Has Cathie Wood Smoked Too Much Sticky Bud?

Did Elon Musk inhale?

Or are they just stupid?

Considering these are possibly two of the smartest people in their respective fields (and Elon, for all his batshit crazy, is actually a master of several fields), I’m sure my calling them dumber than a bag of hammers (and I am) will raise more than a few eyebrows. But if you buy into their BS, there’s a lot of money to be lost.

Consider:

There was a guy (not Elon) who wanted to go to the moon. Let’s call him Donald. Athletic was this particular Don. So he practiced jumping. He got higher, and higher, a few millimeters at a time. He made progress. Until he couldn’t jump any higher, at which point he realized he could start higher, so he found a hill and jumped his best. Not high enough. But still… progress. Don found a higher hill, and then higher. Until inspiration stuck his benighted noggin and Don realized he should just go to the highest point he could get to.

So Don trained and trained, learned to climb mountains. He climbed Everest — tremendous progress. He had come closer to his goal by several orders of magnitude. Once at the top Don gave a huge smile, sooo confident that after all his sacrifices and after all his training, he would finally, finally do it. Pumpkin face grinning ear to ear, he jumped… and Don’s ignorant ass died wedged in a fissure the width of a classified file folder.

The moral of the story for all software developers is — progress alone doesn’t mean anything. Progress, even tremendous progress, does not mean you can achieve your goal. Massive progress might very well be hiding the fact that you will never get where you’re going.

What does this have to do with Cathie and Elon?

Getting there.

Off a Cliff

Driving a car without an accident 80% of the time is unacceptable. You can sail through a Software Engineering a class with B, but if you wreck a car on 20% of your outings, you’ll be hospitalized, dead or imprisoned within a month.

90% isn’t enough.

95%? Not even close.

99? Hell no. We drove our kids to and from school every day– four journeys. With a few extra trips here and there to the store and whatnot, a 99% success rate means we’d wreck our car once a month. That sound good to you?

99.9%? I’d wreck our car every year and a half or less.

99.999%? Let’s say an accident once every 15 years. My grandma drove for 70 years and never hit another vehicle. So billions of dollars to perform worse than an 85-year-old woman?

Unless I’m a taxi driver. Or semi driver. Or Amazon delivery dude/ette. Then maybe 99.9999% would suffice?

Except… those are numbers in good weather. Now account for blizzards and black ice (we’re in Colorado).

And directions over mountain passes that require four-wheel drives — cellphone automated driving apps have a penchant for sending sedans on unpassable four-wheel-drive roads out here. See story (not an affiliate link) on Jalopnik here.

I left my house on a beautiful sunny day in the 60s and hit a white-out blizzard at the top of a Wolf Creek Pass. I made it through and arrived in the San Luis valley to a dust storm so thick I couldn’t see the gas station at the next crossroads. I crept through that, got to a sunny spot, and breathed a sigh of relief until later in the day when I climbed into another blizzard on the west side of the Eisenhower tunnel, which I passed through at 11000 feet to emerge into snow that rapidly became blinding rain.

Just another late May in Colorado.

Take your lidar, radar, bumper cameras, and Robotaxi that, techbro.

I’m going to make a bold prediction and say — not in my lifetime.

Those People Are Scary

Have you ever driven in Boston? Yes? A picnic compared to Milan. Even in the smallish Italian town I lived in the drivers completely spread out across all lanes waiting for the traffic lights to change — in the oncoming traffic side.

Seriously.

I’m not sure how humans manage Italian cities. (No disrespect, Amici — Mi amo Italia) I’ve never been to China or India, but the pictures make them look even worse.

The moral of the story for all of us little investors is — don’t believe Cathie Wood or Elon Musk when it comes self-driving cars or evaluating software companies because — smart as they are, when it comes to code, their opinions are worth less than what I see coming out of the longhorns I pass on the range every day.

Because at least that stuff can be used for fertilizer.

Ms. Wood will crunch the numbers and tell you what the projected forward margin capacity in arrears flux ratio is for any company in her portfolio, but I sincerely doubt that she could tell you the difference between pass-by-reference and pass-by-value without a Google tab open. This means she knows jack sprat about the basic-est of basic software development. And that’s who you’d give your money to?

Nor does Elon Musk grok software development — I think since physics is easy for him he figures how hard can a few silly if statements be. But don’t take my word for it — let him outline his superior knowledge himself: in a story from Futurism with the headline Watch Elon Musk Promise Self-Driving Cars “Next Year” Every Year Since 2014.

And then, this year, his words: “Self-driving is way harder than I thought.”

NSS. (No sh*t, Sherlock)

Don’t get me wrong — Elon is a certified genius. With his math abilities and seemingly living well along the Asperger curve, he could probably be a world-class programmer. But he isn’t, and never will be, because he doesn’t have the time. Same as Cathie. C++, Java, Templates, and API’s aren’t in their wheelhouse and never will be. The only Rust they’re familiar with is on the underside of their vehicles. They’re too focused on the forest to understand what it’s like to bushwhack through the b-trees.

Pancakes, Anyone?

I saw an eye-opening documentary on the current development of self-driving cars. One of the bits showed a team of people with a robocar in a suburb, training it to recognize other cars backing out of a driveway in a ‘real-life’ situation.

And I thought, dear Lord, these people really are dumber than a box o’ rocks.

Trying to play-act all of the infinite possibilities of automobile type, traffic, weather, pedestrians, animals, and Acts-of-God in real-time. Can you say heat-death of the universe?

I refer you to my opening story, it’s why I put it there. I’m sure they made progress. They trained their baby on a white car. A black car. In a box, with a fox. But how about a 1957 Cadillac missing a bumper with unprimed Bondo for a rear quarterpanel?

Whack-a-doodle.

The filmmakers of the documentary got it, as did some of the data scientists they interviewed. In another clip, they showed the AI view of the street, and how it tracked all the people. Until one of the people carried a small box. Didn’t recognize the figure as a person at all. Unchecked, that car would have IHOP’d all over the poor pedestrian.

Wishful Stinking

When Cathie recommends a software company like Teledoc or Docusign on Zoom or Tesla — it’s a fantasy even worse than Amazon’s Lord of the Rings prequel.

She is smart and is completely correct about disruptive technologies. However, like she doesn’t understand software, she apparently doesn’t understand that disruption, innovation, and profitability aren’t synonymous.

Visicalc completely disrupted the pen-and-paper world of spreadsheet calculation. But have you ever used Visicalc? (You Gen-X’ers, ever even seen the name before?) Heard of Dan Bricklin, the genius coder who wrote it? No? Then surely you use Lotus (the company and product that destroyed Visicalc) for all your spreadsheet needs?

Hmmm.

Updated your MySpace page lately? MySpace 2.0, aka Facebook, aka Meta, now exists through acquisitions and a deplorable revenue model, but even with its huge base, those techniques aren’t saving it. Maybe it will come roaring back. Maybe that pig will fly again. But I would not be at all surprised if 20 years from someone said to a random dude in cardboard box— Zuck, you can’t sleep here.

A Watery Tart

Ms. Wood has the distressing habit of wielding the word ‘disruptive’ as an all-powerful sword, telling us all that we just don’t get it.

Cathie’s the watery tart tossing Excalibur at us and we’re catching it — pointy bit first.

The problem is most software companies don’t have Warren Buffet’s favorite feature — a ‘moat’. Because bits and bytes make distressingly poor water.

Profitable disruption nowadays almost always entails a network effect.

Meta dominated with the network effect — more users meant more users — but the pivot to the Metaverse? No network there, yet. Nothing for Meta to leverage. They actually have to innovate (laugh track goes here). And since they already have all of our data, they can’t use gathering it again as a secret weapon — no use robbing the same bank twice in one day.

This brings us to some of Cathie’s other favs: Teledoc, Docusign, and Zoom. Seriously … document sharing and video? A glorified Google drive and a couple of camera software companies that basically put a gloss on Facetime? Video software and document-sharing software have been copied, and can or will be out-innovated (likely FOSS’d) because it’s just software and just software alone is rarely enough. There is not now and never was a case for their valuations (IMO). They were low, they exploded, now they’re low again, all without making a profit for few but VCs, founders (one presumes), and speculators.

I’m not actually judging the companies — I know nothing about their deeper financials, and don’t give a rat’s hindquarters. I’m just saying their software is boring and obviously reproducible. (Psst, doctors, heard of Telegram? — end-to-end encryption and it’s got no ties to China.) Maybe they’s gold in them thar’ hills — but I wouldn’t wager a bucket of spit on Teledoc or Zoom.

Even Oracle, who’s made mad Benjamins, is selling a flagship product that 98% of businesses no longer need. Many still use it, but I would guess mostly out of habit and/or fear of retooling, not necessity. Sooner or later, the business world will wake up to the fact that RDBMS’s are an unnecessary toolchain link for most modern applications. My opinion is, technologically, they’re living on borrowed time — again, not that they won’t continue to perform fantastically as a company long after I’m gone. Wall Street works according to its own unfathomable (to me) laws.

Cathie made her name, and the vast bulk of her money, by calling Tesla’s rise to $3000/share. She said by 2022 electric cars would be cheaper than gas-powered, and the bulk of Tesla’s value would be their robotaxis flooding the city streets.

Still says that, in fact. The date just keeps moving outward, like the prophecy of any doomsday cult. According to her ride-hailing will be an 11 trillion market by 2030.

Seven years.

You think 50 states, let alone all the developed countries can agree on laws for a life-and-death technology in seven years? And that the world can produce $11 trillion worth of cars? A year?

I would need the entire worldwide fleet of 777s to skywrite ‘bullsh*t’ big enough to respond equably to that.

Anyway, she made her Tesla call on the back of Robotaxi predictions that never came true.

In other words, she got lucky.

Because the software doesn’t exist.

May very well never exist, and certainly won’t be developed, tested, and deployed worldwide in 7 years to the tune of $11 trillion (over half of the US’ GDP!) because that’s not how software works. It’s certainly not how governments work.

Wait until that first live kid meets baby Jesus on a dash cam. If it’s a little girl with blonde hair and blue eyes and a photogenic family, whatever company does the killing will file bankruptcy by the following Sunday.

Not So Humble Pie

Despite all of these utterly pie-in-the-sky numbers that have been proven wrong year after year, as of this writing, Tesla’s market cap is over $200,000 per car sold.

$200,000.

Per.

Car.

If we just take Ford’s valuation for cars sold since Tesla delivered their first, according to my back-of-the-envelope calculation Ford’s number is maybe $1000. If we compare lifetime deliveries, it’s probably under $10. Over four orders of magnitude difference.

I agree that Musk is a genius, and he and the workers at Tesla have made a massive contribution to the planet — genuine applause track here — but a valuation equal to $200K per car is simply insane. There is no rational argument for that number. Imagine Kellogg’s being valued at $10 for every box of cereal they had ever sold. Tesla’s Robotaxis (since they don’t exist) aren’t going to save the day anytime soon. My prediction is this — Tesla never delivers a country-wide autonomous ride hailing service.

Never.

Note: even if I’m right it’s a crazy dangerous short — as the saying goes: the market can remain irrational far longer than you can stay solvent.

A broken clock is right twice a day

Even most smart people know diddly about software development. And while knowledge of software in itself is insufficient for making money in the stock market, taking anyone’s recommendations about a ‘transformative’ software company who doesn’t know software is pure gambling. Which is fine, as long as you know you’re gambling and don’t believe all the bullsh*t predictions. And the $3000/share hit she made?

Even a broken clock is right twice a day.

Remember — her famous prognostication, what she made her reputation on, was based on a completely counterfactual outcome (she was wrong).

I’ll keep my money in my pocket or take it to Vegas and put it all on black. I think either one is a better bet than Cathie Wood’s software picks. Because all that number crunching, all those published papers are castles in the sky — layers of thick puffy clouds obscuring a deeply fundamental lack of understanding.

Blatant Self-Promotion

I write on software development and travel. I’ve been a coder/senior dev/analyst/tech architect/webdev/startup principal for over 40 years, self-employed for over 3 decades of those and counting.

If you are a beginning-intermediate-level software developer, you might find my series The Missing Course of interest — it was developed to outline basic software engineering principals after I saw some of the nonsense and blatant holes in my daughters CS curriculum. You can start here:

Disclosure — I have no positions in any of the mentioned companies, though I’m considering taking a flyer on a few long-dated, deeply out-of-the-money puts. Just a little mad money in lieu of a lottery ticket. All opinions above, are just that — my opinions.