WEBVTT - Tech News: Netflix Has a Rough Phone Call 0:00:04.400 --> 0:00:07.760 Welcome to Tech Stuff, a production from I Heart Radio. 0:00:12.119 --> 0:00:14.480 Hey there, and welcome to tech Stuff. I'm your host, 0:00:14.600 --> 0:00:17.600 Jonathan Strickland. I'm an executive producer with I Heart Radio 0:00:17.680 --> 0:00:20.400 and how the tech are Yet it's time for the 0:00:20.440 --> 0:00:26.599 tech news for Thursday, April twenty first, two thousand, twenty two. Uh, 0:00:27.120 --> 0:00:30.280 this is gonna be like a down with Capitalism episode. 0:00:30.320 --> 0:00:33.839 And I realized that as an employee of a massive 0:00:33.920 --> 0:00:38.920 company that that, you know, there's some baggage there. But yeah, 0:00:39.400 --> 0:00:42.360 let's let's jump into it because I'm gonna be getting 0:00:42.400 --> 0:00:44.959 on a soapbox. Um, So for those of y'all who 0:00:45.000 --> 0:00:48.360 hate it when I do that, here's your preemptive warning. 0:00:49.120 --> 0:00:52.360 But first, let's talk about Netflix because one of the 0:00:52.400 --> 0:00:55.760 big stories yesterday in the tech space was about how 0:00:55.880 --> 0:01:02.360 Netflix had its company's quarterly earning report, and Netflix revealed 0:01:02.400 --> 0:01:05.400 that it had experienced a net loss of around two 0:01:05.520 --> 0:01:10.720 hundred thousand subscribers worldwide. So this is after taking into 0:01:10.760 --> 0:01:13.680 account all the new subscribers that had joined, there were 0:01:13.680 --> 0:01:15.720 still a net loss of two hundred thousand. Now, this 0:01:15.800 --> 0:01:20.280 was the first quarter where Netflix had ever reported a 0:01:20.440 --> 0:01:24.559 drop in subscribers over the last ten years, and boy, 0:01:24.640 --> 0:01:28.640 howdy did the bottom drop out? Like? It was actually 0:01:28.680 --> 0:01:31.279 kind of shocking to see the reaction to this news. 0:01:31.680 --> 0:01:35.680 Shares of Netflix closed at more than thirty down from 0:01:35.680 --> 0:01:38.759 what it had been trading at. And netflix Is stock 0:01:38.800 --> 0:01:41.160 had already taken a bit of a beating this year, 0:01:41.360 --> 0:01:44.600 you know, before yesterday, the drop in share price meant 0:01:44.680 --> 0:01:48.920 the company lost fifty billion dollars off its market cap. 0:01:49.360 --> 0:01:51.920 Market Cap is something you can figure out by multiplying 0:01:52.400 --> 0:01:56.480 the number of existing shares by the going market price 0:01:56.680 --> 0:01:59.360 for those shares. You multiply those two numbers together, you 0:01:59.360 --> 0:02:01.360 get the market up. And I've got a lot to 0:02:01.440 --> 0:02:04.640 say about that, but first let's just get to why 0:02:04.760 --> 0:02:08.440 Netflix saw numbers go down. The company said it was 0:02:08.520 --> 0:02:11.519 due to a combination of factors. One is that as 0:02:11.600 --> 0:02:15.200 regions have lifted mandates and more people have become vaccinated, 0:02:15.760 --> 0:02:17.680 a lot of folks are getting out of the house, 0:02:18.000 --> 0:02:22.120 and as such, they are canceling service subscriptions because you know, 0:02:22.240 --> 0:02:24.320 they were signing up for these things when they were 0:02:24.360 --> 0:02:27.320 stuck at home and didn't have anything else to do. Now, 0:02:27.360 --> 0:02:31.919 presumably another factor that contributes to this issue is inflation. 0:02:32.480 --> 0:02:34.840 Inflation has been a huge problem, particularly here in the 0:02:34.919 --> 0:02:37.680 United States, and thus people have had to kind of 0:02:37.680 --> 0:02:41.320 tighten their budgets across their households, right, They couldn't spend 0:02:41.360 --> 0:02:44.959 as much money like that. When your basic necessities start 0:02:45.040 --> 0:02:48.520 costing more, you've got to make these kind of determinations. 0:02:49.000 --> 0:02:53.080 And so a lot of folks were looking at entertainment 0:02:53.080 --> 0:02:56.360 as something where they could cut some corners. It doesn't 0:02:56.400 --> 0:02:59.320 help that Netflix has increased subscription fees a couple of 0:02:59.360 --> 0:03:03.840 times in the not too distant past. In October twenty twenty, 0:03:04.080 --> 0:03:07.120 the price of premium Netflix membership went up to seventeen 0:03:07.120 --> 0:03:10.760 dollars nine cents per month. Then last year it went 0:03:10.840 --> 0:03:13.720 up again to nineteen dollars and nine cents per month. 0:03:13.840 --> 0:03:16.600 So you know, it's increased a couple of times in 0:03:17.000 --> 0:03:21.160 recent memory, and that's another big issue. But another really 0:03:21.200 --> 0:03:24.920 big factor is obviously competition. You know, Netflix used to 0:03:25.040 --> 0:03:28.640 only have to really grapple with Hulu and Amazon Prime 0:03:28.680 --> 0:03:32.520 when it came to streaming video, but these days you've 0:03:32.560 --> 0:03:35.760 also got Paramount Plus, You've got Disney Plus, you've got 0:03:35.840 --> 0:03:40.480 Hbo Max, you've got Apple and lots more. So if 0:03:40.520 --> 0:03:44.360 the average household is like mine, folks end up making 0:03:44.400 --> 0:03:47.600 decisions on which services they want and which ones they're 0:03:47.640 --> 0:03:51.000 willing to skip out on. And trust me, I've got 0:03:51.040 --> 0:03:53.840 plenty of fomo like I, I I don't subscribe to Apple 0:03:54.000 --> 0:03:55.440 and I feel like I need to so I can 0:03:55.440 --> 0:03:59.560 watch Severance and Ted Lasso. I just haven't done it yet. Um, 0:03:59.800 --> 0:04:01.680 and I used to have Hulu and I cut that. 0:04:01.840 --> 0:04:04.520 So lots of households have to make these determinations. And 0:04:04.520 --> 0:04:06.400 if they say, you know, we haven't watched anything on 0:04:06.480 --> 0:04:09.960 Netflix in like six months, clearly they're gonna cut that. 0:04:10.080 --> 0:04:12.600 If they're looking at you know, we still want to keep, 0:04:12.960 --> 0:04:17.280 say Disney Plus or whatever. Now, Netflix has long leaned 0:04:17.279 --> 0:04:20.360 on its original programming to set it apart, particularly as 0:04:20.440 --> 0:04:24.160 various studios have chosen to move their own properties onto 0:04:24.240 --> 0:04:28.159 their own streaming services. So you've had companies say like, well, 0:04:28.200 --> 0:04:31.960 why would we give Netflix the power of having our 0:04:32.040 --> 0:04:35.920 content when we can have our own streaming service and 0:04:36.080 --> 0:04:39.320 just hosted there. We've seen that a lot, and uh, 0:04:39.400 --> 0:04:43.120 you know, making original contents really expensive. In fact, Netflix 0:04:43.200 --> 0:04:49.080 was famously spending billions of dollars making their original series 0:04:49.120 --> 0:04:53.920 and shows and films and such. So that's also an issue. 0:04:54.839 --> 0:04:57.839 And now we also have other entities like Apple that 0:04:57.920 --> 0:05:01.560 are producing award winning cont hint, So the competition is 0:05:01.600 --> 0:05:04.560 really serious in that case. Now, add to all of 0:05:04.600 --> 0:05:07.159 that the fact that Netflix was hitting a saturation point 0:05:07.200 --> 0:05:10.280 in some regions like the United States, it really meant 0:05:10.360 --> 0:05:15.760 that expansion within those regions would become unrealistic. You know, 0:05:15.839 --> 0:05:19.080 it's hard to convince more people to buy into it 0:05:19.080 --> 0:05:22.840 when you've pretty much hit everybody who is interested. There's 0:05:22.880 --> 0:05:26.480 also the fact that some households share login credentials with 0:05:26.560 --> 0:05:31.080 friends and family outside of that household, and Netflix estimates 0:05:31.120 --> 0:05:34.680 there's some one hundred million of those out there, So 0:05:34.720 --> 0:05:39.159 that's a hundred million potential accounts that Netflix could could 0:05:39.240 --> 0:05:42.360 get signed up on the service that instead are just 0:05:42.600 --> 0:05:47.400 piggybacking on existing accounts. So what exactly is Netflix planning 0:05:47.440 --> 0:05:50.239 to do about all this? Well, one thing they're looking 0:05:50.279 --> 0:05:53.919 to do is to roll out a lower cost, adds 0:05:53.960 --> 0:05:58.080 supported tier of service to attract new subscribers, similar to 0:05:58.520 --> 0:06:02.120 how services like Hulu use you know, tears that have 0:06:02.200 --> 0:06:07.240 add support to them. Another potential avenue they're looking at 0:06:07.320 --> 0:06:11.000 is to crack down on the account sharing issue. Now, 0:06:11.040 --> 0:06:13.480 Netflix has already rolled out a pilot program in some 0:06:13.520 --> 0:06:17.640 countries in Central and South America that give subscribers an 0:06:17.640 --> 0:06:21.400 option to sign up for a tier that has up 0:06:21.440 --> 0:06:24.480 to two additional profiles for folks who do not live 0:06:24.560 --> 0:06:27.320 within the household itself. So in other words, you spend 0:06:27.320 --> 0:06:30.760 a little bit more money, but you have these authorized 0:06:30.880 --> 0:06:34.240 tiers that you can hand out to people. Uh, you know, 0:06:34.320 --> 0:06:37.599 and and it's limited to like two. Uh, it's cheaper 0:06:37.839 --> 0:06:41.640 than if everyone got their own subscription, but it still 0:06:41.640 --> 0:06:45.520 means that Netflix gets some money. And meanwhile, those additional 0:06:45.520 --> 0:06:48.680 people can still get access to Netflix, which is better 0:06:48.720 --> 0:06:51.599 than having it cracked down to the point where anyone 0:06:51.680 --> 0:06:56.440 outside of a specific say I P address is excluded 0:06:57.120 --> 0:07:00.000 from being able to use that account. Obviously, it gets 0:07:00.000 --> 0:07:02.000 of issues there too, like if you travel a lot 0:07:02.480 --> 0:07:04.680 and you'd like to use Netflix to keep up with stuff, 0:07:05.120 --> 0:07:07.200 then you want to make sure that you're not going 0:07:07.279 --> 0:07:09.680 to run into an issue where Netflix says, hey, I 0:07:09.760 --> 0:07:12.040 noticed that. You know, there's a lot of log insto 0:07:12.040 --> 0:07:14.120 your account, but they're not all from the same place, 0:07:14.840 --> 0:07:16.920 and you know, then the company cracks down and you 0:07:16.920 --> 0:07:21.920 you want to work around that too. So these could 0:07:22.000 --> 0:07:25.720 be handy solutions, but they're ones that are going to 0:07:25.840 --> 0:07:29.120 take some time. In fact, Netflix says these measures might 0:07:29.160 --> 0:07:31.600 take more than a year in order to have a 0:07:31.600 --> 0:07:34.240 big impact on the business, and that has a lot 0:07:34.320 --> 0:07:38.360 of investors scrambling. And here's where I'm going to have 0:07:38.600 --> 0:07:44.040 a bit of an antique capitalist rant. Um So, I've 0:07:44.080 --> 0:07:49.400 complained many times about how modern capitalism holds shareholder return 0:07:49.640 --> 0:07:55.080 and by extension, company growth over all other metrics. This 0:07:55.160 --> 0:07:57.600 is something that really got its its start in the 0:07:57.640 --> 0:08:01.160 early eighties. It wasn't always this way, a uh, And 0:08:01.200 --> 0:08:03.680 in fact, some of the people who are most responsible 0:08:03.960 --> 0:08:08.600 for a renewed focus on shareholder value would later go 0:08:08.640 --> 0:08:13.200 on to say it's a mistake two hold shareholder value 0:08:13.280 --> 0:08:16.640 above everything else. Doesn't stop companies from doing it though. 0:08:17.240 --> 0:08:19.320 Um So, it's not. It's not enough to do a 0:08:19.360 --> 0:08:22.280 good job if you're a company. In fact, doing a 0:08:22.280 --> 0:08:26.360 good job at whatever you do ultimately isn't that important 0:08:26.400 --> 0:08:31.560 at all. What is important is growth, because growth equals 0:08:31.720 --> 0:08:37.559 increased value. Increased value means higher share prices of your stock, 0:08:38.120 --> 0:08:42.200 and that means that the stakeholders, your shareholders are happy 0:08:42.320 --> 0:08:45.720 because they're seeing a return on their investment. And since 0:08:45.720 --> 0:08:50.000 we're usually talking about companies that report quarterly results, those 0:08:50.040 --> 0:08:53.800 important numbers hit every three months, so they want to 0:08:53.880 --> 0:08:56.000 you know, shareholders want to see those numbers going up 0:08:56.360 --> 0:09:00.440 every report. So ideally you show growth across every three 0:09:00.440 --> 0:09:04.240 month period, and that's the measure of success for a company. 0:09:04.720 --> 0:09:07.480 If the company happens to stay true to its organizational 0:09:07.640 --> 0:09:10.079 mission and if it happens to perform at the top 0:09:10.120 --> 0:09:12.480 of its game, you know, that's nice too, it's just 0:09:12.559 --> 0:09:16.640 not required. And so for a company like Netflix when 0:09:16.679 --> 0:09:19.040 it has a setback, you end up seeing a lot 0:09:19.080 --> 0:09:22.800 of people jumping ship. And that's because those people they're 0:09:22.800 --> 0:09:26.319 they're focuses on quarter over a quarter gains. If those 0:09:26.360 --> 0:09:29.040 numbers go the wrong way, people start to bail. Now, 0:09:29.080 --> 0:09:32.360 on top of that, this focus on short term gains 0:09:32.480 --> 0:09:36.520 makes it very challenging for companies to make good plans 0:09:37.040 --> 0:09:40.480 for the long term. It's not impossible. There are companies 0:09:40.520 --> 0:09:43.000 that do it, but it is much harder because in 0:09:43.040 --> 0:09:46.000 the meantime, you really have to keep the shareholders happy 0:09:46.040 --> 0:09:49.600 on that quarter by quarter basis. If the shareholders aren't happy, 0:09:49.960 --> 0:09:52.960 they bounce, and now it becomes way harder for you 0:09:53.040 --> 0:09:55.720 to achieve those long term goals because if those stock 0:09:55.760 --> 0:09:59.240 prices start going down because people have lost confidence, you're 0:09:59.280 --> 0:10:04.040 not gonna have of the financial ability to execute the 0:10:04.240 --> 0:10:07.280 long term plans you have in mind. And if enough 0:10:07.320 --> 0:10:09.720 folks bounce, it can actually send a company into a 0:10:09.760 --> 0:10:12.880 spiral that's really hard to pull out of. And when 0:10:12.880 --> 0:10:15.760 we pull ourselves away from the stock market side of 0:10:15.760 --> 0:10:18.840 business and we just look at how this affects the 0:10:18.880 --> 0:10:22.640 companies and their customers, we just see tons of problems. 0:10:23.320 --> 0:10:27.200 Then there's also the issue that there's a limit to growth. 0:10:27.800 --> 0:10:31.240 It's very hard to grow once you hit saturation points, 0:10:31.240 --> 0:10:34.000 and we see this in all sorts of companies. Netflix 0:10:34.080 --> 0:10:36.360 hit in the United States because pretty much everyone who 0:10:36.400 --> 0:10:40.360 wanted Netflix and who could afford it subscribed, so there 0:10:40.360 --> 0:10:46.360 were no more worlds to conquer. Alexander wept. And we've 0:10:46.400 --> 0:10:49.160 also seen it in other companies like you know Facebook 0:10:49.480 --> 0:10:53.640 meta slash Facebook, but specifically Facebook, because Facebook expanded to 0:10:53.679 --> 0:10:57.400 a truly gargantuan user base, but now it's seeing those 0:10:57.480 --> 0:11:01.840 numbers on the decline. It's not able to attract new users, 0:11:01.880 --> 0:11:05.760 and a lot of older users have either slipped off 0:11:05.840 --> 0:11:11.040 the system or otherwise you know, are unable to be users, 0:11:11.080 --> 0:11:15.280 like maybe they've passed away or something. So we see 0:11:15.280 --> 0:11:18.679 this in other companies like Facebook or you know Meta, 0:11:18.720 --> 0:11:22.160 but specifically the Facebook platform. You know, Facebook expanded to 0:11:22.200 --> 0:11:26.200 a truly gargantuan user base, but now the company is 0:11:26.240 --> 0:11:30.000 seeing numbers on the decline for the Facebook platform. It's 0:11:30.040 --> 0:11:35.920 having trouble attracting younger users, and meanwhile older users are 0:11:36.000 --> 0:11:39.839 kind of slipping off the platform. So it hit a 0:11:39.920 --> 0:11:43.520 saturation point and it's having a real hard time growing. 0:11:44.080 --> 0:11:47.120 And that because that's such an important metric in a 0:11:47.200 --> 0:11:51.839 company's uh, you know health, at least according to shareholders, 0:11:52.120 --> 0:11:55.160 it's really put Meta in kind of a rough spot. 0:11:56.000 --> 0:11:59.160 We also have seen this with cable networks where a 0:11:59.200 --> 0:12:02.760 cable network. Letlet's say it's a company that has several channels. 0:12:03.320 --> 0:12:06.920 You know, once they get on a certain number of services, 0:12:06.960 --> 0:12:10.200 they really can't expand anymore. You're essentially in as many 0:12:10.240 --> 0:12:13.440 households as you possibly can be within that region. So 0:12:13.480 --> 0:12:17.720 the only way to grow is to expand to other regions, 0:12:17.840 --> 0:12:22.040 to focus on international growth. And you know, I saw 0:12:22.120 --> 0:12:25.240 that when when I worked for How Stuff Works, and 0:12:25.240 --> 0:12:27.760 How Stuff Works was part of Discovery Communications. That was 0:12:27.800 --> 0:12:31.600 a big part of discoveries strategy. Now we see discovery 0:12:31.600 --> 0:12:37.000 strategy also being on expanding through online services, you know, 0:12:37.080 --> 0:12:42.280 with the merger with the former Warner Media. So eventually 0:12:42.480 --> 0:12:44.880 you do hit a cap and you just stop growing. 0:12:44.920 --> 0:12:48.240 You just can't grow any bigger. It is unsustainable to 0:12:48.280 --> 0:12:51.680 continue to grow, and then what happens, you know, it's 0:12:51.720 --> 0:12:54.480 it's very hard for me not to look at this 0:12:54.760 --> 0:12:59.120 entire thing as a very long term pump and dump scheme, 0:12:59.320 --> 0:13:02.160 the idea that you're just pumping up a company up 0:13:02.480 --> 0:13:04.800 so they can grow bigger and bigger until it just 0:13:04.840 --> 0:13:07.240 can't grow anymore, and then you get the heck out 0:13:07.640 --> 0:13:10.040 and in the meantime, you just, you know, this company 0:13:10.080 --> 0:13:12.800 that might have been doing something really good and important 0:13:13.440 --> 0:13:17.640 is suddenly at in a trouble spot because of that. 0:13:18.240 --> 0:13:23.760 Um anyway, I'm done ranting about modern capitalism for now, anyway, 0:13:24.120 --> 0:13:29.040 And obviously this is an oversimplification of the issue. There 0:13:29.080 --> 0:13:31.760 are lots of companies out there that do not fall 0:13:31.800 --> 0:13:35.200 into this trap. It's just this is a trap I 0:13:35.240 --> 0:13:39.840 see way too many companies fall into. And in many 0:13:39.880 --> 0:13:42.720 cases they are companies that I actually really kind of like, 0:13:43.120 --> 0:13:45.280 or at least I like the services or products that 0:13:45.320 --> 0:13:50.760 they produce. So it's frustrating as a consumer to see 0:13:50.800 --> 0:13:54.679 that the focus goes towards the shareholders. Uh. And it 0:13:55.200 --> 0:13:59.880 would require a seismic shift in business philosophy for this 0:14:00.000 --> 0:14:03.600 to change, so I don't expect it to happen anytime soon. 0:14:04.800 --> 0:14:08.360 All Right, when we come back, we'll be talking about 0:14:08.400 --> 0:14:11.440 a lot of other tech news UH and some business stuff, 0:14:11.480 --> 0:14:15.640 because the two are very tightly intertwined. But first, let's 0:14:15.960 --> 0:14:18.440 take some time for our own business and listen to 0:14:18.480 --> 0:14:29.760 a couple of messages from sponsors. Okay, we're back. How 0:14:29.800 --> 0:14:32.760 about we talk about some big wins for companies that 0:14:32.760 --> 0:14:35.160 are connected to Elon Musk. You know, I make no 0:14:35.280 --> 0:14:37.800 secret that I'm not a big Musk fan, but there's 0:14:37.800 --> 0:14:40.920 no denying that a couple of his companies have really 0:14:41.000 --> 0:14:45.360 performed incredibly well recently. First up as Tesla, which reported 0:14:45.520 --> 0:14:48.800 an eighteen point seven billion dollars in revenue for the 0:14:48.840 --> 0:14:52.880 first quarter of twenty two, and three point three billion 0:14:52.920 --> 0:14:57.440 dollars of that was profit. That is incredible. Now, part 0:14:57.480 --> 0:15:00.720 of the revenue came from Tesla's practice of cell emissions 0:15:00.760 --> 0:15:04.520 credits to other automakers. UH. See. Certain governments like the 0:15:04.560 --> 0:15:07.760 EU and the United States require automakers to manufacture a 0:15:07.800 --> 0:15:11.520 certain percentage of clean vehicles in all the cars that 0:15:11.600 --> 0:15:18.640 they manufacture. Not every automaker actually manages to hit those regulations, 0:15:18.800 --> 0:15:22.680 so to balance it out, these automakers are allowed to 0:15:22.800 --> 0:15:28.480 buy emissions credits from other companies that do hit those requirements. 0:15:28.520 --> 0:15:31.760 So the idea here is that the automakers have an 0:15:31.800 --> 0:15:35.960 incentive to develop and produce cleaner technology because if they don't, 0:15:36.160 --> 0:15:39.600 they have to pay money in order to buy credits 0:15:39.640 --> 0:15:44.400 to offset their dirty, dirty cars. And so Tesla is 0:15:44.440 --> 0:15:47.640 allowed to sell emissions credits to these automakers because Tesla 0:15:47.720 --> 0:15:52.640 makes electric vehicles, their vehicles don't have emissions anyway. Tesla 0:15:52.720 --> 0:15:56.560 sold nearly six hundred eighty million dollars worth of emissions 0:15:56.600 --> 0:15:59.960 credits in the first quarter of twenty twenty two. That's 0:16:00.080 --> 0:16:03.360 more than twice what Tesla sold during the fourth quarter 0:16:03.440 --> 0:16:07.400 of one, so you know a good amount of money 0:16:07.480 --> 0:16:11.480 is coming in from these emissions credits sales. Obviously not 0:16:12.080 --> 0:16:14.800 a significant amount when you look at eighteen point seven 0:16:14.960 --> 0:16:18.720 billion dollars of revenue, but in years past it was 0:16:18.720 --> 0:16:22.520 those emissions credits that really helped Tesla when it was 0:16:22.560 --> 0:16:26.160 making these earnings calls, because they weren't making as much 0:16:26.200 --> 0:16:29.640 money off actual vehicle sales, but that is a different 0:16:29.720 --> 0:16:33.600 story right now anyway, um, anyway, the company has a 0:16:33.600 --> 0:16:36.440 lot of other battles to fight, including navigating the ongoing 0:16:36.600 --> 0:16:40.280 supply chain challenges, but so far Tesla has performed better 0:16:40.440 --> 0:16:42.800 in that regard than a lot of other companies have. 0:16:43.400 --> 0:16:47.160 So Tesla has shown a lot more flexibility than a 0:16:47.160 --> 0:16:50.680 lot of other other automakers have managed, and thus has 0:16:50.840 --> 0:16:53.160 really flourished quite a bit in the first quarter of 0:16:53.200 --> 0:16:56.640 twenty two. One other thing that must talked about during 0:16:56.680 --> 0:16:59.400 that earnings call was that Tesla is working on creating 0:16:59.440 --> 0:17:02.520 a robo taxi vehicle that won't have pedals or a 0:17:02.560 --> 0:17:05.600 steering wheel, and that the company is targeting a twenty 0:17:06.160 --> 0:17:11.960 four date for rollout. Now, I think that is incredibly ambitious. 0:17:12.560 --> 0:17:15.919 We all know that the Tesla full self driving mode 0:17:16.040 --> 0:17:20.360 isn't actually a full self driving mode, and that our 0:17:20.359 --> 0:17:23.960 current level of autonomous car technology has is probably somewhere 0:17:24.040 --> 0:17:28.359 around level three. There are five levels total, or six 0:17:28.400 --> 0:17:33.480 if you count zero, which is no autonomous system at all, 0:17:34.320 --> 0:17:38.600 uh and level three is conditional automation. That means that 0:17:38.920 --> 0:17:43.000 current autonomous vehicles really still need human oversight. They're only 0:17:43.040 --> 0:17:47.800 capable of autonomous operation in specific situations, such as within 0:17:47.880 --> 0:17:52.040 a narrowly defined region of operation, like you know, within 0:17:52.119 --> 0:17:56.639 these you know, twelve blocks or something like that, or 0:17:57.080 --> 0:18:01.240 under specific circumstances, like specific weather conditions like it has 0:18:01.280 --> 0:18:05.560 to be bright and sunny or it can't be you know, raining, 0:18:06.000 --> 0:18:07.800 or has to be a specific time of day, like 0:18:07.840 --> 0:18:11.560 it can't be after dusk. These are the sort of 0:18:11.560 --> 0:18:15.080 conditions that most autonomous cars have to operate under. It's 0:18:15.119 --> 0:18:20.080 some form of restrictive automation. For a driverless ROBOTAXI that 0:18:20.119 --> 0:18:23.440 has no means of human override to be a possibility, 0:18:23.680 --> 0:18:27.560 we would need to achieve level five autonomy, because even 0:18:27.640 --> 0:18:31.480 level four autonomy typically includes the option for humans to 0:18:31.600 --> 0:18:34.720 override the system and take control. Obviously, that would be 0:18:34.760 --> 0:18:38.040 impossible if there are no controls to take. Of course, 0:18:38.200 --> 0:18:40.639 the fact that this is a goal doesn't mean that 0:18:40.680 --> 0:18:43.800 Tesla will actually hit it, nor does it mean that 0:18:43.840 --> 0:18:46.440 whatever Tesla does produce, let's say it does produce a 0:18:46.800 --> 0:18:51.560 vehicle with no you know, steering wheel, no pedals, doesn't 0:18:51.560 --> 0:18:54.280 necessarily mean that that vehicle will actually qualify as a 0:18:54.320 --> 0:18:58.080 true level five autonomous vehicle. So in that second possibility, 0:18:58.119 --> 0:19:00.840 I would really caution anyone against getting into such a 0:19:00.920 --> 0:19:04.439 vehicle because it could potentially be really dangerous. We've already 0:19:04.480 --> 0:19:09.040 seen several instances in which driver assist features and Tesla 0:19:09.160 --> 0:19:13.199 vehicles have contributed to fatal accidents. Now, in several of 0:19:13.200 --> 0:19:15.600 those cases, you could argue that that was due to 0:19:15.720 --> 0:19:20.600 human driver's disregarding safety rules. But still, this is a 0:19:20.640 --> 0:19:24.120 pretty big swing that Tesla is taking. And it's been 0:19:24.160 --> 0:19:27.359 a while since I talked about the Boring Company. That 0:19:27.840 --> 0:19:31.640 is Elon Musk's business that's all about digging massive tunnels 0:19:31.680 --> 0:19:34.359 for the purposes of high speed transportation, as well as 0:19:34.400 --> 0:19:37.760 some other stuff, but the high speed transportation is typically 0:19:37.840 --> 0:19:41.760 what we really focus on. The Boring Company held a 0:19:41.880 --> 0:19:44.760 round of funding that brought in six seventy five million 0:19:44.800 --> 0:19:47.679 dollars and investments which brought the company's value up to 0:19:47.760 --> 0:19:52.359 five point six seven five billion dollars. This is another 0:19:52.400 --> 0:19:56.159 company with which I have some concerns, mainly because the 0:19:56.200 --> 0:19:59.960 goals and claims of the company seemed to be largely 0:20:00.119 --> 0:20:04.360 unsubstantiated by reality. However, let's talk about what the company's 0:20:04.400 --> 0:20:08.640 mission is before I get all skeptical. So, for the 0:20:08.680 --> 0:20:11.639 transportation side of the Boring company's business. The goal is 0:20:11.680 --> 0:20:14.119 to dig out tunnel networks that will allow for the 0:20:14.119 --> 0:20:20.240 construction of transportation infrastructure. That infrastructure will ideally create an 0:20:20.280 --> 0:20:24.720 alternative to street level traffic and help reduce or potentially 0:20:24.760 --> 0:20:28.200 even eliminate congestion, making it easier for you to get 0:20:28.200 --> 0:20:31.359 to your destination and create a more pleasant experience for 0:20:31.480 --> 0:20:35.119 you know, the surface dwellers. And when coupled with loop, 0:20:35.400 --> 0:20:39.360 which is the transportation infrastructure part, the ideas that passengers 0:20:39.400 --> 0:20:42.200 will zip around these tunnels and potentially up to a 0:20:42.320 --> 0:20:46.240 hundred fifty miles per hour. Uh now, this in itself 0:20:46.400 --> 0:20:48.879 was a step down from the original concept of the 0:20:48.960 --> 0:20:52.680 hyper loop, which was an enclosed train system that would 0:20:52.680 --> 0:20:54.920 pump out most of the air from the tunnels in 0:20:55.040 --> 0:20:57.600 order to reduce air resistance and be able to travel 0:20:57.680 --> 0:21:02.479 at very high speeds. The current loop proposal involves writing 0:21:02.480 --> 0:21:07.000 in Tesla vehicles through tunnels. Uh now. Standard Tesla can 0:21:07.040 --> 0:21:10.720 hold five people, although the versions that we've seen have 0:21:10.920 --> 0:21:15.840 maxed out at three passengers plus a human driver. And obviously, 0:21:16.119 --> 0:21:17.680 if you wanted to go all the way to five 0:21:17.720 --> 0:21:20.080 people where you have one human driver and four passengers, 0:21:20.119 --> 0:21:21.960 you have to have folks who don't mind being super 0:21:22.000 --> 0:21:25.399 cozy in the back seat. Also, so far, people have 0:21:25.560 --> 0:21:28.119 only been in vehicles that have reached a maximum of 0:21:28.200 --> 0:21:31.640 fifty miles per hour. And last I checked the LVCC 0:21:31.840 --> 0:21:34.120 loop that is in the Las Vegas Convention Center loop, 0:21:34.560 --> 0:21:37.560 where there's kind of a pilot program of this that 0:21:37.600 --> 0:21:40.720 one is restricted to a maximum of thirty five miles 0:21:40.760 --> 0:21:42.879 per hour. This has led a lot of critics to 0:21:42.920 --> 0:21:46.320 suggest that all Elon Musk is really doing is just 0:21:46.400 --> 0:21:49.320 adding more lanes of roads. It's just that these are 0:21:49.400 --> 0:21:55.560 lanes that are underground um and thus isn't really that revolutionary, 0:21:55.640 --> 0:21:58.320 nor is it expected to make that big of an 0:21:58.359 --> 0:22:02.879 impact on issues like traffic congestion. Now, arguably we won't 0:22:02.880 --> 0:22:05.960 know for sure until something more robust than the Las 0:22:06.040 --> 0:22:09.359 Vegas Convention Center system is in place in order for 0:22:09.480 --> 0:22:13.159 us to evaluate it. My guess is that we aren't 0:22:13.160 --> 0:22:17.399 going to see a massive improvement using this kind of system, 0:22:17.440 --> 0:22:19.639 and that maybe it would have been a better idea 0:22:19.720 --> 0:22:22.719 to use some more tried and true measure like building 0:22:22.720 --> 0:22:26.960 out a train system instead, which has a higher capacity 0:22:27.080 --> 0:22:31.000 and has a long history of being proven to work. 0:22:31.440 --> 0:22:33.800 But we're gonna have to wait and see. I would 0:22:33.840 --> 0:22:35.880 love to be proven wrong about this. I would love 0:22:35.920 --> 0:22:37.800 to see that this is really an effective means of 0:22:37.800 --> 0:22:40.680 getting people around using electric vehicles. I think that would 0:22:40.720 --> 0:22:44.159 be amazing for Las Vegas and for other cities that 0:22:44.200 --> 0:22:47.639 follow suit. Now, getting back to self driving cars for 0:22:47.840 --> 0:22:51.080 a second. Uh. In fact, part of the plan for 0:22:51.160 --> 0:22:54.040 the loop is to use self driving Tesla vehicles in 0:22:54.040 --> 0:22:56.520 the future. It's just that's not how it's working right now. 0:22:57.080 --> 0:23:00.680 But in the UK, the Department for Transport has determined 0:23:00.720 --> 0:23:03.680 that in the event of an autonomous car getting into 0:23:03.680 --> 0:23:06.919 an accident, the motorists inside the car will not be 0:23:07.000 --> 0:23:11.280 held liable for claims. Instead, the insurance company representing the 0:23:11.320 --> 0:23:15.399 motorists or that vehicle will be held liable. Moreover, the 0:23:15.440 --> 0:23:18.440 Department says that writers will be allowed to watch videos. 0:23:18.480 --> 0:23:21.160 They can watch TV on built in screens and self 0:23:21.240 --> 0:23:24.200 driving cars and there won't be any problem with that. However, 0:23:24.520 --> 0:23:26.479 they will still be against the law to use a 0:23:26.520 --> 0:23:32.040 mobile phone. And Okay, I'm not really sure why one 0:23:32.080 --> 0:23:34.960 activity is okay and the other one isn't. Also, I 0:23:34.960 --> 0:23:37.000 think it's gonna be a while before we have vehicles 0:23:37.040 --> 0:23:40.240 that are really dependable enough where this sort of measure 0:23:40.240 --> 0:23:43.800 will even be relevant. However, assuming we do get to 0:23:43.880 --> 0:23:47.480 that level of reliable autonomy, the benefits would be tremendous, 0:23:47.520 --> 0:23:51.080 from relieving traffic congestion to reducing the number of accidents 0:23:51.080 --> 0:23:54.679 and thus injuries and fatality. So I'm really hoping that 0:23:54.720 --> 0:23:59.600 we hit it UH soon. I remain a little cautious 0:23:59.680 --> 0:24:03.560 about it because it's just taking a lot more time 0:24:03.560 --> 0:24:08.080 because as we've as we've discovered the challenges are more 0:24:08.200 --> 0:24:11.960 subtle and varied than what a lot of people previously, 0:24:11.960 --> 0:24:16.360 including myself, previously considered. UH. I was really gung home 0:24:16.720 --> 0:24:20.199 on driverless cars for a really long time, and I 0:24:20.240 --> 0:24:23.720 still am for the concept. I'm just a little more 0:24:23.760 --> 0:24:29.360 cautious about the actual capabilities. I mentioned on Tuesday's episode 0:24:29.359 --> 0:24:32.440 that employees at the flagship Apple store in New York 0:24:32.480 --> 0:24:35.359 City are in the process of organizing a union, and 0:24:35.440 --> 0:24:38.040