Ryan
Jan 84 min
Before jumping in, I just wanted to quickly say RIP to Charlie Munger, who passed away at 99 on Tuesday. He was Warren Buffett’s best friend and business partner for 60 years and to say he was an avid learner is an understatement. I learned so much from Mr. Munger over the years and I’m grateful for him and his life.
Ok, on to the news of this week.
Tesla
First, Tesla rolled out its latest software, FSD 12, to employees. This is the version where the neural nets are autolabeling all of the video data rather than humans needing to interfere. It’s certainly not perfect but it should be a solid step up from version 11. What’s also amazing is that all FSD subscribers get the upgrade immediately. That is just so different from the legacy automakers.
Second, yesterday was the Cybertruck event so that means the first official deliveries hit the road. There is a lot of hype around Cybertruck and we know it will take many quarters to get cash flow positive but I think there will be more than enough demand. It has better specs for the price than all of the other EV trucks out there. I’ll keep you all updated with the latest developments here as I’m sure more information will come out over the next few weeks.
Datadog
Datadog’s CFO was at an investor conference and there is really only one interaction that I wanted to share:
Analyst: I do have a question about the consolidation, so why don't that up the rank. So we've seen in your broad industry around infrastructure management, let's say, Splunk folding their hand, New Relic folding their hand. Maybe that's the wrong term, maybe they got a great bid, so it was a terrific move. But you know what I mean Sumo Logic selling. Why do you think if this industry around infrastructure management is healthy, as I'm sure you consider it to be. Why have we had 3 vendors sell?
CFO: Yes. I think it probably has a lot to do with us.
So the analyst asks the CFO why three competitors have sold and the CFO responds with “yeah, it’s probably because of us”. That’s just amazing. Cocky but true! Datadog really has disrupted the space with a better product that devops engineers love.
MercadoLibre
First, MercadoLibre had Black Friday sales that were 80% higher than last year. That’s only one day but that’s quite a stat! For the month of November, GMV grew 39%, which, if that is continued for December, would be a shocking 17% QoQ growth number for GMV. This would be very strong on top of an already strong Q3. The Brazilian economy seems to be strong and MercadoLibre is pulling ahead of the cross-border competitors. The company is also getting a tiny amount of hype from the newly elected pro-business Argentinian president as MELI still has a decent chunk of revenue there.
Second, speaking of those competitors, there was an analyst report that came out, saying that the bill that took away the cross-border tariffs is being challenged in the Brazilian government. I’m not surprised by this as it hurts Brazilian SMBs – repealing it would certainly help MercadoLibre as Shopee would be handicapped.
All in all, MercadoLibre is one of the easiest stocks to hold. Competitors are focusing on other geographies while MELI is getting stronger and the results just keep getting better.
Cloudflare
Matthew Prince, Cloudflare’s CEO, was also at an investor conference this week. Here are two quotes that I thought were interesting:
If you talk to a product manager at Cloudflare, what they are measured, by the KPI that we pay attention to, is how much are we connecting various things together. How much are we making it easy for any device, anywhere in the world for any cloud to any other cloud, to make it easy for that data to flow between those things and give a consistent control plane, consistent security, consistent availability, reliability, make it as efficient as possible.
Cloudflare is not the “4th cloud”, even Prince said that. They are a connective tissue between the hyperscalers. It allows data to flow cheaply and securely across different clouds.
But some models are going to be too big to be able to work on the actual device. And so I have no doubt that in 10 years, you're going to have ChatGPT-level quality on your phone, effectively GPT-4 on your device. But by that time, we'll be up to GPT-20, and that's going to be too big to run on your device itself, and it's going to be better in some various ways, do something the thing on your phone can't do. And so the next best place is to have that inference run as close as possible to where you are. And that's better than going all the way back to Ashburn, Virginia, for 2 reasons.
I think this inference stuff is super interesting. Maybe one day we’ll have the world’s intelligence that can be accessed without even being connected to the internet. But for now, Cloudflare will enable very quick inference so that it’s almost as if the models are running locally.