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Thoughts for the day – Group think, crypto and taxi drivers

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It is important to challenge convention. I have had countless questions from people on bitcoin and crypto lately. Sort of reminded me of the above. Perhaps the golden rule of investing doesn’t lie in complex models and sci-fi scenario analysis but the simple question of whenever an overwhelming majority think something is great, it is time to take the opposing view and vice versa. I haven’t been in a taxi yet to confirm Bitcoin is overdone. As I put it – gold needs to be dug out of the ground with effort. The thing that spooks me about crypto (without trying to sound conspiracy theorist) is that state actors (most top end computer science grads in China end up working in the country’s cyber warfare teams), hackers or criminal minds (did you know 70% of top end computer science grads in Russia end up working for the mob (directly or indirectly) the value of coins in the system could be instantaneously wiped out at the stroke of a key. We’ve had small hiccups ($280m) only last week. So as much as the ‘security’ of these crypto currencies is often sold as bulletproof, none of them are ‘cyberproof’.

Think of why your Norton, Kaspersky or Trend Micro anti-virus software requires constant upgrading to prevent new threats trying to exploit new vulnerabilities in systems. We need only go back to the Stuxnet virus of 2010 which was installed inside computers controlling uranium centrifuges in Iran. The operators had no idea. The software told the brain of the centrifuges to spin at multiples faster than design spec could handle all the while the computer interface of the operators showed everything normal. After a while the machines melted down causing the complete destruction of the centrifuges which were controlled from a remote location.

So much in life is simple. Yet we have lawyers writing confusing sentences that carry on for pages and pages, politicians complicating simple tasks, oil companies trying to convince us their additives are superior to others and so on. The reality is we just have to ask ourselves that one question from Mark Twain,

It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.

Kathy Griffin’s most hilarious black humour yet because the truth really hurts

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Kathy Griffin has made a video pleading for networks to put her on shows and value her two Emmys. It is perhaps the funniest thing she’s ever done in comedy given she is being serious about how inhumanely the system that she’s made $20mn out of is now treating her – blacklisted as she calls it. Watch her go through the routines of how she is a woman and deserves to be paid as much as men if she gets another go. She should consider herself lucky to get a 30 second snippet on an unknown local network for free such is her poor form and complete lack of understanding of why no one will touch her because networks know audiences won’t bother watching and no advertisers will back her. Perhaps she needn’t have abused Aussie breakfast TV hosts with “you’re full of crap”. She openly admitted she showed no remorse for what she did yet now begs for forgiveness because her brand of apology is unaccepted by the main. Pass me the Kleenex.

Tesla asks for sub 1.9 week deposit to full transfer of $250,000

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While the new Tesla Founders Series Roadster will supposedly be the fastest car in the world (at least in 1.9secs 0-100km/h) if it ever gets built it remains to be seen whether those $250,000 deposits will disappear inside Tesla inside that the acceleration figures. While the company will charge $50,000 deposits for the base model roadster it remains to be seen how many people will line up to part with cash for a car to be delivered after 2020. I’m sure some will line up to part with the cash to be one of the first to buy one but with cash burn and dreadful production issues it remains to be seen whether that money is just on auto pilot straight into the nearest sink hole.

Tesla Semi to haul new scrip or incomplete Model 3s?

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Elon Musk is rallying the call on his new truck which he is presenting this evening, albeit delayed from the initial Oct 26 launch.  He tweeted, “Tesla Semi Truck unveil to be webcast live on Thursday at 8pm! This will blow your mind clear out of your skull and into an alternate dimension. Just need to find my portal gun …”  If Elon Musk said that Tesla was superseding lead balloons with Li-ion his devout followers would fall for it as a logical progression with cumulus and nimbus charging stations providing endless power top ups. He is the ultimate salesman. One can only imagine the Tesla Semi will haul (in reality) incompleted Model 3s to double up on the promo!

It is hard not to see it as a distraction to tee up the next capital raising by revving up the share price to minimise dilution. Of course we must give full credit to Musk for his ability to rev up excitement among his faithful followers. He can do no wrong in their eyes. Spend 5 minutes on a Tesla owners forum and they are all gushing at their purchase and quick to virtue signal even when seeking help for trouble shooting whether it be a wayward navigation system or quality defects. They are followers of the Tesla cult and see their leader cando no wrong.

Still the truck is fraught with risks as we wrote at the end of last month. First, truck regulations are extremely tough. Even in America, crossing state lines has legal ramifications. While there are overall weight restrictions, there are also weight restrictions over each axle (defer to the DoT’s schematic below). So even if Musk talks of driverless vehicles (a USP for sure), a battery laden truck will likely be heavier than its diesel cousin. Higher rig weight means the less that can be hauled. Think of the Tesla 100D which weighs in at 2,250kg some 22% heavier than a fully loaded M550ix BMW.

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Also truck haulage companies are hugely conservative. Risking the switch to EV trucks could put them out of business. If it takes 30 minutes to “fast charge” a Tesla car how long will it take to charge a stack likely to be at least 10 times larger (300 minutes?) in mass if it’s to have any chance of hauling 35 tonnes any sensible distance.

For the 2018 model series of the major Class 8 truck makers, most have achieved an extra 8% fuel economy gains for on highway performance to around 5.5mpg. Tyre pressure monitoring and new slipstreaming bodies also assist in the fuel savings. With a 150 gallon tank option, a driver can in theory do 1,300km. Battery-powered semi-tractors may be useful in low-speed, short-haul duty cycles, but long-haul makes little sense because of the batteries bulk, weight and expense.

The battery pack in a Tesla Model S passenger car weighs in at around 600kg. The diesel engine in a Freightliner Cascade Class-8 truck weighs around 1.2 tonnes. So if we assume that the basic Tesla Semi package (ex powertrain), is more or less the same as the Cascade will two sets of Tesla 85D battery packs suffice to give similar range? As we mentioned earlier, in order to give a similar 400km range in a truck having to haul 30+ tonnes it is easy to imagine battery packs being at least 10x the amount needed for an 85D car. So 6 tonnes of batteries replacing a 1.5 tonne engine transmission combination. That would mean 4.5 tonnes less carrying capacity for a start and even then can it be properly distributed over the axles to meet road regulations? Like the chap above, the average truckie probably cares about the environment as much as his waistline.

Tonight’s truck is only having to move around 10 miles to its event. I’m sure the list of its capabilities will be an envious list “on paper” of its potential. Sadly to CM it looks like a distraction for its struggling Model 3 production woes by selling a future that has many questions about commerciality. Cars are personal modes of transport. Trucks are a business. Trucking companies are hugely conservative and won’t risk replacing an entire fleet until it’s completed rigorous field tests. Yes Class 8 truck sales may have nearly tripled in the last month to over 35,000 units but the series is highly volatile. In the auto world Tesla is playing in a local pond of 17mn vehicles. In trucks that is more a 250-400,000 market. Unless Tesla can promise huge market share gains in a field it has little or no experience  (even though his Tesla Semi Guy was a former Freightliner Cascade head developer) in reaching any economies of scale and reaching out to 1000s of haulage companies will be a stretch.

However spectacular the Tesla Semi lunch will be expect the share price to be pumped on the news don’t be surprised if an equity capital raising is towed behind it. Remember that farside cartoon of Ralph Harrison, king of salespeople, standing on a boat waving to eskimos that he’s just sold refrigerators to? That is Musk. A magician who runs on the smell of an oily rag. Looking forward to seeing if the fanfare proves right.

And so the Hollywood witch hunts come forth

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As CM wrote at the time of #metoo the saddest part to emerge from this campaign will be the risk of witch hunts where potentially innocent people are forced to defend against things that may not have actually happened. As Jeremy Piven points out in the quote above – careers and reputations can be destroyed with impunity even if allegations are proven false. Whether it is Kevin Spacey or the sanctimonious George Takei, so much Hollywood dirt is surfacing and within it there will be ambulance chasers looking for a quick out of court settlement to make the problem disappear.

Real sexual assault is a major issue that should be dealt with. Shame on anyone that looks to take advantage of a serious problem to enrich themselves at the expense of someone who is innocent. That is almost as sick as committing the crime itself. Sure every proven case of sexual assault should be prosecuted to the extent of the law yet so should perjury by the ambulance chasers.

LinkedIn – artificially impolite

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One has to query the real embedded value of LinkedIn. Apart from having complete strangers endorse one for skills never used or studied, the latest craze is to give users automated one button generic answers to allow one to tell a potential client, colleague, recruiter or stranger that they care. In a strange way, LinkedIn’s true value added is knowing among one’s list of acquaintances who actually thinks to authentically write salutations to one who is indeed experiencing a birthday or work anniversary. That would show reality rather than the 90% who think a “kudos to you” could register anymore than “why am I doing any business with such a lazy, thoughtless and insincere two dimensional nobody?” That’s right most people just blink at your profile and move on.

Has anyone thought that Daniel may have been given a battlefield commission? Maybe he manages upwards well but his colleagues can’t stand him? Perhaps he is merely the result of luck in terms of market timing which has zero to do with individual ability? Whose to say Daniel didn’t knife 20 colleagues to get to that position? The options are endless. Why doesn’t LinkedIn at the very least offer some negative responses? Even Facebook does it now.

People continue to drone on about how digital and AI is transforming the way we conduct business. Indeed it is. The value of individual  connections, sincerity, trust and personal service is being cast off for algorithms which have absolutely zero chance of refining human nature which on balance is different for everyone almost everyday. Human instinct can detect subtle changes – “Steve seems happy today” or “Penelope looks a bit down today” – then again perhaps those people who’ve agreed to have an embedded company chip in their body will allow companies to tailor good or bad news depending on their biorhythm delivered by microchip?!

We all know what the value of good service is. Go to any restaurant that gives a special touch and you’ll go again and again. Or maybe the special dinner date of the future will give each party the right algorithmic responses to a romantic night out. Then why bother going out at all. You can dine from the same take out menu all from the comfort of your own home while wooing your special one over a synched video screen.

So to all those that look at LinkedIn pay attention to those that will spend the time to link you and those who will merely blink you. Which brings me to this piece on recruitment

Fox News – you should be happy a Democrat wants to run impeachment ads on your network

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Black mark for Fox News. On Monday the network said that it would no longer air an ad calling for President Trump’s impeachment paid for by a wealthy Democrat billionaire Tom Steyer citing, “Due to the strong negative reaction to their ad by our viewers, we could not in good conscience take their money,”

This is utter nonsense. Surely a network that beats the drum of pointing out fake news should allow free speech (that Hannity, Tucker Carlson et al) to reign. Indeed if the likelihood is that most of Fox’s audience is pro-Trump shouldn’t they see it as a) farcical comedy, b) a waste of time and money and c) supporting free speech.

It is hard to believe that the ad donor is so blind to be unaware of Fox’s political views nor Newscorp’s revenue collection policies. Indeed if the donor wishes to spend money and it is contractually signed off provided the content meets all “criteria” of normal (i.e. not lewd) advertising. In fact why not get Hannity to run the tape and poke fun at it on his prime time show? That way they could keep the hordes contented that free speech is indeed beautiful and they should entertain what the other side has to say regardless of how immaterial they may view it.

CNN had the “carp” story. Fox has the “crap” excuse. Moving right along.