Billionaires are Banking on the Robotics Revolution

What do Jeff Bezos, OpenAI, Microsoft, Nvidia, Intel Capital and ARK Invest share in common?  

They invested $675 million into, a 12-month startup valuing it at $2.6 billion dollars.

Not bad for one year of work.

But what do these brilliant investors know that most of the general population doesn’t?

Today, you’re going discover:

  1. How became so valuable so quickly.
  2. Why Tesla’s pain might just be your gain.
  3. When I plan to capitalize on this once-in-a-lifetime opportunity.

But first, we need to understand why the big boys placed such a large price tag on such a little company.

And for this, we need to go back in time before those pesky humans.

Imagine a pristine world…

…untouched resources, untapped potential. This is a world without economics, where value exists only in its raw form.

Enter us. (Go humans)

We have needs, desires, and our greatest tool – the ability to work. 

We see a tree, but don’t just see a tree, we see shelter, warmth, tools. It’s through our labor that potential transforms into value.

But we can’t do everything ourselves.

So we specialize.

About 3.5 billion specialized creators, innovators, and problem solvers.

It’s our labor that is the bridge between our wants and the resources to fulfill them. Without labor, there is no production, no value creation. It’s the primary limiting factor for economic growth.

But what happens in a world where labor becomes limitless?

Massive disruption, and where there’s disruption, there’s opportunity.

And tech titans like Jeff Bezos, OpenAI and Microsoft know this know this, which is why they’re writing massive checks to fledgling robotics startups.

figure01 robotics investment

But if you’re not a billionaire, how do you capitalize on humanity’s magnum opus?

Lucky for you, I think I’ve got the answer.

But before we get to that, we need context.

How Figure 01 Became So Good So Fast

How are one-year-old startups leap frogging companies like Boston Dynamics that have been in the robot game for decades?

In the same manner horse-drawn transportation lost to the rise of Ford’s automobiles.

Not by doing things differently, but by discarding the old playbook entirely.

Imagine you’re giving a friend directions to your house. The list of steps to get them from point A to point B is programming — you’ve been programming your entire life. 

And while directions may be an easy thing to program, some programming challenges are near impossible.

For instance, compare how easy giving directions is to telling someone how to identify these digits:

MNIST 100 digits

If you think this feels near impossible, you’re right.

But using neural networks makes this stupid easy. 

Instead of giving the computer instructions on how to identify the digits, you show the computer a bunch of images of the numbers and let it figure it out on its own.

Here’s Elon sharing that they’re largely solved full-self-driving by replacing 300,000 lines of code with around 3,000 using a neural network approach.

Computers can now perceive and respond to countless scenarios in an infinitely unpredictable world.

But what I think is missed by most is that computers can learn exponentially faster than humans. Moreover, unlike humans, if one robot learns something new, they can share it with all of their robot buddies.

And if you still don’t believe that the humanoids are coming, watch Figure 01 in action:

That is why these tech titans invested in Figure. 

They realize that recent breakthroughs make humanoid workers something that’ll happen next year, and that swapping even just a small portion of the 3.5 billion labor force is a mind-boggling opportunity.

So who wins?

I think the answer is crystal clear.

Why Tesla’s Pain Could Be Your Gain

When Tesla faced early production struggles with the Model 3, many saw it as a failure. But within that “production hell” lay the seeds of Tesla’s superpower — first principles manufacturing excellence.

The relentless struggle to refine their manufacturing processes forced them to innovate, iterate, and learn at a pace unmatched by competitors.

Tesla can now build a car in just 10 hours, a third of the time it takes Volkswagen and other competitors.

Tesla 1 Car / 10 Hours

The foundation for Tesla’s robotic ambitions isn’t theoretical; it’s already under their own roof.

And for those of you who haven’t realized it yet, Tesla’s vehicles are essentially sophisticated robots on wheels, providing the company with extensive expertise in AI, sensor systems, battery management, and locomotion.

This is to say nothing of their Dojo supercomputer, distribution advantages using The Boring Company’s technology,  and myriad of other technological advantages.

But it’s not just about their tech, it’s about timing.

Tesla will deploy and test robot prototypes directly in its own factories, rapidly collecting real-world data and speeding up development, while reducing their manufacturing costs.

This drives down consumer costs leading to more four-wheeled data collection robots providing valuable data back to the mothership.

And you know what they say: data is the new gold.

But if I’m right, and Tesla is uniquely positioned to take advantage of the largest economic shift in the history of humanity, why is the worst performing stock in the S&P 500 YTD?

Tesla vs Spy YTD on 2024-03-14

The Best Investments Are Often Hiding in Plain Sight

I’ll turn this question to you.

Before reading this article, did you think of Tesla’s cars as data collection robots on wheels?

I think the answer is hiding in plain sight.

Also, how does this tweet make you feel? Really…

I could be wrong. But I don’t think so. My Tesla long will be the largest bet of my lifetime.

I currently value Tesla at $168 dollars using a discounted cash flow WITHOUT factoring in the robotics revolution.

And as I write this, Tesla is trading at $162.55. 

Old Leo who only relied solely on valuation for tax-advantaged position trades would be backing up the truck.

New Leo salivates every day it gets cheaper waiting for:

  1. Tesla shareholders to capitulate on no news with the weekly, daily, and hourly RSI hitting historic lows.
  2. Tesla to show relative momentum to the market.

There’s no need to ride something down. This is obvious to great traders like Oliver Kell:

Valuation is important, but when it comes to triple digit returns, timing is everything.

If you are interested in how to value a company and Tesla specifically, check out this video from my professor, who I think is the best in the biz.

Liked this one? Disagree? Let me know in the comments below 👇

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