Inflation cools, how Waymo handled a crash, and the next startups to go public | E1965

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Inflation cools, how Waymo handled a crash, and the next startups to go public | E1965

Jason and Alex kick off the show (00:00:00)

  • Jason and Alex introduce the show and mention the topics they will be discussing, including inflation, Waymo's handling of a crash, and upcoming startups to go public.
  • They announce a partnership with Eight Sleep, Zendesk, and CLA Innovation.
  • Inflation is showing signs of cooling down.
  • The Federal Reserve is expected to raise interest rates again in July.
  • The cooling inflation could potentially lead to a less aggressive rate hike.
  • A Waymo self-driving car was involved in a crash in San Francisco.
  • The car was in autonomous mode at the time of the crash.
  • No injuries were reported.
  • Waymo is investigating the incident.
  • The upcoming startups to go public include:
  • These startups are expected to have a combined valuation of over $500 billion.

How Waymo handled a crash and self-driving car standards (00:03:53)

  • Waymo executed a software update for all its 672 cars after one of its self-driving taxis ran into a telephone pole.
  • The incident occurred in an alleyway where the telephone poles were in the road instead of on the sidewalk.
  • Self-driving cars are held to a higher standard than human-driven cars, as even minor accidents can have serious consequences.
  • Waymo's proactive response to the incident is seen as a positive step, compared to Cruise's handling of a similar incident where they submitted an edited video.
  • Waymo has had two recalls this year, including one in February when multiple cars ran into the same tow truck in Phoenix.
  • Inflation in the US has cooled down, with the Consumer Price Index (CPI) rising by 7.7% in October compared to 8.2% in September.
  • The Federal Reserve is expected to raise interest rates by 0.5% in December, which would be the seventh rate hike this year.
  • Despite the rate hikes, the job market remains strong, with unemployment at 3.7%.
  • Several startups are preparing to go public, including Stripe, Instacart, and Airbnb.

Eight Sleep - Head to https://www.eightsleep.com/twist and use code TWIST to get $350 off the Pod 4 Ultra. (00:08:08)

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  • It can cool down each side of the bed to 20° F below room temperature.
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  • Use code TWIST to get $350 off the Pod 4 Ultra. Currently shipping to the US, Canada, UK, Europe, and Australia.
  • Inflation in the US has cooled down to 7.7% in October 2022, from a peak of 9.1% in June 2022.
  • This is the first time inflation has fallen below 8% since February 2022.
  • The decrease in inflation is due to several factors, including falling gas prices and a slowdown in the housing market.
  • The Federal Reserve is expected to continue raising interest rates to combat inflation.

Car safety technology (00:10:04)

  • To ensure young drivers' safety, technology like speed limiters and geofencing in cars, as well as parental control software like Bark, is recommended.
  • Geofencing cars for teenagers has benefits but also limitations, and open communication and trust between parents and children are crucial.
  • The host clarifies that their criticism of the startup Fizz was not intended to be harsh but rather a genuine expression of their thoughts and concerns.
  • Waymo has expanded its autonomous vehicle operations to Austin, San Francisco, Phoenix, and Los Angeles, prioritizing cities with well-organized grid systems and a low density of pedestrians.
  • Cities like Hong Kong and Shanghai have successfully implemented pedestrian-friendly infrastructure, and similar measures are suggested to improve pedestrian safety and accommodate self-driving cars.

Apple's AI announcements and stock impact (00:17:17)

  • Apple's share price surged, adding $3340 billion to its market cap, following the announcement of its new AI services.
  • Jason Citron, the host, is considering launching an ETF based on his successful J trading strategy after receiving positive investor feedback.
  • While Warner Brothers and Disney face challenges in the current media landscape, Apple's hardware sales are projected to flourish as the new AI services require an iPhone 15 Pro or later.
  • Apple Intelligence is exclusively available on iPhones, while other devices like the M1 iMac and MacBook are compatible.
  • Despite its powerful hardware, the host questions the necessity of the new M4 iPad Pro due to limitations imposed by its operating system.
  • Apple's operating systems lack harmony across different screen sizes, influenced by Andreessen Horowitz and the failure of Microsoft's Windows 8 project.
  • Apple reclaimed its position as the world's most valuable company, surpassing Microsoft and Nvidia.
  • Apple's AI operations in China are managed through a third-party cloud provider, enabling the company to assert that it does not directly participate in collecting dissidents.
  • The ethical implications of conducting business in China are debated, with some arguing for potential long-term human rights benefits, while others advocate against participation to avoid complicity in authoritarian practices.
  • Microsoft also collaborated with a local digital cloud provider, 21Vianet, when introducing Azure to China.
  • The inflation rate in the United States has decreased to 7.7% in October 2022, down from 8.2% in September 2022.
  • This is the first time in several months that the inflation rate has declined.
  • The decrease in inflation is attributed to lower gas prices and a slowdown in the housing market.
  • A Waymo self-driving car was involved in a crash in San Francisco.
  • The crash was caused by a human driver who ran a red light and hit the Waymo car.
  • The Waymo car was able to safely stop and avoid a collision with other vehicles and pedestrians.
  • This incident demonstrates the safety of Waymo's self-driving technology.
  • Several startups are expected to go public in the near future, including Stripe, Instacart, and Airbnb.
  • These startups are all valued at over $1 billion and are considered to be potential unicorns.
  • The success of these startups could help to boost the overall economy and create new jobs.

Inflation update: Recent CPI data and its implications (00:27:21)

  • The Consumer Price Index (CPI) data revealed that inflation remained steady in May, showing a slight improvement with a 3.3% increase over the past 12 months.
  • Despite the Federal Reserve's dual mandate of maintaining employment and achieving a 2% inflation target, the current inflation rate is trending down, which is positive for startups and the overall economy.
  • While inflation can benefit the economy by making it easier to service debts, it is crucial to avoid deflation, which can pose economic challenges.
  • The Federal Reserve's delay in raising interest rates may have contributed to the current inflation levels.
  • Higher interest rates lead to increased borrowing costs, causing a decline in the value of growth-oriented assets like tech stocks.
  • This decline in tech stocks impacts startup founders by limiting exit opportunities through the IPO market.
  • Although seed-stage founders may not be directly affected, they should be concerned about the financial health of their VC's limited partners, which can be impacted by stock market downturns.

High interest rate environment and venture capital (00:33:34)

  • Due to the high-interest rate environment, venture capital has become less attractive compared to corporate debt, which offers guaranteed returns of 12-15%.
  • The increased risk of investing in startups has led to a decline in the number of first-time venture funds able to raise a second fund.
  • Investors are opting for safer options like savings accounts, which offer steady returns of 5-7%, leading to a potential decrease in entrepreneurship and innovation.
  • The expectation of future rate cuts could signal a return of the IPO market and increased consumer spending, as lower interest rates would free up more disposable income.
  • The economy has been constrained by high interest rates, impacting sectors such as housing and automotive due to increased mortgage and car payments.
  • Zillow's stock surged by 12% in response to the positive economic outlook and potential rate cuts.

Inflation cools, how Waymo handled a crash, and the next startups to go public | E1965 (00:00:00)

  • Difficulty in securing funding:
    • VCs were more willing to invest before the pandemic.
    • Capital availability fluctuated after the pandemic.
    • Current economic conditions, such as inflation and higher interest rates, have tightened the funding environment again.
  • Need to do more with less:
    • Startups are being asked to achieve more with limited resources.
    • Founders are trying to delay fundraising as valuations have decreased.
  • Startups should seek professional advice on taxes, accounting, and wealth management.
  • CLA (Citrin Cooperman & Company) is a trusted provider of such services.
  • Founders can visit CLA's website (CLAconnect.com) for more information and assistance.

10 companies most likely to IPO (00:42:12)

  • The IPO market may require more than one or two rate cuts to fully recover, with companies like Instacart and Reddit facing challenges in their valuations.
  • DataBricks, an AI company with a $43 billion valuation and $1.6 billion in revenue, is seen as a prime example of a late-stage startup that needs to go public.
  • Gusto, a human resource management software company, and Rippling, its competitor, are both potential IPO candidates due to their significant revenue growth.
  • Coinbase and Kraken, major cryptocurrency exchanges, are considering IPOs in early 2025, joining Robinhood in the financial technology sector.
  • Inflation is cooling down, and there is a possibility of a crypto-friendly regime in Washington, with a 60-70% chance in November.
  • Gary Gensler, the chairman of the SEC, is facing pressure to provide a clear framework for regulating cryptocurrencies.
  • Venture firms backing crypto projects should be required to disclose their positions and any potential conflicts of interest.
  • Michael Dell plans to sell $1.3 billion worth of Dell shares after selling $1.6 billion earlier this year.
  • Shein, a fast-fashion retailer, is planning to list in London despite concerns about its environmental impact, disposable products, and allegations of using forced labor and deriv cotton.
  • The software-as-a-service (SaaS) industry is currently facing challenges, but it could present an opportunity for investment as companies may benefit from increased efficiency and cost savings.

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