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DemetriKofinas:What'sup,everybody?Welcometothisweek'sepisodeofHiddenForceswithme,DemetriKofinas.TodayIspeakwithMarkSpiegel,managingmemberandportfoliomanagerofStanphylCapitalPartners,aNewYorkbasedequityinvestor.PriortofoundingStanphylin2011,Markspentsixyearsasaninvestment[00:00:30]bankerfinancingpubliccompanies,havingstartedhiscareerincommercialrealestatewhereheexperiencedfirst-handthesortsofrealworldchallengesandopportunitiesthathecreditsformuchofhislatersuccess.Mark,welcometoHiddenForces.

MarkSpiegel:Thankyou.I'mreallyhappytobehere.

DemetriKofinas:Yeah,it'sexcitinghavingyouhere,man.I'mactuallylookingforwardtoaneducationandtoagoodlaughwithyou.Normally,Ihavepeoples'quotes,andIhavesomeofyours.They'regreat.They'resortofinmylittlequotelisthere,whichIhadwithCharley.

Thething[00:01:00]IpulledupthatIlikemore,whichIthinkcaptureswhoIthinkyouarebasedontheverylimitedcontactthatwe'vehadalreadyisyourTwitterprofile,whichsays,"Investor,managingmemberofStanphylCapital,wiseguy.Ibuydeepvalueandshortbubbles,andIdon'tdoitquietly."

MarkSpiegel:Ihaveahugemouthforthesizeofmyfund,there'snoquestion.

DemetriKofinas:Icouldtelltalkingtoyouonthephonethisisgoingtobegreat.

Iwanttosayalsoaswellfortheaudience,thispodcastisforinformational[00:01:30]purposesonlyandshouldnotberelieduponasabasisforinvestmentdecisions.That'sthefirsttimethatIhadaprofessionalsortofthingtosay.Thelasttwowerelike,"Don'tsueme,thisisnotadvice,"becausethisislikebrandnewforme.

MarkSpiegel:Yeah,don'tsuemeeither.Thisisnotadvice.

DemetriKofinas:Thisisdefinitelynotadvice.

MarkSpiegel:Thisisopinion.Opinionandfacts,though.

DemetriKofinas:Exactly.We'regoingtogetintothat,becauseyouhavesomeamazingfacts,Mark.Tellmealittlebitaboutyourbackgroundthough,too,becauseyou'reareallyinterestingguy,andIwanttheaudiencetoreallyappreciatewhatauniquecharacteryouare,[00:02:00]especiallyforourparticulartypeofbroadcast.

MarkSpiegel:Well,Idon'tknowhowinterestingIam.Tellmygirlfriendthatandshe'llthinkyou'rekidding.ButI'moutofcollegealongtime,Igotoutofschoolin'83.Spentthefirst17yearsofmyprofessionalcareerinthecommercialrealestateindustry.Imetalotofcompaniesthatway,andlearnedhowbusinessesreallyrun,asopposedtogettingoutofcollegeandjustgoingrighttosomeinvestmentbankandworkingasananalystandneveractuallybeingintherealworld.

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Soanyway,17yearsofthat.Igotalittlebitbored,soldthebusinesstomypartner.[00:02:30]Basicallytaughtmyselffinance,spentayearworkingforamicro-cap,sortofstorystock,,techcompany,learnedallofthesortofbullshitpressreleases...CanIsaythat?

DemetriKofinas:Yeah,youcancurse,man.[crosstalk00:02:44]Well,that'strue,butIdon'tthinkthat'saproblem.

MarkSpiegel:Alright.

DemetriKofinas:Theynevertoldmeitwasanissue.Theynevertoldmeitwasanissue.

MarkSpiegel:SoIwouldseelikewhat'sgoingonwiththecompanyversuswhatwouldbeonthepressrelease.Iwaslike,"Ohmygod,companiesdon't[00:03:00]alwaystellthetruth,"whichIwasnaïveaboutthisstuff.Soanyway,didthatforayearandthenIdecided,"Okay,nowIwanttoworkonWallStreet."

Atthatpoint,I'm42yearsold.IhavenoWallStreetresumeatall,Imean...butIsentoutalotofresumes.Oneyoungguyrunningasmallinvestmentbanklookedatit,andhesaid,"Hey,youknowwhat?ThisguyworkedwithCEOsofcompaniesandhelpedthemfindtheirrealestate.WeworkwithCEOsofcompaniesandhelpthemfindtheirmoney."That'swhatinvestment[00:03:30]bankingis.Hisphilosophywas,"IfyoucantalktoaCEO,youcantalktoaCEO,"sohehiredmeonaneatwhatyoukillbasis.Gotmelicensed,7/63–

Anyway,soIdidsomedeals,learnedalotaboutthebusiness,andwentfromtheretoalargerinvestmentbank.Wentfromtheretoastilllargerinvestmentbank.ThenIdecidedthatIreallyhatedraisingmoneyfrominvestors...allinstitutionalinvestors,wedidn'tdealwithanyretailinvestors,but...

DemetriKofinas:Thatisanawfulthingtohavetodo.

MarkSpiegel:No,letmejust...No,whatI'msayingisIhateddoingit[00:04:00]forcompaniesthatwouldn'twanttoinvestinmyself,youknow?

DemetriKofinas:Oh,yeahthatmakesitmoredifficult.

MarkSpiegel:That'swhenIdecided,Ireallywouldbemuchhappieronthebuyside.Forpeoplewhoarelisteningtothiswhoaren'tWallStreetpeople,you'vegotthebuysideandthesellside.Basically,thebuysideareinstitutionalinvestors,andthesellsidearetheinvestmentbankswhotrytosellthemonstocksanddealsandwhatever.

Sospentacouplemoreyearsinvestingonmyown.IputtogetherareallygoodpersonaltrackrecordinvestingwhileIwasabanker,andthenIwasreadytoopenmyownfund,[00:04:30]andIdidthatin2011.That'showIgothere.

DemetriKofinas:You'vebeenshortTeslaforthelastfouryears,isthataboutright?

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MarkSpiegel:I'vebeenshortTesla...

DemetriKofinas:Andnotquietaboutit.

MarkSpiegel:Right.I'vebeenshortTeslaforroughlyfouryears.Startedwithareallytinyposition.I'vealwaysbeenacarnut.Peoplesay,"HowdidyougetattractedtoTesla?"Well,Ithoughtitwasafascinatingconcept.I'velovedcars.ButthenthemoreIlookedatthecompany,themoreIsawthatthiswasactuallynotabusiness.Wecangetintothatlater.[00:05:00]Ishortedalittlebit,andthenasthestockgothigherandhigher...andbasicallyasitgotintotheupper200s,whichfirsthappenedin2014...Igotbiggerintheposition.Actually,coincidentally,astheday...Goahead.

DemetriKofinas:Haveyoushortedjustusingoptionsor...

MarkSpiegel:No.I'moutrightshortcomeandstock.Thereasonforthatistwofold.Numberone,it'sverycheaptoborrow.Otherthanafewrareinstanceswherestockgotcalledinforcorporateevents,theborrowrateistypicallybeensomethinglike1%ayear.[00:05:30]Thestocktradesveryactivelyfrom4:00AMuntil8:00PM,NewYorktime,andoptionsdon't.Optionstradewhentheoptionsmarketopens.Itjustgivesmealotmoreflexibilitytojustoutrightbeshortthestock.

DemetriKofinas:Haveyoutriedbeingshortinotherwaysbybuyingcertaincompetitors?Haveyouthoughtofotherwaystogoshortthecompany,orareyou...Imean,justcurious.I'mjusttryingtounderstandsortofthewaythatyouaretryingtomanifestyourpositionaswemoveforwardinthisconversation.

MarkSpiegel:Well,basicallyeverysinglecarmakerintheworldisabouttobe[00:06:00]acompetitorofTesla.Imean,someofthemalreadyare,buttheotherswillbevery,verysoon.ButIhaven'tgonelonganyofthose,eventhoughalotofcarmakersareactuallyprettycheaponsortofcurrentmetrics.Imean,companieslikeGM,Daimler,evenVWwiththeirproblems,butI'mnotconfidentofwherewearesortofintheeconomiccycle,thecarbuyingcycle,andstuffthatlooksreallycheaptodayoncurrentearningscangetalotmoreexpensiveiftheeconomytakesadive.

DemetriKofinas:WhatarepricetoearningsforlikeaGMorlikeaFord?

MarkSpiegel:Cheap,[00:06:30]thesearelikesingledigits,youknow?Likehighsingledigits,typically.

DemetriKofinas:Right,like8orsomethinglikethat.6to8.

MarkSpiegel:Yeah,Imeanthere'salotofslowdown,Ithink,pricedinalreadyintosomeofthesebigautostocks,butsomeofitbecomespsychology.Imean,ifcarsalestakeadive,thesestockscangetslammedevenlower.

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DemetriKofinas:Youdon'tknowthisbecause...well,maybeyoudo.ButIwasspeakingwithCharleyaboutthis...CharleyGrantwhowasontheshowlastweek.Thatwasmyfirstforay,andthefirstforayfortheaudiencethroughthisshow,[00:07:00]intoTesla.Ilearnedaton.

OneofthethingsIlearnedinpreparingforthatinterviewhadtodowiththeeconomicsoftheindustrymorebroadly,andjustwhatashittyindustryitistobeinasacarmanufacturer.Justlookingattheadvantage,forexample,thatsuppliershave...alsoreallyappreciatingtheglobalnatureofthemarket.It'sabeast.

Imean,theamountoflogistics,andpartnerships,businessdevelopmentrequirements,allthesedifferentsortofcomponentsthathavenothing[00:07:30]todowithshinysortoftechnologicallayer,right,whichissomuchofwhatissupporting,Ithink...atleastforthepublic,anypublicbuyerofTeslashareswhosortswhosortofwalksandsays,"Ilikeit,it'sanicecar.Iwanttobuysomeshares,"isrespondingto,whichisthefactthatit'satechnologycompany.It'srunbyElonMusk,whoappears,bytheway...Idon'tmeanthis[crosstalk00:07:50]

MarkSpiegel:IfIcanjustinterruptyouonesecond.Teslaisnomoreofatechnologycompanythananyothercarmakerintheworld.Infact,theeasiestthing[00:08:00]todoisdesignandbuildanelectricpowertrainforacar,becauseitactuallyisreallysimple.Thehardestthingtodoistobuildthesecarsprofitablyandinscale.Butifyouwanttotalktechnology,Iwouldbet...Look,Ihaven'tdonetheworkonthis,butIwouldbetthattheelectroniccontrolsystemforamodern32valve,twinturbocharged,emissionscompliantengine,alongwiththealloysthatgointobuildingit,probablyhasmoretechnologyin[00:08:30]itthananelectricdrivetrain.

DemetriKofinas:Well,100%ithasatonoftechnology.Idon'tifithasmoreornot,but100%withyou.ThatIhaveknownforalongtime.Theamountoftechnologythat'sinthesecarstodayistremendous.Infact,itmademeregretthelastcarIbought,whichhad...It'snotfunanymore.There'stoomuchtechnologyinit.

MarkSpiegel:Oh,youusedtoliketoworkonthecars.

DemetriKofinas:No,Ididn'tworkonthecars,butlikethemalfunctionsweredifferent.Anyway,it'sawhole'notherthing.Alsogettingthemrepairedisalsoadifferentstory.Butbacktothis,andImentionedElonandIdon'tsaythisglibly...[00:09:00]IalsoshouldsayCharleymadethispointwhenIhadhimontheshow,andImadethispointtodayonTwitter...whichI'musingmorebytheway,it'snotgoodformybrain.

MarkSpiegel:It'skindofaddictive.

DemetriKofinas:Well,yeah,ImeanIdon'tgetaddictedtoitanymore.Iusedtobesuperaddictedtoit,butthat'sbecauseIusedtouseitinamoreself-flagellating...notflagellating,what'sthattermmean?Itmeanssomethingelse.

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MarkSpiegel:Deprecating?

DemetriKofinas:No,inlikea...Iwouldindulgeinit.Idon'tdothatsomuchanymore.Idon'tgetasmuchoutofitasIusedto,butitisagoodpromotionaltool.[00:09:30]ButwhatIdidsay,andIwantedtomakeclear,isIhavealotofrespectforElonMusk,man.Imean,theguyisamuch...heisabrilliantguy.

MarkSpiegel:Okay.

DemetriKofinas:No,butlisten,listen.Straightup,look,separatefromthosethings...

MarkSpiegel:Straightup,Idisagreewithbothofthings.

DemetriKofinas:Okay,fine,solet'sputthatasideasecond.MypointisIdothinktheguyisbrilliant.Thefactthat,youknow...

MarkSpiegel:Whydoyouthinkhe'sbrilliant?

DemetriKofinas:Well,becauseIthinkyouhavetobebrillianttocreateacompanythatcanshootrocketsintospace,youjusthaveto...

MarkSpiegel:Really?Soletmesaysomething.Idon't[00:10:00]knowhowoldareyou.Howoldareyou?

DemetriKofinas:36.

MarkSpiegel:Okay,soin1969,usingbasicallysliderules,onthemostprimitiveofcomputers,wesafelysentandlandedmenonthemoon.Theyhitgolfballsmultipletimestheydrovearoundinlittleelectriccars,andthentheyblastedofffromthemoonandcamehome.Thereisprobablysomuch...Look,I'mcertainlynorocketscientist,butthereisprobablysomuchknowledge[00:10:30]outthereabouthowtojustlaunchsatellites,whichiswhatMuskisdoing.Andonthelastpublicfinancialstatement--

DemetriKofinas:Helandedarocketbackonabarge,wedidn'thavethatbefore.Also,Idon'tthink...justtosay,whatourspaceprogramdidwastremendous,anditwasbeyondjustknowledge,itwasafeatofwill.

MarkSpiegel:Sodoyouthinknobodyeverthoughtoflandingarocketonabargebefore?

DemetriKofinas:Ofcoursetheydid.

MarkSpiegel:LikeLockheedMartinBoeing.DoyouthinkMusk'sscientists...nothim,bytheway.

DemetriKofinas:I’mnotsaying--

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MarkSpiegel:He'sacollegedropout.WhatI'msayingisthatifthatwasaneconomicalthingtodo,otherguyswouldbedoingit.[00:11:00]ThelastpublicfinancialsonSpaceX,whichwasinaWallStreetJournalarticlelastyear,likeallofotherMusk'sbusinesses,it'slosingmoney.

DemetriKofinas:Okay,soholdonasecond.MaybeIdidn't...I'mundertheimpressionquitetheopposite,thatnothavingtowastetherocket...

MarkSpiegel:Therefurbishingofthe...

DemetriKofinas:...isactuallyaneconomicbenefit.

MarkSpiegel:Again,we'retalkingaboutTesla,but...

DemetriKofinas:Nowwe'removingintoSpaceX.Butthat'sagoodpoint,becausethisguystraddlesallthesecompaniesandit'srelevant.Itisrelevant.

MarkSpiegel:Yeah,so...Right.Apparentlyheneedstocarryextrafueltodothat,whichapparentlyreducesyourpayload.Thenrefurbishing[00:11:30]therocket,evenSpaceXadmitted,itwasn'tsavingmoneyyet.They'revery,sortof,cryptic.It'snotapubliccompany.Theywerehopingjusttosavemoneywithitinthefuture.

Bytheway,therocketbusinessisonething,thesesimplelaunches.Muskisgoingtoincinerateasmanybillionsinthatcompanyasinvestorsarewillingtogivehim,buildingasatelliteconstellationforinternetinareasthataren'twellserved,thesameareasthataresparselypopulatedandhavenomoney,bytheway,andcanneverpayfortheservice--

DemetriKofinas:There'sarealestateopportunityrightthere.

MarkSpiegel:[00:12:00]Therestofit'sgoingtobeincineratedongoingtoMars.Sothisguy,yougivehimmoney,Iguaranteeitdisappears.Here'showhecomesupwiththesecompanies,okay.Thisguygotastackof1970seraPopularSciencemagazines.You'retooyoung,whenIwasakid,Ihadthose.Yougothroughthosecoversandyou'llseeeveryquoteonquoteElonMuskoriginalideayou'veeverseen.Here'showhe'sagenius.He'sageniusattalkingpeopleoutoftheirmoney.

Asfar[00:12:30]asIknow,he'sneverrunaprofitablecompany.WhenheranPayPal,thatcompanywaslosingallkindsofdough,andtheythrewhimout.Nowapparently,theythrewhimoutpartiallybecauseitwasanoperatingsystemsargument,butitwasalsolosingmoney.Theguyisallergictoprofits,butthatdoesn'tstophim,bytheway,fromflyingaroundtheworldinaGulfstreamG650ER–

DemetriKofinas:He’sleadingthegoodlife.

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MarkSpiegel:--whichisthelargestandnicestprivateplaneyoucanbuyshortofaconvertedairliner,itdoesn'tstophimfromhavingabunchofconnectedhouses[00:13:00]inBelAir,anditdoesn'tstophimfromdatingsomeveryhotactresseswhowouldhaveneverdatedhim...

DemetriKofinas:Isn'themarried?

MarkSpiegel:...ifheweren'tdumpingseriouscashonthem.No,he'sbeendivorced.Ithinkhe'sdivorcedthreetimes,buttwicetothesamewoman,whowereprettyhot,too.Imean,Idon'tbegrudgehimanyofthat.WhatIbegrudgeisthephoniness,the,"Oh,Elonissavingtheworld."TheguyisflyingtoAustraliatodatethathotchick.

DemetriKofinas:[crosstalk00:13:24]here'smyquestion.Holdonasecond.Youknowwhat'ssurprisingMark,you'rereallygoodatlettingmeinterruptyou.Forsomeonethatis[00:13:30]sogoodattalking,you'resurprisinglycongenialwhenitcomestointerruption.

So,isthathim?Doeshedothat?Oristhatreallythemediathatfawnsoverhim?Ifeellikeit'smorethemediathatfawnsoverhim,andhe'swillingtoacceptthatheenjoysit,heenjoysplayingit.ButIdon'tgetfromhimthatsame...

Likeforexample,IwastellingCharley,didyouwatchthis...Itsoundslikeyouprobablywatchedeverything.Didyouseetheinterviewhedidwith...what'shisname...fromInterstellaratSXSW?

MarkSpiegel:Afewminutesofit,likeIsawsomeclipsfromit.

DemetriKofinas:Okay,[00:14:00]thatwasreallyformelikeaperfectexample...becauseIforgettheguy'sname,thiswasoneofthewritersforInterstellar.Idon'tknowthisguy,andIdon'tmeantoinsulthim,buthedidn'tsoundlikehewasparticularlysortofadeepthinker,buthewastalkingaboutthese,"deeptopics,"likeartificialintelligence,andwhateverelsehewastalkingabout,butbig,big,likeexistentialriskfactorstohumanity,right?

He'sposingthesequestionstoElon,buthewasposingthemtoEloninsortoflikethewayof,"Elon,[00:14:30]oursavior,whatofthis,andwhatofthat?"ElonwouldsitthereandhewoulddohisElonthing,wherehe'dlookup,andhe'sjustsortofsittingthereinhisflightjackedandlookingup,hehasamicrophone,andhe'slike,"Well,yeah..."andhe'lltalkabouttheseconcepts.Idon'tknow,though,howmuchofthatisthatElonislike...hedoesn'tseemtobelikethemostobviousnarcissist,Ijustfeellike...

MarkSpiegel:Okay,he'satotalnarcissist.

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DemetriKofinas:Okay,letmejustfinishmylastthoughtshere,though,justmypoint.Mypointisjustoutwardly,I'vealwayslikedtheguy.[00:15:00]Heseemslikeareally...Igottothinkhehastobebrilliant,butIdotakeyourpoint...andsomeonewhoisalsoagreatshowman,infact,abiggershowmanIwassayinginlastweek'sepisodethanSteveJob's.IhadtogobacktoWaltDisneyandPTBarnumtothinkofacomparable--

MarkSpiegel:100%.That’shisstrength.

DemetriKofinas:So100%showman,butIfeellikehe'shavingagoodtime,he'senjoyinghislife.He'staking[crosstalk00:15:23]...

MarkSpiegel:Buthe'sabigliar.

DemetriKofinas:Okay,sonowlet'sgettoallthat,butIjustwantedtoprefaceitwiththat.

MarkSpiegel:Imean,yes,hisbrillianceishisshowmanship,hisshtick.[00:15:30]Everyonceinawhile,he'llthrowinlikeaself-deprecatingline."Oh,Ihadnoideahowharditwastobuildcars."Thenhe'llthrowoutsometotalbullshitstatisticsaboutsafeautopilotis,claimingit'sgotaloweraccidentratethanallthecarsintheworldexceptmostofthosecarsareinChinaandIndia,andthey're40yearsold.Ifyoulookattheaccidentrateversuslikeothernewluxurycarswith14airbagsorwhatevertheyhave...

DemetriKofinas:Sotheyhave14airbagsnow?

MarkSpiegel:Imean...bytheway,Icangiveyousomanyexamples[00:16:00]ofhimcitingmisleadingstatistics,andoutrightlying.Imean,hewasonaconferencecallonce...thiswasacoupleyearsago.He'slike,"Tesladoesn'tdiscountitscarsforanybody,evenmyownmother.Shepaysfullretail."Meanwhile,whilehewassayingit...

DemetriKofinas:That'slikeajoke,hedidn'treallysayhismotherdidhe?

MarkSpiegel:Meanwhile...Idon'tknow,hemighthave.

DemetriKofinas:That'snotreallytrue,though.

MarkSpiegel:Meanwhile...

DemetriKofinas:Igavemymotherthisbike.I'llgiveyouabetterpricethanmymother.

MarkSpiegel:ItwasanOddCoupleepisodeyearsagoforagaragespotinNewYork.You'vegottago..."You'llbeback,mymother[00:16:30]cameback."Anyway,sobacktothepoint.He'ssaying,"Tesladoesn'tdiscountitscarsforanybody."Meanwhile,whilehe'ssayingit,youcouldgoonthewebsite,seeallkindsofbrandnewneverusedinventory

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carswithfivefigurediscounts,get$1000discountreferralprogram.Theguy...it'sjustlikehewilloutrightlieshamelessly...

DemetriKofinas:No,Ibelievethat.

MarkSpiegel:Theweirdthingistome,yousaythistopeople,andthey...

DemetriKofinas:Butthat'stheproblem,it'sthepeople.It'severyoneelsethat'ssortoflike...

MarkSpiegel:Well,yeah.

DemetriKofinas:It'sthepeoplein[00:17:00]thestandsinthecoliseumcheering.That'stheproblem.

MarkSpiegel:Whentheequityinthiscompany,thestock,goestozero,whichitwill,becausethedebtwillburythiscompany,andit'snotaviablebusiness.Youknow,thesepeoplearegoingtolookthemselvesinthemirror,andthey'regoingtodeserveeverythingtheyget.

DemetriKofinas:Yeah,forsure,man.

MarkSpiegel:Teslaisareligion,okay?

DemetriKofinas:Youcan'tholdit...Yeah.

MarkSpiegel:Withmostcompanies,there'salongcaseandashortcase.YouandIcansitacrossthistablefromeachotherandtalkaboutthismargin,andthatmargin,andthiscompetition,andthat[inaudible00:17:28].I'marguing[00:17:30]withreligionwiththesepeople.

DemetriKofinas:No,no,no.Forsure,forsure.It'snotjustTesla,thisisaphenomenonacrosstheboardforalotofcompanies,inalotof--politics,forexample.

MarkSpiegel:Tesla...Well,politicsforsure.ButTeslaisthemostextremecaseofthisI'veeverseeninmylife.

DemetriKofinas:Solet'sgetintothis.Firstofall,Ireallywantedtodothiswithyou,becauseIjustknewyouwereafunnyguy,soIwantedtokindofstartofftheshowwith...

MarkSpiegel:I'mnottryingtobefunny,bytheway.

DemetriKofinas:No,no,youarefunny.Sobeforewestart,tellme...you'vedonestand-upcomedyandyousaidthereasonthatyoudidn'treallycontinue[00:18:00]itisbecauseyoudidn'tlikeusingoldmaterial,youlikekindofdoingnewmaterial,butthatwasn'treallyaprofitablewaytorunacomedybusiness,whichis[crosstalk00:18:07]

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MarkSpiegel:Well,itwasn'tamatterofbusiness.Imean,whenIhadmyrealestatecompany...

DemetriKofinas:YouknowwhatImean,Imeantsortof...Right.

MarkSpiegel:Atonepoint,Ithoughtitwouldbefuntotrystandup,so...youknow,parttimeatnight,whenIsoldthecompany.IwentandIstartedwithopenmicsanddidthatstuff.Afteracoupleyears,Igotbetteratit.Theyhadopenauditionsatthecomicstrip,whichmaybetheystilldoonceamonth.IwentthereandIpassedtheaudition,andthengottoauditionfortheguywhoran[00:18:30]theclub,whodiedafewyears.ThisguyLucian.Ikilledbothtimes.Icouldhavegoneonwiththis.Lucianwaslike,"Hewasn'tquiteready..."

DemetriKofinas:Youtotallycould,Icouldseeit.

MarkSpiegel:Butthethingaboutstandupis,youknow,you'vegottohavegreat15or20minutes,right?Thefunparttomewasactuallycomingupwithajokeinthefirstplace,anddoingitforthefirsttime,andhavingitwork.Thathappenswith...Idon'tknow,ifyou'relucky,oneoutofeveryfivejokesthatyouwrite,thentheotherfourarenonsense.That'showyouputyouracttogether.[00:19:00]Youtakethegoodjokethatworked,butthenyou'rejustrepeatingthesamethingoverandover.Itwasn'tcreativetome.Ididn'tenjoyit.

DemetriKofinas:Itjustwasn'tfunforyou.Aswebeginnowtodelveintothefactshere,asyoumentionedatthetop,I'llsayoneofthingsaboutyou...Doingthisjob,Ihavetheprivilegetospeakwithsomanyinteresting,smart,quirky,differenttypesofpeople.TheonethingInoticedaboutyourightatthetopwhenwespokeonthephonebeforethisinterviewisyouseemlikeaguywithavery,very,verygoodbullshitdetector.Itwouldbehard[00:19:30]topassonebyyou.

MarkSpiegel:Well,youknow...

DemetriKofinas:No,isthatnotright?Wouldyounottakethattobetrue?

MarkSpiegel:Ihaven'tbeenfooledinawhile.I'vepaidmytuition.Letmeputitthatway.SoI'dsayyes,IthinkIdohaveagoodone.Butthethingis,it'sa...

DemetriKofinas:You'redefinitelyskewedtowardsskepticismasaperson.Isthatnotright?

MarkSpiegel:Iamskewedtowardsskepticism,that's100%true.ThethingaboutTeslaisit'sapubliccompany.Imean,Ihavehere...We'resittinghereacrossfromeachother.IhaveonmyiPadtheQ4earningsreport.Itiswhatitis.

DemetriKofinas:Let'stalk...

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MarkSpiegel:It's[00:20:00]numbers.Inthisdayandagewheneverythingisrecordedeverywhere...Imean,Icanfactcheckallkindsofstuffsomebodysays.

DemetriKofinas:Youdon'tneedtobeSherlockHolmes.

MarkSpiegel:Youdon'thavetobeSherlockHolmes.Thisdaytoday,Teslaputoutthispressrelease,"We'renotgoingtoneedtoraiseanymoney."Well,ElonMuskfirstsaid,"We'llneverneedtoraiseanymoremoney,"in2012.

DemetriKofinas:Yeah,that'sinsane.That'stotalbullshit.Thatispurebullshit.

MarkSpiegel:Butthisguyspewstonsofpurebullshit.

DemetriKofinas:Likethatisbullshit,ifyoulookat...sothat'sthething.PuttingasideElonMusk,becausealotofpeoplebullshit...andactuallyweliveinanagewherethat'shappeningmoreandmore,[00:20:30]andmoreandmorepeoplearegettingawaywithit.Solet'sputthataside,let'sactuallylookatthefacts,becausewhatIsaidontheshowlastweektoCharleylastweekwasthatwheneverIlookatacompanyorIlookatanysituation,Itrytoseebothsidesofit.

IfIfindmyself,let'ssaytaking,inthiscase,thebearposition,Itrytounderstandhowthebullsrationalizetheirpositioninawaythatmakessense.WhereIcansaytomyself,"Okay,Icouldseehowthatwouldbearationalsortofwaytogetthere,butyouhave[00:21:00]tobewillingtolivewiththeseassumptionsthatI'msimplynotwillingtolivewiththeseassumptions.WhatIdon'tseeistherationalargument,withwhateverassumptionsyoulike,bakedin.Idon'tseethatinTesla'scase.Itissoobviously...

MarkSpiegel:It’sareligion.

DemetriKofinas:Solet'stalkaboutit.

MarkSpiegel:It'sall,"Oh,Elonisgreat.Oh,Elonisgod.He'sagenius."

DemetriKofinas:Sowhatareyoursortof...Let'sstartatthetopandgodown.IhaveabunchofthemsortofformepersonallywhenIlookedatit.Oneofthemistheonslaughtofcompetitionthat'scoming,butalsothedebtburden,theinterestpaymentsonthecars,[00:21:30]thelossofthesubsidy,themanufacturinghell,thefactthattheModel3is...theperformanceissodismalthatnowanythingthatbeatsthehorridexpectationselicitssortofamarketrally.Butlet'sgothroughthose,Iwanttotalkaboutthisfortheaudience.Howwouldyouexpressyourdissatisfactionwiththiscompany,beyondthequalitativeassaultsthatweexperiencedinthefirst20minutes.

MarkSpiegel:Letme...Icandistillthisintothreeprimarypoints.Thenwecangoalittlebitmoreintotheweeds,okay?[00:22:00]Pointnumberone,Teslahasabsolutelynomoat.Ithasnouniqueproprietarytechnology.Infact,insomecases,forinstanceitsbatterypackdesign,itnowtrailstheleadingedgestuffcomingout.

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DemetriKofinas:Italsohasnopatentsinautonomousdriving.

MarkSpiegel:AutonomousdrivingisajokeatTesla.Imeanthatifyoulookateverybodyquitthatprogram,they'readisaster.Who'sthebigconsultingfirm?...justratedlike18differentcompaniesonautonomousdriving,Iforgetthefirm.Teslacame[00:22:30]outlast,literally18th.It'snotevenworthtalkingabout.Imean,wecangoasmuchintotheweedsasyouwantonit.

Soanyway,numberone,theirtechnologylaggardsatthispointprettymuchineverythingtheydo.Icangetasspecificasyouwant.Numbertwo,theybasicallyhadanopenwindowwithabsolutelynocompetitioninluxuryEV’sforyears,right?Infact,untillastyear,theyhadnocompetitioninEV’switharangeof200milesandmore.Alltheydidwaslosemoreandmoremoneyeachtime.Inotherwords,theyhadamonopoly[00:23:00]intheirniche,andtheycouldn'tmakeitprofitable.Butnow,therearelike100longrangeEV’scomingintothemarketoverthenextthreeorfouryearsontheluxuryend.

TheyreportedthismorningtheirQ1autosales.Notintermsofrevenue,intermsofunitsales.ThemodelSNX,whicharetheirhighermarginproducts,eventhoughtheystilllosemoneyonanEBITbasisonthose.Butthosenumbersweredowndoubledigitpercentages,bothsequentially...[00:23:30]whichmeansfromlastquarter...andyearoveryear,fromthesamequarterlastyear.That'sevenbeforetheluxuryEVsarrive.

NowJaguarhasafantasticluxuryEV,it'sgoingtobeintheshowroomsthissummer.AudihasagreatelectricSUV,allelectricSUV.It'sgoingtobeinshowroomsthisfall,latefallintowinter.MercedeshasitselectricSUVandit'sgoingtobeinshowrooms...

DemetriKofinas:Isitgoingtolookthatway?Becauseitlooksdope,itlooksgorgeous.

MarkSpiegel:Theyalllookgood.

DemetriKofinas:Well,theJaguarlooksgorgeous...

MarkSpiegel:IthinktheJaguar'sthebestlooking.

DemetriKofinas:...andit's$10,000lessthantheModel3[00:24:00].

MarkSpiegel:Well,no,no,notModel3.

DemetriKofinas:No?ButthentheModelX?

MarkSpiegel:It'sModelX.

DemetriKofinas:100D?

MarkSpiegel:Well,no,no.It's$10,000lessthantheX75.

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DemetriKofinas:The75.

MarkSpiegel:Nowinfairness,it'ssmallerthantheX75,butwe'llgetintothatinonesecond.

DemetriKofinas:Yeah,ifIwascomparingittoModel3,Ithoughtfor...Okay,goahead.

MarkSpiegel:Thenyou'vegotPorschecomingoutwithitsfantasticlooking[crosstalk00:24:20]

DemetriKofinas:I'mnotcrazyabouttheirlookofthatone.Youlikethatone?

MarkSpiegel:Iloveit,yeah,Iloveit.Anyway,that'soutnextyear.Sobacktoyourpoint,sotheJaguarisalittlebitsmallerthantheModelX,it's[00:24:30]notathreerowthing.It's$10,000...butthethingis,alotofpeoplewhowantedanall-electricSUVpickedtheModelXbecauseitwastheonlyone,andwouldactuallyprefersomethingthat'seasiertopark.Nottomentionit'samuchnicerinterior,whichtheJaguarhas.SobetweenthatandtheAudiSUVwhichisbigger.TheAudiSUVisnotthreerows,butit'sabigtworowSUV.

DemetriKofinas:No,it'sagreatcar.

MarkSpiegel:Theonethat'scomingout.ThentheMercedesEQC,whichisoutearlynextyear.

DemetriKofinas:Thatlooksamazing.

MarkSpiegel:Thesearegoingtodestroy[00:25:00]Teslasales,butthepointI'mtryingtomakeisthey'realreadydowndoubledigits,theSNX.Thosearethecarsthattheoreticallywouldhavesomemargintothemeventhoughtheydon't.WhatTesla'sbrillianceis...itsbrillianceformorons,isgettingmoronstofocusonwhattheywantthemoronstofocuson,notwhatthemoronsshouldbefocusedon...bymorons,Imeanpeoplewhoownthestock.Notwhattheyshouldbefocusing.TeslahasthiswholethingaboutModel3production,Model3production.Now,asitturnsout,[00:25:30]it'sbeentotalcrap.It'sbeenadisaster.Thequalityhasbeenhorrible.

DemetriKofinas:It'sbeenacatastrophe.

MarkSpiegel:Buttheyget,"Well,wehadthisburstproductionof2000inthelastweekofthequarter."Now,withoutgoingtoofarintotheweeds,let'sjustpointoutthattodothat,theyrantheplantforsevendaysandtheypulledeverybodyofftheassemblylinefortheSNXtohandbuildextramodels.

DemetriKofinas:Itsoundslikeanightmare,man.

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MarkSpiegel:SotherealproductionrateoftheirModel3evennowis...Idon'tknow,maybe1000aweekorsomething,maybeless.That'snotthepoint.Thepointisthatcarwillnevermakemoney,[00:26:00]okay?IfyoulookatwithModelSandX,howmuchmoneytheylose,andthat'sanaveragesalespriceof$100,000?TheysaletheModel3willhaveanASPof$43,000?Evennow,theyhavenegativemarginsontheModel3,andanASPofover$50,000.

DemetriKofinas:Whatarethelossesperunit?Isn'titlike$23,000,or$16,000?Somehugenumber.

MarkSpiegel:Sookay,inQ4,whichisthemostrecentquarterforwhichwehavefinancials,ifyoulookatthegaplossforthewholecompany,andyoutake[00:26:30]awaythesaleofCaliforniaZEVcredits,ZeroEmissionVehiclecredits,whichisnotasustainablewaytorunthebusiness.Thatwassortofaone-timeinjection.Thosearegoingtogodowninvalueasmoreandmorecompanieshavetheirownelectriccars.Theywon'thavetobuytheseZEVcreditsfromTesla.

DemetriKofinas:Right,thesearethecreditsthatothercompanieshavetobuyinordertooffset[crosstalk00:26:49]...

MarkSpiegel:Tosellcarsandnotmakeanymoney.

DemetriKofinas:...inordertomeetregulation.

MarkSpiegel:Exactly.Soifyoutakethetotalloss,gaplossfromTeslaanddivideitbythenumberofcars,theylostover$28,000[00:27:00]foreverycartheysold.

DemetriKofinas:Whatifyoudon'ttakethoseout,though?

MarkSpiegel:TaketheZEVcreditsout?

DemetriKofinas:Yeah,whatifyoudon'ttakethemout?Iunderstandthatthey'reeventuallygoingtohaveto...

MarkSpiegel:Ithinktheylost$24,000orsomethinglikethat?

DemetriKofinas:Okay,okaysothat'shuge.Exactly.Sothat'swhatIremember...

MarkSpiegel:Nowinfairness,someofthoselossesencompasstheenergycompany.Peopletalkabout,"Oh..."

DemetriKofinas:Talkingaboutsolar...Imean,SolarCity?

MarkSpiegel:Well,SolarCity,butpeoplesay,"Oh,Tesla'sreallyabatterycompany,"right?Imean,Tesla'sbatteriesaremadebyPanasonic.Teslabuysthebatteriesandpackagesthem.

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DemetriKofinas:AndtheypresentedPanasonic[00:27:30]asapartner,butinfact,Panasonicisn'tapartnerwhatsoever.

MarkSpiegel:It'snotapartner.

DemetriKofinas:They'reworkingoutadealwithsomeotherKoreancarmanufacturer.

MarkSpiegel:Firstofall,Panasonicisnotapartner.PanasonicinstalleditsmachinesinafakeboondogglethattheycallaGigafactoryinthemiddleofeffingnowhereinNevada.

DemetriKofinas:Soundsgood,soundsgood.

MarkSpiegel:Inexchangefordoingit,TeslagavePanasonicaguaranteedamountofpurchasethatitwoulddo.ThesemachinesareactuallycapitalizedleasesonTesla'sbalancesheet.PointbeingthatPanasonic'slike,"Giveusthemoney,andwe'llputthemachinesin."

DemetriKofinas:Right,sothey'reon[00:28:00]thehooktoPanasonicnow,too.

MarkSpiegel:Yeah.They'reonthehooktoPanasonic.Buttheotherthingis,TeslabidonthisbigbatteryprojectinAustralia,whichyouprobablyheardabout,whichtheyinstalled.Inordertodothatproject,TeslahadtobuyprobablymillionsofbatteriesfromSamsungandpackagedthemandinstalledthem.Now,Samsunghasitsownenergystoragebusiness.Samsungisallovertheworldbiddingonprojects.SamsunglookedathowmuchTeslaunderbidonthatproject.IguaranteeTeslalostmoney[00:28:30]onthatproject.Samsungsaid,"Whoa,iftheseidiotsaregoingtodoitforthatlittle,we'lljustsellthemthebatteries,andletthemsellthemforlessthanwe'rechargingthemforthebatteries."That'sessentiallywhathappenedthere.

DemetriKofinas:Iwanttojustinterjecthere.Iwantyoutocontinue,Mark.BecauseIwanttomakeanedittomystatementaboutElonMuskbeingbrilliant.Thereareallwaysthatsomeonecanbebrilliant.Heclearlyisahorrificbusinessman.IthinkthatthethingthatstandsoutformewhenIreadthroughthisstuffandit'sjustexacerbated[00:29:00]bylisteningtoyou...andIwanttosayitforouraudience...

...isIthinksortofthebigoverarchingproblemhereisthatanyonewithsortofastrategicmindisseeingatthemostsortofelementaryblundersofstrategythatthiscompanyhasmadeinthelastnumberofyears.Imean,theymovedintothismasscarproductionmarketandwhat'smanifestedisadisaster,anepicdisasterthatthemostsortof[00:29:30]basicstrategicthinkercouldhaveavoided.Doesthatresonatewithyou?Becauseforme,lookingatit...liketheyputthemselvesinsuchahorrificposition,whereevenifeverythinggoesright,theystillcan'tcomeoutontop.

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MarkSpiegel:It'sallaboutthestockpump.Muskhasborrowed,Idon'tknow,probablyaroundabilliondollars,orclosetothat.ThelastreportwashighhundredsofmillionsagainsthisTeslastock.Hefliesaroundtheworld,helivesanincredible...

DemetriKofinas:Youthinkit'sthatbad?Imean,liketherearepeoplethatmightagreewithyou.[00:30:00]ImentionedthatJimChanoshascomparedthecompanytoEnron,butIdidn'thearhimcompare...WhowastheguywithanS...whatwastheguy'snameatEnron?

MarkSpiegel:Skilling?

DemetriKofinas:Skilling.Doyouthinkhe'slikeSkilling?

MarkSpiegel:Idon'tthink...IcertainlyhaveabsolutelyzeroevidencethatTeslaismakingupthebottomlinenumber.Imean,it'ssohorrendousthat...

DemetriKofinas:They'renotmakingupthenumber,that'sforsure.

MarkSpiegel:Imean,noonewouldmakethatnumberup.ButwhatTesladoesistheydoverydeceptiveandmisleadingthingsinthefinancials.Forinstance,[00:30:30]Tesla'sserviceandusedcardivisioninthelastquarter,whichisQ4,whichisthelastonewehaveasofthetimeofthispodcast,hadamassivenegativegrossmargin.

Wholosesmoneysellingusedcarsanddoingautomotiveservice?Nobody.Youknowwhytheydo?Becausetheyunderreserveforwarrantycostsinthenewcarstohaveanartificiallyhighgrossmargin.Andthey'reoverpayingfortrade-insinordertogetpeopletobuythenewcar,thenwhen[00:31:00]theyhavetosellthoseusedcarsataloss,netofallexpensesinvolved,theyburythatintheautomotiveservicelinetomakethegrossmarginlineonthecarlookbetter.

I'llgiveyouanotherexample.Theentireautomotiveindustrycountsagainstgrossmarginengineeringcosts.Achunkof...somedoallR&D,somedoachunkofR&D,becausebasicallyyou'vegotacarmodel,you'vegottore-engineeriteverysixyears.Thatcostispartofthecostofgoodssold,[00:31:30]orinTesla'scase,costofpointofsales.Theydon'tdothat,theyputallofthatstuffbelowthegrossmarginlineinordertohaveanartificiallyhighgrossmarginline,andthentheycomparethemselvestoothercarcompaniesandsay,"Lookathowgreatourgrossmarginis,"which,bytheway,isnowawful.

I'llgiveyouonemorepoint,whichiseveryothercarmanufacturerintheworld,majormanufacturer,theyhavefranchisedealers.Soifyou'vegotaMercedesS-Classwith$100,000sticker,Mercedessellsittoitsdealerfor$[00:32:00]90,000andthendoesn'thavethecostofoperatingthedealerships.That'sallinitsstickers.Butitjusttooka10%hittogrossmargin.Teslahasitsowndealerships.Tesladoesn'thavetotakethathitongrossmargin,insteaditlosesallkindsofmoneyontheSG&Aoperatingitsdealerships.

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Pointbeingisthis.Lastquarter,Teslaautomotivesales,ifyouexcludethoseZEVcredits,hadarounda13pointsomethingpercentgrossmargin[00:32:30]underitsowntotalbullshitdefinitionofgrossmargin.IfTeslahadtocalculategrossmarginthewaytherestoftheautocompaniesdid,soyoucouldactuallydoanapplestoapplescomparison,Teslawouldhavehadanegativegrossmarginonitscars.

ButyoutalkedwithTeslarian,oraTeslemming,asIcallthesepeople,andtheysay,"Oh,theyhavethehighestgrossmarginintheworld."No,theydon't.Mostofthesepeopledon'tevenknowhowtoreadafinancialstatement,frankly.Theoneswhododon'twanttolook.Thentherewere...

DemetriKofinas:Iwouldn'twanttolookatthese[00:33:00]financialstatements,either.

MarkSpiegel:Right,exactly.TherewassomemutualfundswhoIthinkarebasicallymomentuminvestors,whoarelike,"Aslongasit'sgoingup.We'renotgoingtoworryaboutthatstuff."

DemetriKofinas:It'ssimilartotheculture...hassomesimilaritytothecryptocommunityculture.Infact,generallyspeaking...andIwonderwhatyouthinkaboutthis,becauseit'sonethingIwanttoaskyouabout,whichisIthinkthatTeslainsomewaysisa...ifnot'the'certainly'a'iconandEloncertainlyis,aswellasthepersonhepersonifies,[00:33:30]thisbullmarketandtechnologyrelatedstocksandsortofthistech-bullmarketmoregenerally.Ithinkthereisthiscultural...

MarkSpiegel:Bytheway,except...torepeatwhatIsaidearlier.Teslaisnotatechcompany,it'sacarmaker.

DemetriKofinas:Ofcourse,butit'slocatedinSiliconValley,like...

MarkSpiegel:Idefyyoutoshowmeasingletechcompanywitha13%grossmargin.

DemetriKofinas:No,no,Ihearthat.Technicallyspeaking,yes,Iagreewiththat,andIagreewitheverythingwediscussedearlieraboutthelackofsortofproprietarytechnologyinthecar.Alltheseother[00:34:00]carsaretechnological,blahblahblah,sureyeah.That'sirrelevantintermsofwhatthepublicfeelsandthinksandhow...

MarkSpiegel:Itis...Well,it'sirrelevantuntilitisn't.

DemetriKofinas:Well,right.That'snotmypoint.Mypointisthatwe'vebeeninabullmarketnowforyearsandthereis,Ithink,somethinguniqueaboutthismarketthatwasn'ttrueinthelast...Iwouldn'tevencallthelastoneabullmarket,itwasacreditfueledbubble.

MarkSpiegel:That'swhatthisoneis,too,bytheway.

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DemetriKofinas:Yeah,itis,butwe'reactually...butthatmoney'sgoing[00:34:30]intoinvestmentsasopposedtogoingintohousingpricestorefuelthebubble.It'sdifferent.Wehadabubbleinthelate'90s,aswell,butitwas...

MarkSpiegel:It'sactuallynotgoingintoinvestments.Firstofall,housingprices,Ithink,areprobablybackuptowheretheywere.Butmoreimportantly,you'vegotridiculousmultiplesonstocks,andthey'reborrowingmoneytobuybackstocks.

DemetriKofinas:Igotyou,no100%.

MarkSpiegel:Thisisn'tgoingintoinvestment,either.

DemetriKofinas:--thereisstock...

MarkSpiegel:Oryou'vegotthecompleteincinerationofcapital,liketheTesla'softheworldhavedone.

DemetriKofinas:Yeah,you're100%rightthatinthestockbuybacksthingsisahugeproblem.Inthat[00:35:00]sense,itissortofliketheequityextractionofthemortgagemarketandsortofpilingon,andleveraging,andbuyingmorehomes.ButIjustthinkthatthatwasevenworse,fromastandpointoflikeactualinvestmentcapital.

MarkSpiegel:Stocksaremore...Well,ifyou'retalkingaboutthestockmarket,stocksaremoreexpensivethantheywerein2007byjustaboutanymultiplepossible.

DemetriKofinas:Right.ButIthinkthereisthissortofeuphoriaforsure,butwhatIthinkwe'reseeingthistimearound...thiswasmypoint.It'smoresimilartothelate'90s,andI[00:35:30]thinkthevitriolthataccompaniedthe2008collapse,thesortofseethinghatredforWallStreet,Ithinkthat'ssomethingthatwe'renotat2008intermsofthesametypesofpotentialfeelings,butIthinkwe'remakingprogresstowardsthat.IthinkthepublicbacklashagainstSiliconValleyandtechrelatedstocksandcompaniesandcryptocurrencies,Ithinkallthosethingsareonthehorizon.

Ithinkoneoftheblowbacksisgoingtoberegulation.We'vetalkedaboutthatforcryptocurrencies.Ithinkintermsofone[00:36:00]thesortofbearishcasesyoucanmakeforautonomousdrivingisnotthetechnologyitself,butthebacklashthatcouldaccompanystoriesliketherecentcrashofthatTeslavehicleandthesortofpersonthatgothitbyanUbervehicle.

It'snotthestatistics,it'snotthefacts,let'sputthoseaside.It'sjust,Ithink,therewillbeabacklashandgovernmentwilloverregulate,andIthinkthat'sgoingtobepartofthestorythat'sgoingtohappenafterthere'sgoingtobeacorrectionoracrashorwhateveryouwanttocallit.[00:36:30]Wemayhavealreadybegunthatprocess.DoyouthinkthatthetopwasmadeinJanuaryandthatwe'regoingtobebouncinguntilwestartmakingnewlowsinfinancialmarkets?

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MarkSpiegel:Youknow...

DemetriKofinas:WhenIsaid,"doyouthink,"doyouthinkthat'sahigherprobability?

MarkSpiegel:Okay,I'mpositionedforthat.Obviously,callingmarkettopsishard.

DemetriKofinas:Yeah,yeah,forsure.

MarkSpiegel:ButI'mpositionedforthat.Ithinkthatwe'veseenthebestintermsoftheeconomyintheworld.There'sactuallyalotofliquiditywithdrawalthat'sabouttohappenfrom[00:37:00]thecentralbanks.TheFedhasalreadywithdrawingtensofbillionsamonth.Europe'sbeenprinting30billioneurosamonth,butthatends,actually,inSeptember.Theymayextenditwithsomelimitedamountafterthat,butnotalotafterthat.That'swhat'sbeendrivingthisstuff.

Imean,theBankofJapanisstillprintingamassiveamountofyen,frankly,andI'vebeenshorttheyen,andit'sdonenothing.Ihavenoideawhy.Ithinkeventuallyitwill,butthat'sawholedifferentstory.

Butasinterestratesgoup...thiswholethingwasfueledbymoneyprinting,lowinterestrates,[00:37:30]andjustgeneralliquidity.Asthatgoesaway,youcan'tsustainthesekindofassetprices.

DemetriKofinas:Right.

MarkSpiegel:It'sinteresting,bytheway,youtalkedaboutthebacklashagainstSiliconValley.I'mnotonFacebook,butcertainlyuseGoogleservicesallthetime.

DemetriKofinas:You'veneverbeenonFacebookever?Goodforyou.

MarkSpiegel:No,IregisteredmynameonitjustsoI'dhaveit,sosomeoneelsecouldn'tdoit.

DemetriKofinas:It'ssuchawaste.It'ssuchashittyplatform.Itreallyis.It'spureshit.I'vebeenusingitoutof...I'vebeenusingitfortheshowoutof...sortofpushedintodoingitbysomeonewithgoodintentions.[00:38:00]I'vewastedalotoftime,createdcontentforFacebook,whereultimatelynoonereallywho'sgoingtolistentothisshowcaresorgoesonFacebookandspendsmuchtime.I'vefoundthat,nowthatIstartedusingTwitterabitmore...Imean,myaudienceisonTwitter.It'sjustsuchatimesucktosortofTweetandstufflikethatonTwitter.ItsortofgoesagainstkindofthemoresortofthoughtfulapproachthatIwanttotakewiththeshowasopposedtogun-slingingsortofwittycommentstuffthatdoeswellonTwitter.Butanyway,soyou'renotreallyonFacebook...

MarkSpiegel:WhatIwasgoingto[00:38:30]saywasI'magainstthiskindofregulation.EventhoughI'mnotonFacebook,butlikeGoogle.IusealltheGoogleservices.I

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knowwhatGoogle'sdoing.Iknowthey'repullingkeywordsoutofmystuffandhopefullyanonymouslysellingitadvertisers.Listen,youknowwhatIsaytopeople?Isay,"You'regettingalltheseservicesforfree.Ifyoudon'twantpeoplescanningyourstufftoanonymouslysellyouadwords,orwhateverthehelltheydo,youknowwhat?Gostartabusinesswhereyouchargepeople$100ayearbecauseyou'vegottooperateallthoseservices[00:39:00]andeverything.You'regettingthisforfree.Ifyoudon'tlikeit,leave."

DemetriKofinas:Youusealltheircloudservices,likealltheir...

MarkSpiegel:IdouseGoogleDrive,soIpayalittlebitmorebecauseI...

DemetriKofinas:Youdon'thaveanythinglocally?Youdon'tuseMicrosoftWord?DoyouuseMSOffice?

MarkSpiegel:No.Actually,Idouse...IsubscribetoMicrosoft'sOfficeSuitefor$99ayearforfivecomputers.

DemetriKofinas:Butyouhavetosaveitlocally,youdon'thaveitsortofonthecloud?

MarkSpiegel:Correct,it'slocal.Actually,thenIstoremydocumentsonGoogleDrive.

DemetriKofinas:Theonesthatyoudon'tworryabout.Iknowpeoplethatarejustfullypluggedintothecloud.Ingeneral,Ireallydon't[00:39:30]likeGoogle'sstuff.Infact,it'sinteresting,nowwe'regettingwayofftopic,butIgotreallybulliedintousingGoogleforthecompanyforabunchofthings,andnowI'vepushedback.I'vetakencontrolbackandI've...

MarkSpiegel:Sowhatdoyouuseinstead?

DemetriKofinas:IhaveOutlook.IuseOutlookformyemails.Ihaveeverythingsaved.

MarkSpiegel:Oh,that'sfine.

DemetriKofinas:Yeah,soImean,Idon'tlike...butthat'sawhole'notherthing.Idon'tfeelcomfortable,generally,withwhereprivacyhasgone.

MarkSpiegel:Butthat'sfine.Itotallyrespectthat,Itotallyrespectyoufordoingthat.Butthenyouhavetopayforaservice.

DemetriKofinas:Yeah,forsureyouhavetopayforit.100%.[00:40:00]That'spartoftheargumentthatI'vemadefortheaudienceonthisshow.Youcannotgetgoodcontentanymorefromcompaniesthatrely,orpublishersthatrelyonadvertising.Youwillgetpure

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shit.TheonesthathavemadeabargainwiththedevilandFacebook,they'regettingpurecrap.

MarkSpiegel:I'venoticedmoreandmorepaywallsgoingup.

DemetriKofinas:We'renotgoingtodosubscriptionservicesforthepodcast.Everythingthat'sfreepeoplegetnowisgoingtobefree.Butwe'regoingtomakestuffthat'svaluableandmeaningfulandeducationalforpeopleavailable,andthey'llbeabletopayforitataveryreasonablecostthatwill[00:40:30]beworthit.

MarkSpiegel:So,inotherwords,theyshouldn'tjudgethisbyme.

DemetriKofinas:Whatdoyoumean?

MarkSpiegel:Whenyousayvaluableandusefulstuff.

DemetriKofinas:Thisisvaluable.Listen,thisshowissupervaluable.Youknow,weneedtohaveepisodeslikethissometimes,wherewehavesmartpeoplewhoarealsofunnyandhavedonestandup.You'remyfirststand-upcomedian.ButyoueverwatchComediansinCarsGettingCoffee?

MarkSpiegel:Yeah.Ihavetotellyou,whatactuallygotmetodocomedywasseeingSeinfeldandhowsuccessfulhewas--

DemetriKofinas:Really?Live,or...

MarkSpiegel:No,no,no.Theshow.IguessI'dseesomeepisodeandsay,"Thatguy'skindoffunny,buthe'snotthatfunny,andhe'smakingall[00:41:00]thatmoney?"Isaid,"Icoulddothat."

DemetriKofinas:He'sahorribleactor.

MarkSpiegel:What'sthat?

DemetriKofinas:Hewasahorribleactor.

MarkSpiegel:Yeah,obviouslyit'shardertodoitthanyouthink.He'safunnyguyandIlikehim.

DemetriKofinas:He'safunnyguy.

MarkSpiegel:Ilikedthatshow.Imean,I'matotalcarguy,sohe'sgotsomegreatcarsonthere.

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DemetriKofinas:SoIhaven'treallywatchedmuchofthem,butIwashavingmyengineerwatchonethatIsawlastnightthatIliterallypissedmyselfitwassofunny.AlecBaldwin,haveyouseenthatone?

MarkSpiegel:No.IsheonNetflixnow?Idon'thaveNetflix.

DemetriKofinas:Well,theComediansinCarsGettingCoffeeisonNetflix.

MarkSpiegel:That'sonNetflix.[00:41:30]Idon'thaveNetflix.IusedtowatchitonCrackleorwhatever.

DemetriKofinas:Oh,Ididn'tknowthat.What'sCrackle?

MarkSpiegel:ThatwaslikeacomedythingonYouTube.

DemetriKofinas:Oh,that'sinteresting.

MarkSpiegel:Whoeverhadit,Ithinkitwas[crosstalk00:41:38]

DemetriKofinas:Soyouknowthatguy...YougrewupinNewYork,right?

MarkSpiegel:Yeah.

DemetriKofinas:Where'dyougrowup?

MarkSpiegel:Well,IgrewupinJerseyandthenImovedintothecityaftercollege.

DemetriKofinas:Butyouevergooutwhenyouwereyounger...youwentout...maybeyoustilldoit,butprobablynottoomanypeopletodoitwith.Butyougoouttoacluborsomething,you'rewasted,it'stheendofnight,it'slike4,5:00AM.Later,yougotoadiner.You'rewithabunchofbuddies.

MarkSpiegel:Many[00:42:00]times,butnotinmanyyears,butmanytimes.

DemetriKofinas:Yeah,you'rewithabunchofbuddies,andyou'resittingatatable,andthere'sthatguywho'sinthegroupwho'salwayslike...hecanjust...he'snotineverygroup,becausehe'sararefind.Hecanengageeveryoneandyou'reallchokingonyourfood,youcan'tstoplaughing.

MarkSpiegel:I'lltellyouwhatthemostfunwas.

DemetriKofinas:Maybethatwasyou.

MarkSpiegel:No,I'lltellyou.

DemetriKofinas:ThatwasAlecBaldwininthis...

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MarkSpiegel:Hewasthatgood?

DemetriKofinas:Ohmygod,man.Hewasthatguy.Hewasjustthatguythatyoucan'tstop.[00:42:30]Hewasjust...Hehadthebestimpressions.HedidthisgreatJackNicholsonimpression.Hedidallthisinteresting...hewouldjusttalk.Hisflowwasincredible.

MarkSpiegel:AlecBaldwinisanamazinglytalentedactor.

DemetriKofinas:Amazinglytalented.

MarkSpiegel:Thesevenminutes,orwhateveritwas,thathedidinGlengarryGlenRoss,youknowthesceneI'mtalkingabout,right?

DemetriKofinas:Oh,ofcourse,ofcourse.He'sagenius.

MarkSpiegel:Thatcouldbethesinglegreatestsevendramaticminutesofanysortofstagedplayever.

DemetriKofinas:He'sincredible.

MarkSpiegel:Imean,fantastic.Buttheguy'scareerkindofwenttoshit.

DemetriKofinas:Yeah,[00:43:00]becauseIthinkhe...

MarkSpiegel:HewasaleadingmaninHollywood,andthenIguesshebecamedifficult.

DemetriKofinas:He'sapparentlyverydifficulttoworkwith.

MarkSpiegel:ButletmetellyouwhatIcandowithAlecBaldwin.

DemetriKofinas:He'sanangryman.

MarkSpiegel:Yeah,right.LetmetellyouwhatIcandowithhim.Icanhavetotalrespectforhistalent,whichIdo.He'sincrediblytalented.Andseparatethatfromhistotallibtardism,whichhesuffersfrom.

DemetriKofinas:Sure,100%.

MarkSpiegel:Peopletellme,"WhatdoyouthinkofTrump?"Okay,now,IthinkTrumpisabuffoon,[00:43:30]he'saserialliar,he'sajerk.He'salotlikeElonMusk.

DemetriKofinas:HeshouldrunTesla.

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MarkSpiegel:He'sgotalotofparallelstoElonMusk,actually.Seriously,hedoesintermsofthenarcissisticpersonality[inaudible00:43:41].But...[crosstalk00:43:42]

DemetriKofinas:Idon't...Imean,yeah,butImean...you'rereallytakingawhackatElon.

MarkSpiegel:Well,therearealotofinterestingparallelsthere.ButElonlashesoutatthemediawhentheyasklegitimatequestions,verysimilar...

DemetriKofinas:Doyouthinkhe'shavingabreakdown?Inallseriousness...

MarkSpiegel:Maybe.

DemetriKofinas:Ithinkhe's...No,no,inallseriousness,Iactuallythink...

MarkSpiegel:DoIsoundexcitedwhenI[00:44:00]saythat?Maybe.

DemetriKofinas:No,but...

MarkSpiegel:Idon'tmeantosound...

DemetriKofinas:Idon'tknow,ouraudiencedoesn'tknowthis,here'sthatpictureofhim.HetookafakepictureofhimselfonAprilFoolsandheputasign,"bankrupt,"ontheendofacar.Notfunnyatall...inallseriousness,notfunnyatall.Isawthat,andheputoutaTweetthatTesla'sgoingbankrupt.Ijustthought,"That'sscarythatyouwouldthinkthatthat'sappropriate."Inallseriousnessrightnow,becausethat'ssuperscary,man.

MarkSpiegel:He'sadmittedtoeitherbeingbipolarormanicdepressive.Butjusttofinishmypoint...

DemetriKofinas:Hemaybe[00:44:30]havingabreakdown,inallseriousness,becauseintheconditionthatthecompanyisinandtheseriousnessofhissituation,he'snotapproachingitwiththesamelevelofseriousness.

MarkSpiegel:Youknow,it'sfunnyis...

DemetriKofinas:HedeletedtheFacebookaccount,bytheway.Itmightbepartofthewholebender.

MarkSpiegel:What'sfunnyisalotofpeopleownTeslabecauseofElon.OneofthebiggestreasonsI'mshort...

DemetriKofinas:Yeah,that'sabadidea.

MarkSpiegel:OneofthebiggestreasonsI'mshortTeslaisbecauseofElon.IjustwanttofinishonTrump,becausetopeoplehearingthis,[inaudible00:44:57].WhatIwas

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sayingwasIactuallylike...[00:45:00]notallofthem,butIlikeafairnumberoftheguy'spolicies,eventhoughIthinktheguyisajerkandaliarandabuffoonandeverythingelse.Allofmyrelativesaretotalultra-liberalJewsfromNewYorkCity.I'mlikeanathemaevensayingthat.We'llsitdown,they'llgolike,"So,whatdoyouthinkofTrump?"I'llstartoffwith...

DemetriKofinas:Likewhat'shisnamefromCurbYourEnthusiasm.

MarkSpiegel:I'llstartoffwith...

DemetriKofinas:He'slike,"YouvotedforBush?"

MarkSpiegel:LarryDavid.

DemetriKofinas:"ShevotedforBush?"

MarkSpiegel:LarryDavidisagenius.IfIweredoingcomedytoday[00:45:30]still,andIsawLarryDavid,Iwouldjustquit.

DemetriKofinas:Ican'twatchhimnow.Ifoundhimfunnyforacoupleepisodes,butIcouldn't...

MarkSpiegel:Somepeoplecan'ttakehim.

DemetriKofinas:Ihaveanotherfriend,areallygoodfriend,who'sJewish.LikeJewish,Jewish,grewupinBrooklyn.Hegoes,"Ican'twatchthatguy.Igrewupwiththoseguys.Ican'twatchthatguy."[Laughter]

MarkSpiegel:Yeah,soI'llstartoffwithmyrelativesandI'llstartoffaboutIthinkTrump'saliarandajerk,andblahblah.They'renoddingtheirheads,like,"Oh,great,great,great,"thenI'llsay,"ButIactuallylikesomeofthe[00:46:00]guy'spolicies."TheyallhaveTDS,TrumpDerangementSyndrome.Theycan'tseparatethepersonfromthepolicies.

DemetriKofinas:Ican'tdealwiththatbullshit.Idon't...

MarkSpiegel:WithAlexBaldwin,justtofinishfullcircle,Icanseparatethepersonfromthetalent.He'saverytalentedguy.

DemetriKofinas:WellImeanyouknow,it'sfunnyyousaythat,becauseJerrySeinfeldwasonStephenColbertsomemonthsago.StephenColbertaskedhim...whichIthoughtwasjustaweirdquestion.Hewaslike,"SonowthatthesethingswithLouis[00:46:30]CKcameout,canyouseparatethatfromhim?"Seinfeld'slike...ormaybeitwasBillCosbyhewastalkingabout,Iforgetwhathesaid.No,Idon'tthinkitwasBillCosby,ItwasLouisCK.Hesaid,"Yeah,Icanseparateit."Thenhe'slike,"Okay.Youcan'tseparateit?"He'slike,"No,Ican't."YoucanimagineSeinfeld...

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MarkSpiegel:Whosaidhecan't?

DemetriKofinas:Colbertsaidhecan'tseparateit.

MarkSpiegel:Oh,Colbertsaidhecan't.

DemetriKofinas:Seinfeld,youcouldsee,wasbecomingreallydisgusted.Hewaslike,"Youcan'tseparateit?"

MarkSpiegel:Well,Seinfeld,tohiscredit,saidhecan'tevendogoodcomedyanymoreincollegesanymorewiththiswholePCstuff.

DemetriKofinas:No,ofcourse.Therearealotofpeoplearesayingthat.Butitistrue,man,it'stotallytrue.

MarkSpiegel:[00:47:00]Admiretheart,nottheartist.

DemetriKofinas:Ittrulyisan...I'mnotjustsayingthis.Ittrulyistrueofboththeleftandtheright.YouandIexperienceitforpeopleontheleft,becauseweliveinNewYork,anditisaveryleftistcity.Weexperiencethatfromtheleft.ThereareotherpartsofthecountrythatI'msurepeopleexperienceitfromtheright,andeachsortofsidehasitscharacteristics,butit'sasheepish,sortofideologicallydrivenmentality.

It'shorrible,becauseit'sgenuinelydividingpeople,evenwithinfamilies.Peoplegettinginto[00:47:30]arguments,right?We'veallexperiencedthat.It'sthereasonwhyIdon'ttalkaboutpoliticsontheprogram,becauseIfindthatthetaskoftryingtoapproachthesubjectintelligentlyisimpossible.

I'mgoingtohaveJonathanHaidt,theauthorofTheRighteousMind:WhyGoodPeopleAreDividedbyPoliticsandReligion...afantasticbook,abookIreadoveracouplesummersago.He'sgoingtocomeontheprogramsometimeintheearlysummer,Ithink,becausehehasabookcomingoutthathe'sbeenworkingfeverishlyon.Hewasn't[00:48:00]doinganypressexceptforlikeonethinghedidwithMarcAndreessenorsomethingatTED.Heapproachesitinsuchanintellectualway,talkingaboutsortofourfeelingsofdisgustandmoralityandeverything.Iwoulddoashowlikethat.

Butingeneral,Idon'ttouchit,becauseIreallydon'twanttogetintoasituationwhereI'mbeingcriticizedbytheleft,becauseitisreligious,becausepeoplearelemmings,andtheyaresortofjustsofocusedonsortofthemoralaspectsandallthesesortofPavlovian[00:48:30]reactions.

MarkSpiegel:Mylate...

DemetriKofinas:Bytheway,thisshowsyouhowlittlerespectweobviouslyhaveforElonandTesla,becausewe'vecompletely...Thisshowisgoingtobetitled...Bytheway,Ihavetheworkingtitlehere.Thisishorrible.Ihavetheworkingtitlehereforthisshow,it's

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called,"TeslaandtheCultofElonMusk.Areweseeingaburstingbubbleintech?"HalftheshowormoreisgoingtobeaboutlikeJerrySeinfeldand...

MarkSpiegel:It'smyfault,Isteer...

DemetriKofinas:It'salright,man.It'sallgood.

MarkSpiegel:Wecangobackontopic.Ijustwanttosaythatmylate[00:49:00]JewishmotherlastelectioncompletelydisownedmewhenItoldherIvotedlibertarian.Shewaslike,"So,who'dyouvotefor?"Isaid,"Well,Mom,Ivotedforthelibertarianguy."

DemetriKofinas:She'slike,"YouvotedforGary?ForGaryJohnson?"Aleppo?What’sAleppo?

MarkSpiegel:She'slike,"You'renosonofmine."Mybuddycameover,hehadthesamethingwithhisJewishmother.WewerelikethetwopeopleinManhattanwhovotedlibertarian.Anyway.

DemetriKofinas:SobacktoElonandtoTesla,becausewehavegotten...It'sokaythatwekindofgotofftrackonlikefactsandfigures,because[00:49:30]wedidcoverthemquiteabit.IwillsuggesttotheaudiencetogobacktoourepisodewithCharleyfromlastweek.Anyonewhohasn'theardthatonewhowantsmoresortoffactbased,meatandpotatoconversations.Wedidcoverthatalot,andCharley'sbeencoveringthisstuff.Tobringitbacktotheseriousnessofthisissue,wetalkedalittlebitaboutthesesortofquestionsofintegrity.JimChanos,who'snojoke,averyseriousshortseller,whohadshortedTesla,shorted...he'sprobablyshortingTesla.Idon'tknowwhathispositionisorifhe'spublicly[00:50:00]said...hashe?

MarkSpiegel:Hehassaid,he'sshort.Iknowhimalittlebitperipherally.Yeah,verysmartguy.

DemetriKofinas:Hesaidhe'sshort.He'saninterestingguy.

MarkSpiegel:Greatguy,goodsenseofhumoralso.He'sdefinitelyshortTesla.

DemetriKofinas:He'scomparedittoEnron.He'sopenlycomparedEnron...Hetalksabouthe,acoupleyears...eitheracoupleyearsagohestartedtoputthislisttogether,orrecently,buthewas...

MarkSpiegel:Theexecutivedeparturelist.

DemetriKofinas:Hehadanexecutivedeparture...

MarkSpiegel:IactuallypostthatonTwitter.Hehasoneofhisanalystsputthattogether,andIputitupthere.

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DemetriKofinas:He[00:50:30]pulledthatdatafromyou,initially?

MarkSpiegel:No,no,hegetsitfromallover.He'snotonTwitter.HewasonTwitterforawhile,andhe'snotonTwitteranymore.

DemetriKofinas:Hedoesn'tseemlikeTweeter,youknowwhatImean?Heshouldn'tbeonTwitter.

MarkSpiegel:Well,he'snot.

DemetriKofinas:He'stooreserved,tooquiet.

MarkSpiegel:He'sactuallyadrylyfunnyguy.Butatanyrate,soyeah,soTesla...

DemetriKofinas:He'sscarythoughtful.I'vemetJim,andIhadlunchwithhimonceatatable.Me,him,andafewotherpeople.Iwoulddescribehimasscarythoughtful.That'showIwoulddescribehim.Iremembersittingtherebeinglike,"Thisguyishavingatremendous[00:51:00]amountofbrainactivity,whichIamnotregisteringbecauseofhisfacialexpressionsandhisbodylanguage."

MarkSpiegel:He'sgotagreatmemoryfordetail,forlikesomethingacompanysaid.

DemetriKofinas:Yeah,forsure.Verytrue,verytrue.

MarkSpiegel:Thenthey'llcontradictit18monthslater,andhe'llbelike,"Waitasecond.Iseemtorememberthis,"thenhe'llputitrightup.Yeah,he'sterrific.

DemetriKofinas:HetalkedaboutthedarkturnandthepurchaseofSolarCity.Wetalkedaboutthatlastweek.Absolutelyveryscarything,notinaccordancewithsortoftypicalsortofcorporategoverning.

MarkSpiegel:[00:51:30]Itwastotalself-dealing.Nowthere'salawsuitthat'sbeenallowedtogoforwardonthat.Yeah,whatyoustartedreferringtowithChanosishemaintainsthatexecutivedeparturelist,whichisjustmassive.Anotherguylefttoday,literallytoday.Bytheway,lastmonth,twoofthetopthreefinancialpeopleleftwithinaweekofeachother.Thatisnevergood.TheCFO,whowasbroughtintoreplacetheoriginalCFO,lastedIthinkayear,thisguyWheeler.Heleft,andtheybroughtbacktheoriginal[00:52:00]CFO.

DemetriKofinas:Thesearehorriblesigns,whichImentionedlastweekinmyconversationwithCharley.Iaskedhim,"Whyisyouropinion,Charley,notreflectedinthestockprice?"Ofcourse,Iknowthatpartoftheprocessofmakingmoneyinmarketsisbeingrightbeforeeveryoneelseseesthatyou'reright.Iunderstandthat.Butagain,thisissuchanegregiouscaselookingatit.Itisnotanormalbearishcaseagainstthestockthat'sdoingabnormally[00:52:30]well,givenwhereitsdebtistrading.Tome,itdefies...

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MarkSpiegel:Sobasically,you'vegotafairlyrestrictedflowinthestock.Muskhimselfownsover20%ofthecompany.Thenyou'vegotahandfulofmutualfunds.BaillieGifford,whichisaScottishfirmfidelity,whichhasbeenselling,butIthinkthey'restillthelargestoutsideshareholder,orclosewithT.RowePrice,whichaddedshareslastquarter.Thosethreetogetherhaveahugeamountofthestock.

DemetriKofinas:Doweknow[00:53:00]whatpercentagetheyown?

MarkSpiegel:Yeah,wedoknow.It'sallpublic.Iforgetoffhand.Idon'tknow,maybe30%amongthethreeofthem?Somethinglikethatintotal.

DemetriKofinas:Well,Elonownslike20%,doesn'the?

MarkSpiegel:What'sthat?

DemetriKofinas:Doesn'tElonownlike20%?

MarkSpiegel:Right,he'sownedover20%,sothat'shalfthefloat,there.Thenyou'vegotothermutualfundswithbigchunks.I'veseenallthreeoftheportfoliomanagerswhocontrolthestockatthosethreemutualfundsinterviewed.Theyjusttalkinvaguetermsabout,"Tesla'sgoingtodominatethis,andElonMusk[00:53:30]isthat."

Iwouldlovetositdownwithoneofthoseguysacrossfromthetableandsay,"Okay,they'regoingtodominate?Well,whydon'tyouexplaintomewhyit'sbetterforthemtowiretogether7,000littlebatteriesthattheybuyfromPanasonicthanthewholerestoftheindustrymovingtoprismaticbatteriesthatarelargerandyouonlyhavetowiretogetherafewhundredofthem."Ithinktheguy'sjawwoulddropopen.Thesepeoplehavedonenohomeworkonthecompany.Imean,asfarasIcantell,theyhaven't.

I'veneverseen...There'snospecificcaseforthis.It'sareligion.[00:54:00]Ilearnedalongtimeagonottoargue...IsaidI'mJewish,butI'mtotallyagnostic.I'mreallyagnostic.Idon'tsayI'matheistjustincaseI'mwrong.I'magnostic.

DemetriKofinas:Youcanonlytakesomuchshitfromyourmother.YoualreadyvotedforGaryJohnson.

MarkSpiegel:Well,shewasmorethanagnostic.Weneverarguedaboutthat.Mypointisthatyoucan'targuereligionwithpeople.Theyjustbelieve,andtheydon'twanttohearanythingthatcontradictsthat.Buthere'sthedifference,thedifferencebetweenTeslaandotherstuffisTesla,justtokeepthelightsturnedonand[00:54:30]spendthecapsbackthattheysaythey'regoingtospend,isconsuminglikefourorfivebilliondollarsayearinnegativefreecashflow.It'sonethingforsomeschmucktosay,"Oh,IloveElonMusk[inaudible00:54:42]."It'sanotherthingforthatschmucktokeepopeninghiswalletandpouringmoreofhisownpersonalmoneyintothecompany.

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DemetriKofinas:Sowhereisthatmoney...We'veseeninthelastfewdaysthestockgettinghammered,andthenbuyingthatdip.Whoisbuyingstockatthoselevels?Isitjusttraderswhoaretakingadvantageofthemomentuminthestock,orsortofusing[00:55:00]technicalstotradeitandlookingtomakeshorttermprofits?Orarethereactuallypeoplebuyingthedipinthisstock?

MarkSpiegel:Well,wedon'tknowatthispoint.We'llseethenewinstitutionalholdingssixweeksafterthequarterends.MyguessisalotofTeslatradingiscomputermomentumstuff.Momentumonthewayup,momentumonthewaydown.ThefundamentalsaresohorridforthiscompanythatrecentlywegotinalotofwhatIcalltouristshorts.Inotherwords,peoplewhohaven'tbeenshortthisthing,andknowitthewayIdo,butthey'relike,"Ohthisisreallybad,IthinkI'llshortsome."[00:55:30]It'sprettyeasytospookthoseguysout.Today,theyputoutthereleaseabouttheproductioninQ1.Itwasterrible.Theymissedeverything.But,forwhateverreason,peopleseizedonMusksaying,andundoubtedlylying,thattheydon'thavetoraisecapitalfortherestofthisyear.Thatgetsthestockgoing,andthenafewshortsgetscared,andthentheycover,thenmoreshortsgetscared.Thencomputers,Ithink,sensethis,thealgos.They'relike,"Oh,there'salotofshortsherethataregettingscared.Let'sspikeitupmore."Ithinkthat'skind[00:56:00]of...

DemetriKofinas:That'sareallygoodpoint.

MarkSpiegel:Ithinkthat'swhathappens.

DemetriKofinas:There'salotofshortcovering.

MarkSpiegel:Thenyou'vegotquoteonquote,"bargainhunters."Thestockwas380atonepoint,anditwasdowntowhat,tothehigh240stheothermorning.They'relike,"Oh,itmustbecheapinthehigh240's."They'renotpayingattentiontothefactthatthere'slike...whateveritisatthatprice,a50billiondollarenterprisevalueorsomethingonthisthing.They'reconsumingbillionsofdollarsayear.Ithinkthere'ssomeofthat,too.

DemetriKofinas:Well,Elonknowsbetterthananyoneelse,theonethinghecertainlyknows,isthatgravityisreal.[00:56:30]Youcan'tfightit.Mark,Ireallyenjoyedhavingyouontheprogram.Thiswasalotoffun.Wedidn'tgetintotoomanysortofspecificdetails,butIthinkthatthatwasalright,becausewegotintothoselastweek,andwhatI...

MarkSpiegel:Whatyouhavetorememberismassivecompetitioncomingfromcompaniesthatknowhowtobuildcars,it'sbettertechnologythanTesla's.TheycancrosssubsidizethosecarsbytheirprofitsfromtheirtraditionalcarsandSUVs.Here[00:57:00]intheU.S.,Teslalaterthisyearisgoingtolosethe$7,500percartaxcreditwhileallthesenewcompetingcarsaregoingtohaveit.NotonlyaremanyofthesecarspricedcheaperthanTesla'stobeginwith,they'regoingtohaveanextra$7,500Tesla'sgoingtolose.

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Theyhadtheirwindow,alltheydidwaslosemoreandmoremoneyduringthatwindow.Nowthewindowisgettingslammedshutonthem.Teslaisnotabusiness.It'sacashburningMuskvanityproject.

DemetriKofinas:That’swheremoneygoestodie.Well,letme[00:57:30]askyouthis.Whatdoyouthink,ifyouhadtosay...becauseIhavemysortofsenseofthis.Butifyouhadtosaylikewhatthestoryis...Whenwelookback,let'ssaythingssortofprogressthewayyouimaginedthem,inanumberofdifferentwaysthatyouhaveimagined.WhatwillthestorybeofTesla?

MarkSpiegel:I'lltellyou.Well,besides...

DemetriKofinas:Ialreadygotthisready,thisisready.Thisiscannedmaterial,thisisnot...

MarkSpiegel:No,no,no,besideseverythingwetalkedabout,there'soneotherpointIshouldmake.Thistiesintothatpoint.Youknow,whenyoutalktoaTeslemming,thefirstthingtheysaytoyour[00:58:00]factsis,"Buthaveyoudriventhecar?"Many,manypeopleareconfusingEVlove,electricvehicleandelectricvehicledrivetrain,withtheinstanttorqueandthequietandthatstuff...manypeopleareconfusingTeslaloveforEVlove.

Allthesepeoplewillsay,"Oh,I'llnevergobacktomyothercar.IlovemyTeslatoomuch."YouputthosepeopleintheJaguar,theMercedes,theAudi,orthePorsche,withtheelectricdrivetrain,andaJaguar,Audi,[00:58:30]andMercedes,andPorschelevelofinteriorqualityandreliabilityanddealershipconvenience,theywillthrowthatTeslainthegarbagewhereitbelongs,becausethey'llbeabletoenjoywhatevertheylikedabouttheTeslawithnoneofthesacrificesyouhavetomakeintermsofthecompanyitself.

DemetriKofinas:Well,inthatsense,IthinkElonhasaccomplishedthegoalthathestatedearlyonwassortofhisgoal.Youknow,it'sinterestingyousaythat,becauseIwatchedhimonapiecein60Minutes,andhetalkedaboutthiswithSpaceX.Isaw[00:59:00]anotherinterview,anditmayhavebeeninSXSWwherehesaidthesamething.Actually,itprobablywasn'tatSXSW,becausethatwouldhavebeen...

MarkSpiegel:Toencouragetheworldto--

DemetriKofinas:Yeah,yeah.Hispointbeingthat...whichisacrazythingtosayasaCEOofacompany,IwouldneverwanttoinvestinacompanywithaCEO...but,youknow,lookhehasdonethat.That'sexactlywhathe'sdone.

MarkSpiegel:Hey,youknowwhat?That'sfine.We'reverycompatible.Ifhe'shappywithTeslagoingoutofbusinessbecauseeverybodyelsebuildsbettercars...

DemetriKofinas:He'snotgoingtobehappyaboutthat.Hesaysheis,he'snotgoingtobehappy.

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MarkSpiegel:Ofcoursehe'snot.

DemetriKofinas:Yeah,yeah,yeah,he'snotgoingtobehappyaboutthat.But...

MarkSpiegel:He'sgoingtohavetoswaptheG650fora[00:59:30]G250orapropellerplane.

DemetriKofinas:IhavedrivenaTesla,andit'sanamazingcar.

MarkSpiegel:Right.Youknowwhat[crosstalk00:59:36]

DemetriKofinas:Ilovedrivingit.Somypointis,Iloveddrivingit,andI'mgoingtolovedrivingthenextsortoffleetofelectrichighperformancevehiclesthataregoingtocomedowntheline.

MarkSpiegel:Bytheway,therearemultiplehedgefundmanagerswhoownTesla'sandareshortthestock.

DemetriKofinas:Makessense.Whynot?Sure.

MarkSpiegel:Yeah,right.

DemetriKofinas:YoucouldownaDeLoreanandbeshortit,right?Idon'tknow,maybenot.

MarkSpiegel:Well,thatwasneverpublic.

DemetriKofinas:Yeah,thatwasamuchbiggerdisaster.[01:00:00]ButIthinkthestory,Mark,willbe...

MarkSpiegel:Actually,Tesla'sabiggerdisaster.

DemetriKofinas:Becausethere'smoremoney.

MarkSpiegel:Tesla'sdestroyingfarmorecapitalthanJohnDeLoreandid.

DemetriKofinas:Butwedon'tknowaboutanycokedealsthatJohn--

MarkSpiegel:Well,MuskisanAmbienman.Hesaidthat.Ifwecatchhimwithasuitcase,it'snotgoingtobecoke,it'sgoingtobeAmbien.

DemetriKofinas:AsuitcasefromColombiawithAmbien,isthatright?Ambien'stheworsttotakeforsleep.

MarkSpiegel:I'veneverhadit.

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DemetriKofinas:It'shorrific.Yousleepwell?

MarkSpiegel:Isleepverywell.

DemetriKofinas:Really?Amazing.That'sbecauseyou'reshortTeslaandit'srightnow--

MarkSpiegel:Whenitwasspiking,alrightI'll[01:00:30]admit,Iwouldgetupat4:00AMtocheckthepricewhenitopenedandthenI'dgobacktosleep.Isleepbetternow.

DemetriKofinas:SoIjustwanttosaythis.Ithinkthestoryforme...thereasonwhyIfindthisstoryinterestingisbecauseitisattheintersectionofanumberoftheseforcesthatwe'vecoveredontheshow,oneofwhichisthechronicallylowinterestratesandthecheapfinancing,thewealthgapthat'sgrownthat'smadealotofthisfundingadditionallyavailable.We'veseenthatalsointhecaseofUber,whereUber'sinvestorsarefinancing,subsidizingofmyridesin[01:01:00]anUber.

Butit'salsointerestingasa...reallybecauseofElon,becauseyou'vegotthisreallycaptivatingfigurewho'sshootingrocketsinspace,walkingaroundwithaflightjacket,who'ssortofinvestingatthefrontieroftechnologicalinnovationinsofarasthepublicsortofimagines.It'sobviouslynot.Obviouslyit'snot.Weagreewiththat100%.Thatisnotthefrontierofpublicinnovation.Butthesearethingsthatpubliccansortofconceptualize,theycanwraptheirheadsaround.Electric[01:01:30]cars,hyperloops,electricplanes,tunneling.Youcreateaboringcompany.

MarkSpiegel:I'mtellingyou,allthisshitwasonthecoverofPopScienceinlikethe'70s.

DemetriKofinas:No,listen,listen,listen.Ithinkwhenwelookback,heisgoingtobeaseminalfigurethat...I'mnotgoingtosaythis100%,it'sonepossibility.Youcouldseehow10,20yearsfromnow...maybenot20,but10certainly.We'lllookback,andElonwillhavebeentheface,oroneofthefacesoftheboomandthebust.

MarkSpiegel:[01:02:00]Noquestion.

DemetriKofinas:Itshowssortofthewillingnessofpeopletobelieveinastoryabovethefactsthatarestaringthemintheface.

MarkSpiegel:Absolutely.That'sabsolutelyright.It'sareligion.

DemetriKofinas:Mark,yougotmeexcitedhavingyouon,man.Ifeellike[crosstalk01:02:14].Iinterruptedwaytoomuch,butitwassuchanengagingconversation.

MarkSpiegel:No,itwasalotoffun.Ithink...No,Iinterruptedyou.Ithinkwecouldkeepitgoinghere,thiswasalotoffun.Ireallyenjoyedthis.

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DemetriKofinas:Youdidagoodjob,you'resuperpolite.You'remorepolitethanIexpected.Iwasreadyforcombathere.

MarkSpiegel:No.

DemetriKofinas:Mark,sogreathavingyouon,man.Iknowtheaudienceisgoingtoreallyappreciateitandenjoythis,exceptfortheoneswhoown[01:02:30]Teslastockandwhowillneverlistentomeagain.Ihopethat'snottrue.

MarkSpiegel:Youknowwhat,ifthey'relisteningtothisonUnitedAirlines,they'regoingtohavetospringfor$10forthe...what'sitcalled?

DemetriKofinas:It'sprettycoolthatwe'reonUnitedAirlinesinternet.Theaudiencemaynot...noteveryoneintheaudiencemayknowthat,thatthisshowisonUnitedAirlines.

MarkSpiegel:Yeah,what'sthe...I'mblankingout.

DemetriKofinas:Internationalflights.

MarkSpiegel:No,whenyougettheinternetontheplane.

DemetriKofinas:Bongo?

MarkSpiegel:No,that'sintheairport.

DemetriKofinas:Go-go.

MarkSpiegel:Go-go.They'regoingtohavetospringforthatanddumptheirTesla,becausethat'swhat'sgoingtohappen.

DemetriKofinas:Whatdoyoumean?Whatdoesthathavetodowithourshow?Youdon'thavetobeonGo-gotolistento[01:03:00]ourshow.

MarkSpiegel:No,butifthey'reonaplanelisteningtotheshow.

DemetriKofinas:Oh,ifthey'reonaplanelisteningtotheshow.

MarkSpiegel:Yeah,they'regoingtohavetogettheinternetconnection,logintotheirbroker...hopefullyafterhearingthis.Saveyourmoney,people,seriously.

DemetriKofinas:Didn'twesaythisisnotfinancialadvice?

MarkSpiegel:Oh,you'reright.

DemetriKofinas:Notfinancialadvice.

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MarkSpiegel:I'mnotgivingfinancialadvice.Youwanttowinduphavingtoflycoachtherestofyourlives,thenkeepgoingtoTesla.

DemetriKofinas:Doyouhearthat,audience?Youguys...alotofyouintheaudiencedonotknowthis.WeareonUnitedAirlines,allinternationalflights.Correction,actually.Letmemakethisclear.[01:03:30]Ithinkallinternationalflightsusethewidebodiedaircraft,certainlysomenon-internationalflightsdo.LikeifyougotoHawaii,you'reonawidebodiedaircraft.YoucanlistentoHiddenForces.

That'sbecausethisisanamazingshow.It'sanamazingshow,andIknowhowmanylistenersIhave.Ithinkweonlyhavelike64reviewsoniTunes.Guys,thisisunacceptable.InevermakeastinkaboutiTunes,butI'mgoingtomakeitnow,becauseIhavetheappropriatepersonontheshowtomakethat.Iwouldloveandappreciateoneofyoutogoandclick[01:04:00]thatfivestarbuttononiTunes.

MarkSpiegel:I'mgoingtodoitassoonaswegetoff.

DemetriKofinas:EvenMark'sgoingtodoit.Alright,Mark,greatman.Thanksforcomingon.

MarkSpiegel:Thankyou.

DemetriKofinas:ThatwasmyepisodewithMarkSpiegel.IwanttothankMarkforbeingontheprogram.Today'sepisodewasproducedbymeandeditedbyStylianosNicolaou.Formoreepisodes,youcancheckoutourwebsiteat@HiddenForces.io.FollowusonFacebook,Twitter,andInstagramat@HiddenForcesPod[01:04:30],orsendmeanemail.Thanksforlistening,we'llseeyounextweek.