Blain’s Morning Porridge June 14^th 2024: Musk Promises us Replicants! Bothered…

“All these things will be lost, like tears in the rain…”

The world has clearly gone mad. A showman stands up, makes promises he can’t deliver and the fools throw money at him. We should be asking if these are the right people to entrust money to.

I’m off on holiday tomorrow morning! And I can’t wait for a week of respite from the sheer stupidity that passes for markets and politics in this world. They do say a week is a very long time in markets – but teaching market participants to start thinking logically feels like it could be the wasted work of a life-time these days.. So this morning.. some snippets on what peeves/amuses me..

Do Androids Dream of Electric Sheep?

I am proud to be an honorary professor at Heriot-Watt University in Edinburgh, lecturing smart post-grads in the tau of finance at the Edinburgh Business School. Also on campus is the World Leading National Robotorium – the UK’s centre of excellence for Robotics and Autonomous Systems (RAS), Human and Robot Interaction (HRI) and High-Precision Manufacturing. I have been to see it. The research, invention and innovation going on within the building is simply unbelievable.

The team have identified the needs, the scale and scope of multiple Robotic use cases. On a campus with some of the top science, computing, AI and engineering minds on the planet, they use facts, technical knowledge, skill, experience and the art of the possible to lay out pathways from concept to commercialisation. They have an in-house accelerator and an objective to put the UK at the forefront of the coming Robotic Revolution. They understand the reality, the tech, the possibilities and the limitations.

Meanwhile….

Three years ago, Elon Musk paid a man to put on a robot suit, told him to dance like Michael Jackson, and then, to tremendous applause, assured us a Telsa Robot would shortly be in every home.

Last night, after he pressured his board and shareholders to confirm the $56 bln payout a Delaware judge has previously over-ruled, Musk told us Telsa’s humanoid Optimus Robots will lift the firm’s market cap to $25 trillion… about 50 times its current value.

Welcome to the next thing Musk won’t ever deliver.

Musk showed a prototype Optimus doing the laundry. Actual real, expert robotic engineers watching Musk’s comedy show could not believe what he tried to pull off. They immediately pointed out the robot was being controlled by human operators! Elon told us production starts next year, and Optimus robots will be in his factories – meaning I guess he will sack more of the staff who got him that stock bonus.

Corporate Governance is a banned expression in Tesla. Social responsibility means nothing to a man who thinks only of his personal wealth. If Musk was to set up a new Robot company and call it Tyrell Corporation I would not be in least bit surprised.

Is Musk “pathologically optimistic”, as he claims, or a pathological liar? That’s a question for shareholders. A vast majority, apparently, believe the value Tesla will deliver through Robotaxis, Optimus Robots, and AI makes Musk well worth the $56 in vested options – now worth a little less at $44bln. And that amazes me. How are such stupid people looking after other people’s money?

If I put one of the top robotics teams from Heriot-Watt’s Robotorium in front of a leading VC Robotics investor tomorrow, the experts would explain to the potential investor the challenges inherent in Robotics, the pointlessness of a humanoid robot except as a gimick, the multiple applications robots could be used for, the size and scope of each use cases, the limitations imposed by AI, and what the route to robotic profitability will be.

The VC will thank them. He will shake his head, tell them their start-up concept is too early stage, too small an addressable market, or the pathway has too many total failure points.

Five minutes later Musk will bounce into his office, and a dancer in a suit will show off everything an Optimus robot will never ever do. The VC dude will have his cheque-book out before Musk finishes his introduction. The VC will figure Robots might matter, but Musk certainly does.

The reality gap between the Potemkin village Musk presents to the world and the actuality us growing wider every day. At some point he will role snake-eyes on the dice. Musk has gone all-in on AI. He has no choice but to. (He is nursing grudges, furious that OpenAI did not bend to his will and has had the temerity to sign up with Apple.) He is nervous, because more and more market commentators are starting to question why none of Musk’s grand promises about robots, robo-taxis, AI and much else he has conjured up as future cash generative deliverable has ever emerged.

Tesla works because it solved an engineering problem – electric engines. SpaceX works because its engineering – rejigging 1960s tech. Starlink works because its mobile-com engineering. The other stuff needs true AI – meaning it’s still decades away.

All the stuff like Autonomus driving, Robotaxis, and now his version of Robots, need the spark of brilliance that can only come from true human-level plus AI. What Musk will not admit is Generative AI (effectively spotting patterns and ordering the data on probabilities) can’t solve the same kind of problems a human mind can. GAI will be a fantastic memory intelligence, but is not the same as prescient Human-Level Artificial Intelligence. In fact, GAI may even be a limited evolutionary dead-end because it’s based on algos rather than a spark of insight and genius.. it doesn’t think, it computes.

So yet again.. I call BullSh*t on Musk.

Back in the real world.

Tory MP Craig Williams is a complete arse. When a Tory MP admits an error of judgement, you have to wonder how many pandas he ate, did he rob an orphan home of its cruel, or did he ride a unicorn in the grand national? No, Rishi Sunak’s closest aide placed a £100 bet on a July election days before his boss announced it. Really. You can’t make this level of incompetence up – not even in the Party that spawned Liz Truss.

Meanwhile… Lets stop talking about funded policies

I despair of this election. What is the most common phrase? It’s “this policy is fully funded”. Really? There was a time when whether the policy would work and achieve anything was the talking point, whether it would add to growth, prosperity or the equality of society. Now both parties of so-scared of the prudency there are no real plans for growth.

The bottom line is a competent govt with well-presented policies is able to borrow – they need political competency to do so! Liz Truss was a definitional train-wreck. Move on – the next chancellor has to leverage off their competency!

Anyway, I’m very late, out of time, and off on holiday for a week.

Bill Blain

Author of the Morning Porridge

Wind Shift Capital