Waymo is actually cheap

By 20VC

Categories: VC, Startup

Summary

Tesla's self-driving tech is valued at $500B, but Waymo's functioning program is worth just $100B, making Waymo a potential bargain for tech founders and investors.

Key Takeaways

  1. Tesla's self-driving tech, with zero commercial revenue and only 20 cars driving around Austin, is valued at $500B in the public markets.
  2. Waymo, an actual functioning self-driving program, is valued at just $100B, despite having a more expensive cost structure and potentially not the right long-term solution.
  3. Founders and investors should closely evaluate Waymo as a potential bargain compared to the lofty valuation of Tesla's self-driving tech.
  4. When analyzing emerging technologies like self-driving, it's important to look beyond the hype and assess the real-world performance and commercial viability of the solutions.
  5. Founders should be cautious of relying too heavily on market valuations when evaluating the potential of their own technologies, as the market may not always accurately reflect the true value.
  6. Investors should focus on identifying undervalued companies with functioning products and strong commercial potential, rather than getting caught up in the hype surrounding flashy but unproven technologies.

Related topics

Transcript Excerpt

To be honest, I could actually very compellingly argue it's cheap in two seconds. Watch this. Tesla trades at 1.2 trillion plus or minus. It's got a 100 million flat car business with declining profitability. Let's value that at 2x revenues. That's 200 billion. So, that leaves you a trillion left. There's only two assets that give you that. Self-drive and Optimus. For lack of any information, split it 50/50. Half self-drive, half Optimus. Tesla's self-drive opportunity, which has zero commercial revenue, 20 cars driving around Austin, still having way more stops than humans based on the latest data, is valued in the public markets at effectively $500 billion. You're getting an actual functioning program, albeit with a more expensive cost structure and maybe not the right long-term solution…

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