Hey, I’m Steven and this is Solving The Money Problem.
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So in this video we’re talking about monetizing residual capabilities.
In other words, how Elon Musk finds inventive ways to make or save money, essentially out
of thin air, by tapping existing technology in a new way.
This applies to Tesla, SpaceX and The Boring Company.
I’ll share examples of each.
By the end of this video, you’ll see how these companies, together, will make billions
of dollars of profits by finding opportunities to stack innovations upon one another and
by leveraging technology in novel ways.
Let’s drive in.
Tesla
Tesla’s mission is to accelerate the world’s transition to sustainable energy.
To be fair, they have.
And are.
More so than any other company on the planet.
You may think Tesla is a car company.
IT IS NOT.
Tesla is an energy company whose core technologies are batteries and software -- both of which
are in MOST of their products, including vehicles.
Note I didn’t use the word “car”.
A Tesla is not a car.
It’s a computer on wheels.
While its external form looks familiar, that’s about as far as the similarities go.
Most people still don’t get this, but they will.
And because a Tesla vehicle is a computer on wheels, Elon Musk has found and is capitalizing
on a handful of residual capabilities worth billions, that no automaker or self-driving
company has a hope of replicating.
This matters.
Full self-driving
Tesla will win full self-driving.
I rarely make such audacious claims, but this is one I’m willing to stand by so, hold
me accountable, internet.
There are many companies attempting to solve full self-driving.
The two most notable besides Tesla are Cruise, owned by General Motors, and Waymo, which
was spun out of Google’s self driving project.
Cruise and Waymo have a very narrow focus -- solving full self driving.
To do this, they both fit an expensive sensor suite to an existing vehicle, and then effectively
pay engineers on six-figure salaries to drive the vehicles and collect data.
This is both arduously slow and stupendously expensive but data is how full self-driving
will be won.
I won’t give a lesson in deep learning today, but the importance of data -- LOTS OF IT -- cannot
be overstated.
Whoever has the most data WILL win.
To date, Cruise has driven just a few million autonomous miles.
Waymo, about 20 million miles.
Tesla?
A little over TWO BILLION miles.
Tesla’s data lead is about TWO ORDERS OF MAGNITUDE more than second place.
This data is incredibly valuable in monetary terms.
Autonomous driving will be a trillion dollar industry.
And this is our first example of a residual capability.
While Cruise and Waymo are spending six figures per vehicle to collect a piddly amount of
data, and falling further behind, Tesla has outsmarted everyone and is pulling further
ahead.
See, Tesla has been manufacturing vehicles for years with all the necessary sensors to
not only drive autonomously in the future, but those same sensors today are COLLECTING
data and training the AI -- a residual capability.
Tesla’s fleet is a million strong and every time a driver intervenes with autopilot engaged,
the data is sent back to base and used to improve the self-driving AI.
It’s like when you search Google.
Every time you do this, you’re training Google’s search AI to be better.
Once Google’s user base hit a critical mass, no one had a hope of catching them.
This is why we don’t “search” for things now.
We “Google” them.
In effect, when a customer buys a Tesla, they are paying TESLA for the privilege of collecting
data to improve their self-driving AI.
Meanwhile, Cruise and Waymo first buy a car, then fit expensive hardware, then pay someone
to drive it around.
At this point, no one has a hope in hell of catching Tesla on full self-driving.
It’s game over.
Over The Air Updates and Upgrades
Can you believe that in 2020 there’s only one vehicle manufacturer on earth who can
provide over-the-air updates AND upgrades to their vehicles?
Like, seriously.
It’s 2020.
In fairness, this makes sense.
Automotive manufacturers are good at hardware and manufacturing but in general, suck **** at
software.
Then along comes Tesla, who make a computer on wheels, and are great at software.
By building “smart” vehicles, Tesla created a number of residual capabilities.
Tesla’s get BETTER after you buy them.
I don’t just mean the infotainment.
I don’t just mean new features like sentry mode, dog mode or smart summon.
Although those are cool.
I’m also talking about over-the-air PERFORMANCE and FEATURE upgrades.
Being a computer on wheels, Tesla can basically overclock their vehicles.
Tesla has increased RANGE over the air.
Increased ACCELERATION over the air.
Decreased braking distance over the air.
Increased charging speeds.
These are real, legitimate performance improvements that are simply impossible to offer in a “dumb
car”.
Many of these are free but others come with a price, like the $2,000 acceleration upgrade
or the $300 rear heated seats upgrade.
The amazing part is for Tesla, this is money out of thin air.
Just a few lines of code.
Truly absurd.
In the future, we’ll no doubt see a slew of new infotainment and performance upgrades,
along with an expansive app store.
All able to make your car better after you buy it.
And the only reason any of this is possible is because of the residual capabilities of
a computer on wheels.
Are you noticing a pattern?
Robotaxis
This is the holy grail.
Once Tesla solves full self-driving and has regulatory approval for robotaxis, everything
changes.
This is the single most important example of a residual capability.
All Tesla vehicles manufactured since October 2016 have the necessary hardware for full
self-driving.
With the push of a button, Tesla will launch its Robotaxi app and overnight, practically
its entire fleet awakens.
Suddenly your Tesla can go to work and earn you money any time of day or night.
Not only will this cause one of the biggest ever step-changes in an asset value -- think
about it, a car that can passively bring in twenty, fourty, fifty thousand dollars a year
in revenue is surely worth more than one that can’t -- but it will send Tesla’s valuations
skyrocketing.
They’ll take a cut of every robotaxi fare.
Out of seemingly nowhere, Tesla will see a flood of BILLIONS in annual profits.
All the result of a residual capability.
Once again, Elon Musk has swung his giant brain around and outsmarted everyone.
Finding another way to print billions out of thin air.
It’s this next-level thinking, and Tesla's ability to stack innovation upon innovation,
to find new ways to monetize existing products and to move at such an embarrassingly disruptive
pace that no one has a hope of catching them on anything that matters -- it’s because
of this that Tesla makes up the vast majority of my stock portfolio.
I’m not just investing in Tesla for today.
I’m investing because I see so many residual capabilities that will increase revenue and
profits in the future.
Speaking of investing (and what a segway).
WeBull have extended their offer for US viewers until the end of this month.
If you’d like to help out the channel and get up to 2 free stocks, use the link in the
description.
SpaceX
The mission of SpaceX is to make life multiplanetary.
The most important step in achieving this is developing a fully and rapidly reusable
rocket.
I shed tears of joy when I watched SpaceX land its first Falcon 9 booster in 2015.
As a lifelong space nerd, I knew how monumental this moment was.
Since then, SpaceX have nailed dozens of Falcon landings.
It’s becoming routine, but there’s still some work to go.
From a hardware point of view, SpaceX is moving toward a SINGLE product.
Starship.
This ****-off massive ship is how we will colonize Mars.
Elon Musk estimates we’ll need about 1,000 starships.
In the meantime, Falcon 9 and Falcon Heavy wil be used to launch payloads to orbit until
Starship is ready.
Starlink
To date, SpaceX is the ONLY company who can re-use their orbital-class rockets.
This brings their launch costs down by a STAGGERING amount and accounts for why SpaceX is doing
more than half of all launches worldwide.
And with lower launch costs come residual opportunities that were previously impossible.
Not only can SpaceX launch other people’s stuff for pennies on the dollar, but they
can launch their OWN stuff which creates an opportunity to do things that literally NO
OTHER COMPANY ON PLANET EARTH CAN.
Like Starlink, an internet constellation that will ultimately provide broadband access to
every square inch of the planet, give or take.
Starlink looks set to bring in billions of revenue annually and the entire business is
ONLY possible because of reusability.
Starlink, which could become a $100 billion dollar company is basically a happy accident
of trying to colonize mars.
Talk about a residual capability.
Starship Earth To Earth
This week I released an exclusive video for my Patreon supporters on why Starship Earth
To Earth Transport will make billions.
Soon after, I realized many of you were unaware of this residual opportunity so let’s watch
this clip from 2017.
In a nutshell, Starship will be used to transport people anywhere on earth in under an hour.
It sounds pretty whack, but SpaceX President and COO Gwynne Shotwell has been very clear
that Starship Earth to Earth WILL happen.
THIS decade.
With capacity for 100 passengers, the ability to fly more than a dozen times in a day since
the trips are so short, and with tickets set to be priced somewhere between an economy
and business class flight -- a few thousand dollars -- the numbers get crazy real fast.
I know it sounds mad, but SpaceX will be competing with major airlines and private jets by the
end of this decade.
All because of a residual opportunity coming from reusability.
It won’t just be celebrities, CEOs, presidents and athletes using the service, but business
travellers, holidaymakers and more.
And then there’s the time thing.
If you need to move something or someone to another place on earth as fast as possible,
Starship will be the ONLY option.
Imagine a medical emergency…
or an urgent matter of national security.
While Starship Earth to Earth transport probably won’t become the next American Airlines,
it will nevertheless be an important piece of the revenue pie which is kind of amazing
considering that’s not why Starship’s being built.
The Boring Company
As the name alludes, The Boring Company digs tunnels.
Faster, smarter and better than everyone else.
Surprise, surprise.
Elon Musk innovating again.
But it’s not just the greatly improved speed, or significantly reduced costs of tunnelling
that show the innovations of The Boring Company.
It’s what they do with the mess.
Instead of having to dispose of tonnes of muck as they dig, The Boring Company makes
bricks out of the waste.
Really.
Some of these bricks can be used to reinforce the tunnel walls, others are given away for
public housing and the rest, sold.
So yeah.
When you have a big brain and innovate for breakfast, you can even find a way to sell
dirt.
Elon Musk has proven himself as a master of extracting new value and opportunity from
an existing product or technology.
Not once, not twice, but many times, across many companies.
The end result is that these 170 IQ moves will make billions out of thin air, embarrass
much of the so-called “competition” and inspire others to follow suit.
Elon Musk is operating on another level.
People fail to see the hidden potential buried in the products and technology his companies
create.
Hhe’s laying the foundations for future revenue and no doubt, he’ll think of dozens
more ways to print billions in the future.
Your job is to pay attention and to notice.
As an investor, if you identify opportunity before others, you’re at a distinct advantage.
What other seeds of potential are germinating beneath the surface of Tesla, SpaceX and The
Boring Company?
Time will tell.
I’m Steven Mark Ryan, this is Solving The Money Problem and I love you all,
Thanks so much for watching.
Let me know your thoughts in the comments below.
What is the most exciting residual opportunity?
Can you think of others?
And of course, if you have any ideas for future videos, let me know.
I read ALL your comments.
p.s.
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