971 and the world was never, really never the same. And it's just, 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?

• 3:49Speaker 01

  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 70s 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 waitress. I was interested in economics, but I didn't know this business. And Capital was the premier firm in Southern California at the time.

• 4:22Shaan Puri?

  Sounds like that might be a tough job to get.

• 4:25Speaker 01

  Art recommended me highly to Don Conlin, who was the chief economist of Capital Group. And I walked in there and 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 didn't want to be the half. I wanted to be the one and a half.

• 4:57Shaan Puri?

  So let me ask you a question about that because I think everybody in their career, you know, will have an opportunity. I had one when I moved to San Francisco when I was 24. I didn't know anybody, but I wanted to be an entrepreneur. I wanted to be in Silicon Valley. 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 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 kind of 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?

• 5:42Shaan Puri?

  Do you think, you know, what's the mindset?

• 5:45Speaker 01

  Sitting in the chair 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 were back in time sharing. All the charts that you just brought up, boom, boom, boom, boom. Back then, each one would have cost in today's dollars, five to $10,000. So that just gives you a sense of how far we've come. But sparingly, I was able to use charts, you know, ones we made up, so original, and then, you know, cull them from people we trusted. And

• 6:30Speaker 01

  Really develop little economic books for and presentations for Dawn to use.

• 6:38Shaan Puri?

  Yeah, 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 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 track record or any of those things. Those are your disadvantages, but maybe your advantage is tech and new things might be easier for you to pick up because you have time and maybe you grew up with those tools and you're less set in old ways. And so you bring something to the table and that can be your thing.

• 7:08Shaan Puri?

  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 Monish Prabri, well, they actually put together a nine investment principles document. That's a free document you can have of frameworks that they shared when they came on the podcast. 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.

• 7:37Shaan Puri?

  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?

• 7:45Speaker 01

  I hold sacred in terms of from the moment I get up in the morning until 10:30.

• 7:54Speaker 01

  That time is all about research. And so we have our research meeting from nine in the morning to 10:30. First, first half of it is just the entire research team together and investment team, portfolio management teams together, really sharing information. And then we focus on, in the last half hour, on one of the four teams. So we have, we're broken up into autonomous technology and robotics team.

• 8:32Speaker 01

  AI and Cloud, which has forked another team, which is consumer internet and fintech. Then we have our Multiomics team, which is really all about life sciences and how profoundly AI is going to transform healthcare. And I think that's the most inefficiently priced part of the market. And then we have our blockchain technology team. On Fridays at 10:30, we have a brainstorm. And the brainstorm is all our teams coming together or staying together. But we have another, I'm going to say another 40 people

• 9:16Speaker 01

  who have followed us over the years and are passionate about innovation. And we invite them to what's called a brainstorm. And that is where we try to get out of this not invented here. We really want pushback. So these are venture capitalists. They're entrepreneurs. They're retired engineers. They're retired professors. They're people teaching in universities today. And they are very vocal because they're every, 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.

• 9:59Speaker 01

  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.

• 10:12Shaan Puri?

  That's pretty interesting. Is that common? Do you do other firms do this kind of Friday open door brainstorm with like external folks? And that sounds pretty unique.

• 10:20Speaker 01

  No, they don't. And I've done this since 2001, when I was at my last firm. I just thought it was really important not to get stuck in our own research, but to have it battle tested. And we took that to another level when I founded ARC with this notion that we're going to give our research away. We're going to 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, 2014, Twitter was for tweens, teens and celebrities, right? So I didn't think that was going to be our primary social network.

• 11:05Speaker 01

  We thought maybe LinkedIn would be. Instead, X has become the most important social network, even for crypto. 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. And sometimes we stir the pot, you know, with our research and, and get debates going. So I feel that the world is moving so quickly today. It's not like it was in 1977. Back in 1977, as I described, it was really expensive to get information

• 11:46Speaker 01

  and to travel places, to pull information from managements. And so research departments like the one at Capital, they were closed and that was their secret sauce. Today, information is ubiquitous. It is all over the place. In fact, you have to figure out, is it real or fake? You know, so, you know, so that takes another skill. So 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.

• 12:30Speaker 01

  Well, there's so much information out there and 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 and the kinds of assumptions that you're making, that become more important.

• 12:50Shaan Puri?

  And you, this might be a dumb question, but like you will go on TV and you'll say, I think Tesla is going to $2,000 a share, or 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, you know, here's what we believe the future looks like. And I hold Tesla and I've hoped 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 24 hours, your firm has made like 20 trades or something like that, like millions of dollars in and out of these positions. If you believe Tesla is going to, you know, some $2,000 a share. Why don't you just buy it and hold it? What is all the active trading for? And are you day trading? I mean, I'm not from the investor world. So I'm trying to understand.

• 13:34Speaker 01

  Yeah.

• 13:35Shaan Puri?

  You know, you have sort of the Buffett mentality. And then you're very, very active. I don't really get that.

• 13:40Speaker 01

  Yeah, that's another great question. I know it must seem confusing. So, and we often do describe ourselves. A few people believe this, but we believe it. As a deep value manager, like a Warren Buffett. If you give us five years. And, you know, Warren Buffett. He was the first to admit. I don't invest in technology. He made a few good ones, like Apple was great. IBM not so, but he knew where his strengths were. Or he knows where his strengths are. He's still with us. And he did not feel that technology was where he was.

• 14:25Speaker 01

  Where he had an edge. That's where we do have our edge. And so you can say we're a great complement 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. And really, since I got into the business. I think more than 75% 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.

• 15:10Speaker 01

  So rarely has Tesla dropped below the number one position in our flagship portfolio, ARKK. What has happened? It has gone from $100 to $500 and becomes, you know, 13%, 14% of the portfolio.

• 15:31Speaker 01

  From a portfolio management point of view, we are effectively rebalancing. That's a lot of hard work, 100 to 500. 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 around our high conviction stocks.

• 16:03Shaan Puri?

  Okay, so let's take what you just said. So you said, give us five years, right? Because we're betting on these sort of long-term technology S-curves that we think are playing out. So here's the tough question. Over the last 10 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?

• 16:25Speaker 01

  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 know is on many people's minds, even if they don't ask it. So thank you. So our objective as a firm is to deliver a minimum 15% 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 15%.

• 17:08Speaker 01

  Now, what happened in the middle there? Because you're focused on endpoint sensitivity, and I understand why people use five years, 10 years, all of that.

• 17:17Shaan Puri?

  Sure.

• 17:17Speaker 01

  If you use 10 years and you look at Morningstar and...

• 17:24Speaker 01

  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. Now, that benchmark is mid-cap growth. Right. Which kind of fits because we consider ourselves all-cap. But, you know, if you average, you'll get mid to mid-ish cap, let's say. So that's good. You know, that's, that's actually saying something.

• 18:06Speaker 01

  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 2020. Because, this is when we blew up. I'm, I'm not sure if you know 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 front of their computers

• 18:51Speaker 01

  trying to figure out what to do with their time, right? And their extra money, by the way. Yeah, and their extra money. We were actually, really one of the few out there teaching people about investing, bringing them along on our journey. In 2020, we were up 150%. 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 Schatzker's show on Bloomberg. It was a holiday show. And they gave us a lot of time and one of my main messages was, hey, keep some powder dry.

• 19:34Speaker 01

  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 that, that last point, I probably should have said more loudly to myself and to our team. Right. Because even though our modeling, stock by stock, got us to a 15% compound annual rate of return over the next five years, which was very low. Normally, we're, normally, we're expecting 25 to 40% compound annual rate of return.

• 20:18Speaker 01

  So it had dropped because of the appreciation in stocks to 15%. 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 growth. And when there's an interruption in unit growth, our, our model, our, the, the rate of return expectations come down.

• 20:55Speaker 01

  And I, I thought, and we thought, we were going to come out of this, out of this 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 to reorient. And that, that, I think, was a big, big lesson for us. If I had just focused on that one variable. I would have said, 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 Mag6 and all of that.

• 21:40Speaker 01

  We did not do that. What we did, we owned them. And as we, because that, we had started doing that in the bull market. We always diversify as a bull market extends because our stocks do tend to go crazy to the upside. So we were already doing that. But then in 21, those stocks kept going up and our stocks, 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.

• 22:21Speaker 01

  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, hold your horses, and who left us at the bottom, which is classic. It's classic. And so, we're going to be out there in this cycle, a lot more saying, along the way, rebalance, sell, take profits, so that when our, 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.

• 22:59Shaan Puri?

  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 20% 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 betting against crypto, it's betting against innovation, and it's betting against Elon Musk. Those are just, that's not who I, you know, that's like the Monstars and 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

• 23:42Shaan Puri?

  of time. It's just not where I would want to be positioned against long term. At the same time, like, I'm a normal person, and it's pretty crazy when, like, this is in venture capital too, by the way. In venture capital, VCs, it's a rigged game. I heard this a long time ago, and it never left me, which is venture capital is a rigged game. You make 2% annually 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, like, I don't, let's just use a round number, 20 billion in assets across your ETFs. Is that about right?

• 24:13Speaker 01

  Across the company, we're closing in on 40 billion.

• 24:16Shaan Puri?

  Okay, that includes the digital assets, private funds, everything?

• 24:21Speaker 01

  Yeah, so we do have a venture fund, so I know what you're talking about. We're doing ours a little differently. We don't have a carry, so that anyone with $500 can, can get onto the cap tables of SpaceX, OpenAI, Neuralink, and so forth.

• 24:37Shaan Puri?

  You don't have carry, so how do you make money in that? Just on the fees?

• 24:40Speaker 01

  So what we do is, we do have a high fee. So I think it's 2.75%. And what we did to arrive there is we said, okay, what do the best venture capital firms in the world deliver over time in terms of compound annual rate of return for their clients? And how much of the benefit do they derive? And the best ones, and maybe, they're going to be north of 2.75% per year on average, and especially in this kind of a market where AI is just

• 25:22Speaker 01

  out of sight. But the best ones, if you do a very long-term historical retrospective, historical is retrospective, 2.75% was the landing point. But we are offering direct-to-cap table. These are not SPV.

• 25:39Shaan Puri?

  Right.

• 25:40Speaker 01

  Not SPV, so there are no fees or palm fees or palm fees.

• 25:44Shaan Puri?

  Right. And so, you know, I think that the challenge is basically on a 20 or 40 billion dollars in total assets, there's a guarantee, as this is why finance and fund management is like one of the best businesses in the world, is you get, 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, you know, in venture capital that that you benefit from. And so I think that's the that's the the challenge, right? Like Munger used to say, you know, show me 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 performance. And in the long run, you know, you will be

• 26:28Shaan Puri?

  judged on the performance. But in the short run, it's hard to tell, right? Like, 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 6%, 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 25% of profits. And I thought like, you know, that was a great structure. And I think the world of finance has moved away from that because why would you if you could, I would do it too. If I could take the guaranteed fees, I'm going to take it.

• 26:54Speaker 01

  Well, you know, it's interesting, from the, I'm going to say, from the 80s on, when I saw hedge fund structures and venture capital, I said, I'm an economist. I'm, I said, oh, that game's gonna end. That's, you know, that those kinds of excesses, excessive returns, shall we say, they they go away with competition. But in the venture world, and there is a huge amount of competition. But if you look at where the real money is made, it's in the top, you know, 10. The top 10 is where a disproportionate amount of the returns are. And of course, that's what we're aspiring to. And of course, everyone

• 27:36Speaker 01

  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.

• 27:48Shaan Puri?

  Well, venture has one different property than what you do outside of your venture stuff, which is in startups, it's the only asset class where the 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 want to be with the hot funds and only the hot funds get to be on the cap table. So the security selects 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 access. Even if another investor was totally right in their thesis, they just can't get them to cap.

• 28:31Speaker 01

  Yeah, it's a self, yes, there is, there is self-selection. You're seeing in the hedge fund world, big changes though. In that world, the fee structure is changing because passive, the indexes were outperforming active. It was a self fulfilling prophecy because the pendulum was swinging there.

• 28:52Speaker 01

  I believe that that pendulum swing, I think, I think that, and consider the source, right? But I think the pendulum swing, the final swoosh in that direction, was in the last few years towards the mag six. And now they're so caught, one of the reasons they're such concentrated parts of the. Now, are they all going to benefit from all of these new technologies? You know, our focus on robotics, energy storage, AI, blockchain technology, multiomics? 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 AI.

• 29:34Speaker 01

  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 10. It's not like we won't own them, but we don't own them for the most part in the top 10.

• 30:11Shaan Puri?

  If I'm a believer in AI, what's the number one stock that I should own to benefit from the oncoming AI wave?

• 30:22Speaker 01

  Well, I think everyone knows about Nvidia. We always try and answer that question with stocks. People, either they don't know or they're not quite thinking about them in the right way.

• 30:38Shaan Puri?

  Yeah, misunderstood. Maybe not unknown, but misunderstood or mispriced.

• 30:42Speaker 01

  So, yes, as we were selling Nvidia and we got all kinds of flack. Nobody bothered to notice that we put it in the portfolio in 2014 because of autonomous driving at, I think, 20 cents on the current stocks basis, at 20 cents per share. 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, nope, it was a PC gaming chip company and that's all it was. And then it explodes with ChatGPT and, you know, we start selling it and we sold it too soon in the flagship, I mean, meaning we exited it.

• 31:26Speaker 01

  We're back in it now when it dropped during tariff turmoil. But what did we put in portfolio management? You have to not look at what, adjust 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 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's what we use some of the Nvidia for. It has done pretty darn well, I think, almost as well as Nvidia. So you have to do, so today, of course Nvidia, I mean, it still has a very important role. Palantir still has a very important role.

• 32:10Speaker 01

  It is the premier platform as a service company. We think embodied AI is underappreciated. What is that? Embodied AI is physical AI, physical and digital worlds meeting. You know what I'm going to say next. Tesla is the largest AI project on earth.

• 32:29Speaker 01

  And it's not just robotaxis 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 10 trillion dollar revenue opportunity in the next five to 10 years, from maybe a billion now. So think about that, a billion to eight to 10 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. According to our estimates, the humanoid robot market will be a $26 trillion market

• 33:14Speaker 01

  in the next, I'll say, seven to 15 years.

• 33:20Shaan Puri?

  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 beehiiv.com/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 beehiiv.com/mfm. That's beehiiv.com/mfm to enter the challenge today.

• 34:03Shaan Puri?

  I wanted to ask you about this because you put out this great deck or Ark put out a great deck. And I love this slide. So if you're on YouTube, you'll be able to see this if you're on audio. Sorry, you know, go to YouTube and or Spotify and check this out. So on this 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 1800s, like horse and carriage and, you know, adjusted for inflation and all that. It's not, it looks like it's $2.10 to travel a mile when you're back, when you're on horse and carriage. Then, you know, you get the Ford, you know, Henry Ford era and you're at $1.10. And basically for like, I don't know, almost 100 years, it's been roughly the same number.

• 34:47Shaan Puri?

  It's been $1.10 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, you know, four times cheaper than what it currently costs and what it has cost for the last 100 years. Did I summarize your slide correctly?

• 35:07Speaker 01

  That is correct. That is correct. And, you know, when we first did this research, we too were astonished with that. Wait a minute. It costs the same inflation-adjusted. That, and then, one of the reasons for that is because the automobile matured fairly quickly, right? And we're all about rights law. Rights 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 doubling, costs decline at a consistent percentage rate for each technology. Well, the internal

• 35:48Speaker 01

  combustion engine is mature. And so, it has no shot against EVs, even though I know that's not the prevailing wisdom in this political climate, or I'm just using economics and learning curves, so technology.

• 36:07Shaan Puri?

  Sorry, what do you mean by it has no shot? You mean like, no shot in what sense? The cost comparison or just?

• 36:13Speaker 01

  Nope. Because of the chart you just showed. You can't get that cost down any lower. There are no more cumulative doublings. Everybody's got one. You know, it's a bit of an exaggeration. In the emerging markets, they don't, but they're not going to be paying up for internal, they're going to be looking for the cheapest solutions to cars, and those are going to be electric.

• 36:35Shaan Puri?

  And the part that, the part that I didn't get was, so, okay, great, the cost is going to go down because it's a self-driving electric vehicle. Okay, I get that. I could see why the cost goes down. And I assume when the cost goes down, the demand goes up. It's cheaper to travel, more people travel. It's gets selected over all the others more expensive ways to travel.

• 36:55Speaker 01

  Yes.

• 36:55Shaan Puri?

  But the estimate you have where it's like the cyber taxi revenue. I think you have autonomous revenue is sort of like in the. What did you say? You said 10 trillion or something like that.

• 37:05Speaker 01

  It's a 10 trillion. Yeah, globally.

• 37:07Shaan Puri?

  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 40 billion. You add Lyft, that's another 6 billion and then DoorDash, it does about 10 billion. So like the total of all three of those companies is only in the like 50, 60 billion range. But you're saying that.

• 37:31Speaker 01

  Right, but that is even different from what we're talking about here. They are not autonomous and they are not in the pole position. I mean, DoorDash will harness autonomous. That's very interesting one because we think delivery is with, especially with drones and rolling robots and everything is very interesting use case. But Uber and Lyft are not in the pole position for this new world.

• 37:54Shaan Puri?

  Right, right. But I guess what I'm saying is that's what's spent today on taking rides from a ride, like a push a button, get a ride service.

• 38:02Speaker 01

  Oh, I see.

• 38:02Shaan Puri?

  Why would, why is self-driving going to be 20 times more revenue generated? Why is it going to be 10 trillion when all of those add up to 60 billion?

• 38:11Speaker 01

  Right. What we're doing is moving from a very narrow subset of transportation called ride hail today to all of transportation. Right? 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, I think that Waymo.

• 38:40Speaker 01

  We're finding, research is showing that people are willing to wait longer and pay more for a Waymo than for an Uber or Lyft. And I believe this has already happened, the number of miles, even though in San Francisco, Waymo is geofenced and Lyft is not, the number of miles in San Francisco, the San Francisco metropolitan area, that Waymo is driving per day has surpassed Lyft and is heading for Uber. Isn't that remarkable? People are willing to pay up. Now, that's not in our eight to 10 trillion. We assume that sure,

• 39:20Speaker 01

  they'll start maybe right at or below the prevailing prices for Uber and Lyft, but they will drop over time to that 25 cents. So, starting in the $2 and it's surge pricing, you know, it can be $8 per mile, starting $2ish dollars, $2.50 maybe, and dropping to 25 cents. 25 cents is at scale, right? So, that's the eight to 10 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

• 40:05Speaker 01

  attention on the road, right?

• 40:07Shaan Puri?

  Right. I'm curious, how much of the Tesla market cap, I think Tesla's 1.3 or 1.4 trillion, how much of that is Elon? Meaning, if I took Elon off the company, if Elon went to sleep for the next 20 years and we weren't going to have Elon running, running the company, would you keep your position the same way? And how, I guess, just a pie chart, right, of that 1.3 trillion, what do you think that number goes to if there's no Elon?

• 40:31Speaker 01

  Well, if you had asked the question... 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, some of which people didn't agree with, is because I think he feels they have pretty much solved the last mile in FSD. And if they have done that, then they're going to capture the robo taxi opportunity. They're going to be able to scale. We would not, however, start incorporating humanoid robots in the way we, oh, we haven't done much yet in our $2,600 price target.

• 41:12Speaker 01

  And we'll update that, we usually update it each spring for public consumption. And so we have very little for humanoid. We'd probably be, be much less optimistic on humanoid robots. And so we wouldn't put as much in as we perhaps will with Elon at the helm.

• 41:35Shaan Puri?

  Right. Wonderful. Well, Kathy, I appreciate you coming on. It was 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.

• 41:44Speaker 01

  Yeah, thank you, Sean, and thank you for the tougher questions. They're important. Thank you for giving me a platform on which to answer those questions because it is important. It is important.

• 41:56Shaan Puri?

  Great. Well, thank you. Hope to do it again.

• 42:08Shaan Puri?

  All right, 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 liked 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 could 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 podcasts.