Ryan
Jan 83 min
Weekly Update Dec 4-8
Let’s jump right in!
Tesla
There have been so many viral videos about the Cybertruck. Tesla is, in my opinion, the greatest marketing company on Earth. And they do no advertising. They make such good products that are so unique that people can’t help but share their experiences. It’s the best type of marketing – word of mouth. In that spirit, here are a couple videos that Tesla actually made that garnered quite a bit of attention.
My favorite is the Cybertruck Beast beating a Porsche 911 on a race track…while towing a Porsche 911. That’s just genius. Another one I thought was great is the truck getting shot with several different guns. There are dents but none of the bullets made their way through. I wouldn’t be surprised to see some upper class police stations get some Cybertrucks. They are like mini-tanks that can go 0-60 in under 3 seconds!
I also really like that the Cybertruck is polarizing. Some people hate it. Some people love it. I think that just means more attention for Tesla and there are clearly enough people interested in it, that demand won’t be an issue. To get a sense of what the Cybertruck could contribute to Tesla’s business, it has 2 million reservations and the average price will be around $80k. That’s $160 billion, 60% more than Tesla’s entire revenue base. Now, it’s true that pre-orders don’t really mean anything because people could just choose to lose their non-refundable $250, but that's a sense of the market size.
Snowflake
We got a little more information on Snowflake’s generative AI product, Cortex at AWS’s re:Invent. Cortex is just another leg of this strategy, as the company is enabling developers to bring large language models into their data warehouse. Snowflake is sort of trying to change the way applications and data work together. Typically, data is pulled into an application in the form of a web-page or app on your phone. However, Snowflake is trying to build a platform where developers bring applications to where the data already is. In that reality, there would be Snowflake sitting as the underlying data platform and all of the data would stay in Snowflake and the application logic could be written straight into where the data lives. Ideally, that would lower data egress costs and application latency. There is a long way before any of that would reach a consumer audience but most of the current applications are B2B, things like Blackrock’s Aladdin software running on top of an asset manager’s data warehouse.
Snowflake’s CFO was also at a conference this week. Here were two interesting quotes:
I think we're still very much in the early -- now it's available in multiple just to work with now that we have it so more of them, there's still a conversion of a Snowpark is about a $70 million run rate now as today. So it's starting to get meaningful. Really, what our sales people have been focused on is Spark migration.
This is the first time I’ve seen Snowpark numbers broken out. This is great. Pretty soon here it will be a sizable revenue line item.
A lot of companies say they're going to do buybacks, but they never do them. I always like to do what we say we're going to do -- so we're going to continue to do that. We continue to look at M&A. And -- but all of this continues to be the smaller M&A is more team people that we can bring on and I would say Neevo was an amazing acquisition for us with what we got out of that. We're really, really strong there.
I like management’s capital allocation strategy, even though the stock-based comp is really high. They have done an opportunistic buyback and they don’t like to blow money on acquisitions. The caliber of the CFO is much higher than the average software company.