Introducing the Loup Ventures Braintech Podcast

We’re excited to announce that we’re launching a Braintech podcast.

As computing becomes more immersive, direct brain control is the optimal user interface. Throughout the history of computing – from desktop to laptop to smartphone to wearables – information is, literally, getting closer to us. As we move thru wearables, the next stage is implants. Braintech is the ultimate expression of that.

Here are the first three episodes of our Braintech podcast:

We hope you like it as much as we’ve enjoyed making it. If so, please subscribe and share. And as a reminder, we also publish select Loup Ventures research as audio notes here.

Disclaimer: We actively write about the themes in which we invest: virtual reality, augmented reality, artificial intelligence, and robotics. From time to time, we will write about companies that are in our portfolio.  Content on this site including opinions on specific themes in technology, market estimates, and estimates and commentary regarding publicly traded or private companies is not intended for use in making investment decisions. We hold no obligation to update any of our projections. We express no warranties about any estimates or opinions we make.

More People Interested in Buying a Model 3 Than You Think

Last week we surveyed 519 people in the U.S. regarding interest in buying a Tesla Model 3. We found a surprisingly high number (17%) of people would buy a Model 3 at $40,000. Even if this survey is off by 3x, the results still imply significant market share gains are in store for Tesla given their current U.S. unit market share is below 0.5%.

Consumers wait in line for over 1.5 hours to sit in a Model 3 at a showroom in TX. January 2018. Photo: ntxteslaowners

Survey results: “Would you buy a Tesla Model 3? ($40,000)”

Yes: 17%, No: 61%, Maybe: 22%

Source: Loup Ventures, survey age and household income distribution representative of U.S. census data.

First-time survey has limitations, but insights still valuable. Longer-term (10 yrs from now) we believe Tesla can capture 17% of the U.S. auto market share, consistent with our survey results. That said, this is the first time we have conducted this survey and the true value will be comparing future survey results to our most recent exercise. It’s easy for someone to say they’re going to spend $40,000 and harder for them to actually do it. Our optimism regarding this initial survey is based on dialing back the intent to buy by 60%, which would still indicate significant market share gains.

Expect Tesla market share to increase from 0.5% to 1.5%. As of the end of Dec-17 Tesla has delivered 1,772 Model 3s. We expect 14k in the Mar-18 quarter and 168k deliveries in 2018, with a 70% chance they actually hit those numbers. Separately, we believe Model 3 reservations are effectively unchanged at 455,000 since the last public update in August of last year. If we assume Model 3 deliveries are heavily weighted (70%) in the U.S. initially, and that Tesla delivers the net preorders over the next two years, we expect Tesla (Model 3, S and X) to make up 1.5% of all cars sold in the U.S.

Ramp in Model 3 production won’t be linear. As Model 3 production scales to meet this backlogged demand, it will not be a smooth ramp from ~1,000 vehicles per week today to their goal of 10,000 per week. Steps up in output require factory retooling and significant capex investment that will cause temporary steps down in production. In other words, don’t be alarmed by the inevitable news of Model 3 production issues, as it may be part of the natural process of scaling production.

Disclaimer: We actively write about the themes in which we invest: virtual reality, augmented reality, artificial intelligence, and robotics. From time to time, we will write about companies that are in our portfolio.  Content on this site including opinions on specific themes in technology, market estimates, and estimates and commentary regarding publicly traded or private companies is not intended for use in making investment decisions. We hold no obligation to update any of our projections. We express no warranties about any estimates or opinions we make.
Posted in Tesla  • 

003 – Dr. Mikhail Lebedev

Mikhail “Misha” Lebedev, Ph. D. Born and raised in Moscow, Misha came to the United States after the Iron Curtain was lifted to continue studying Neurobiology. He has conducted research in Russia, Italy, Tennessee (where he earned his Ph.D.), Maryland, and eventually landed in his current position as a Senior Research Scientist at Duke University in the Center for Neuroengineering. The major focus of this research is on brain-machine interfaces (BMIs) that enable direct cortical control of assistive devices that reproduce limb movements.

Top 3 Takeaways.

  • Sending information to the brain is easier than decoding information from the brain, resulting in faster development of sensory neuroprosthesis. Therefore, we will start to see an increased number of surface level, FDA approved, implantable devices within the next decade.
  • Brain-machine interfaces will have a tremendous impact on mental health and could cause a major shift from pharmaceutical treatments to implantable solutions.
  • As the BMI sector becomes increasingly tech-heavy, we will see greater involvement amongst enterprises who will bring a multi-disciplinary angle to the sector.

Show Notes.

  • [0:55] Misha’s initial spark that fueled interest in Neuroscience.
  • [3:40] The encoding and decoding process for BMI.
  • [5:50] Obstacles that slow the encoding and decoding process and how to work through them.
  • [7:20] The future of FDA approval for implantable BMI devices.
  • [9:30] Misha describes what a full body prosthesis is and what it means for people dealing with various forms of paralysis.
  • [11:00] Exoskeletal brain control and the future impact on BMI.
  • [13:17] The potential impact BMI could have in Mental Health and other functions of the brain.
  • [16:14] BMI impacting the way we use pharmaceuticals in treating the brain.
  • [17:40] Misha shares his thoughts on the growing interest of private companies in the field of BMI and Neuroscience.
  • [19:30] Misha shares his favorite Neuroscience book, Comparative Study of the Sensory Areas of the Human Cortex.

Selected Links.

Related Podcasts.

Disclaimer: We actively write about the themes in which we invest: artificial intelligence, robotics, virtual reality, and augmented reality. From time to time, we will write about companies that are in our portfolio. Content on this site including opinions on specific themes in technology, market estimates, and estimates and commentary regarding publicly traded or private companies is not intended for use in making investment decisions. We hold no obligation to update any of our projections. We express no warranties about any estimates or opinions we make.

We Ran HomePod Through the Smart Speaker Gauntlet

Conclusion. Yesterday, we put HomePod through the smart speaker gauntlet which included 782 queries along with comprehensive tests of sound quality and ease of use. Our methodology was comprised of 3 HomePods being tested throughout the day by the Loup Ventures team. Here are four key takeaways.

  • HomePod is hands down the best sounding smart speaker.
  • As a smart speaker, it answered 52.3% of queries correctly compared to recent tests of Google Home at 81%, Alexa at 64%, and Cortana at 57%.
  • The user experience of HomePod is measurably better than its competition (setup, communication style, listening ability).
  • We have added HomePod to our Apple financial model. For CY18, we’re expecting HomePod unit sales of 7 million (12% global smart speaker market share) with a $349 ASP, which adds approximately 1% to revenue and earnings. In CY19, we expect unit sales of 10.9 million, which adds just over 1% to our model. While only factional revenue contribution, we expect HomePod units to grow between 40% and 45% per year over the next 3 years. Link to model here.

Query results. Siri understood 99.4% of queries and answered 52.3% of them correctly. This places HomePod at the bottom of the totem pole in terms of AI assistant performance. Siri is particularly strong in Local (where can I find a good cup of coffee around here?) and Commerce (help me buy some new shoes.) queries, handily beating Alexa and Cortana, but still falling short of Google Home in those areas. Overall, Siri performed above our expectations given the limited scope of HomePod’s music focus.

Adding domains will quickly improve Siri’s score. Some domains like navigation, calendar, email, and calling are simply not supported. These questions were met with, “I can’t ___ on HomePod.” Also, in any case that iPhone-based Siri would bring up Google search results, HomePod would reply, “I can’t get the answer to that on HomePod,” which forces you to use your phone or give up on the question altogether. Removing navigation, calling, email, and calendar-related queries from our question set yields a 67% correct response, a jump from overall of 52.3% correct. This means added support for these domains would bring HomePod performance above that of Alexa (64%) and Cortana (57%), though still shy of Google Home (81%). We know Siri has the ability to correctly answer a whole range of queries that HomePod cannot, evidenced by our note here. Apple’s limiting of HomePod’s domains should change over time, at which point we expect the speaker to be vastly more useful and integrated with your other Apple devices.

Other observations

  • HomePod has superior listening skills to other smart speakers. This is partly due to a noise cancellation feature which allows you, even at a volume where you would have to raise your voice to talk to others in the same room, to use your regular speaking voice with Siri. This was HomePod’s most stellar feature.
  • Wireless setup was super easy. In fact, it was the easiest of any of digital assistant we have used (Alexa, Google Home, Cortana, etc.). You already have a companion app and don’t need to wrestle with wifi networks.
  • Siri’s voice sounds smoother and more human than it does on your iPhone.
  • Her communication is also more human-like. Specifically, after asking a question, she does not repeat the whole thing back to you as is the case with Google Assistant and Alexa, which makes for a subtly smoother process.
  • The tap UI on the touch-sensitive display requires a small amount of instruction, as it is not immediately obvious that you tap to play.pause, double tap for next track, triple tap for previous track, and touch and hold to bring up Siri.
  • HomePod’s packaging is a new level of perfection for Apple. The perfectly fitted box requires you to open it at “reveal” pace, and even the external plastic wrap is pleasing to remove.
  • As a speaker, it sounds incredible – mission accomplished. As a digital assistant, whether it is a direct competitor or not, it is better than what we expected for version 1, but still lags behind Alexa and Google Home.

Survey suggests demand for HomePod similar to Apple Watch. Last week we surveyed 500 people in the U.S. and found 3.3% said they would purchase a HomePod in the next year. Among those surveyed who already own an Apple product, 5.2% planned on buying a HomePod. This is similar to 7% of Apple product owners planned to buy an Apple Watch ahead of its launch in Spring of 2015 (survey was conducted in December of 2014, four months ahead of the Apple Watch launch). While Apple does not disclose Watch unit sales, we estimate in its first 12 months Apple sold 10.2m Watches at an ASP of $475. This compares to our first 12 months of HomePod sales estimate of 7m units with an ASP of $349.

Smart speaker market share. We see Google Home as the long-term smart speaker unit share winner, but Alexa and Apple as the two other key players. In 2018 we expect HomePod will capture 12% of the global smart speaker units, compared to our estimate of Alexa at 52% share, Google Home at 32% and others at 4%. In 2022, we expect HomePod will hold a similar 12% market share (HomePod ASP estimate declines to $149 from $349 today), Google Home at 48% and Alexa at 37%.

Apple’s grander vision around HomePod.  Don’t be fooled by HomePod’s sound quality-focused first step into smart speakers; Apple has a grander vision than delivering a better sounding Echo. While not present in the first version of HomePod (i.e. you can’t even make a phone call with HomePod), we believe Apple’s goal is to make Siri a ubiquitous, ambient presence that connects and controls all your connected devices and services – and to make a leap forward in the transition to voice-first computing.

The way humans interact with computers is changing. Today, we use our keyboards, mice, and touchscreens to interact with computers, but in the future, we’ll simply rely on our voice, gestures, or even our thoughts. Voice is quickly becoming a preferred interface. Apple’s device ecosystem delivers a frictionless experience, which will only get better with the adoption of voice and with the addition of HomePod supported domains (9 supported domains today). Interestingly, Apple has included an A8 chip in its HomePod, the same chip included in an iPhone 6. The A8 chip is much more powerful than the chips competing home assistants run on, which poses the question: what else is Apple planning with the HomePod?

Disclaimer: We actively write about the themes in which we invest: artificial intelligence, robotics, virtual reality, and augmented reality. From time to time, we will write about companies that are in our portfolio. Content on this site including opinions on specific themes in technology, market estimates, and estimates and commentary regarding publicly traded or private companies is not intended for use in making investment decisions. We hold no obligation to update any of our projections. We express no warranties about any estimates or opinions we make.

Nvidia Results: Intoxicating Combination of Faster, More Profitable Growth

What’s new. Shares of NVDA are up 7% after hours as the company reported an intoxicating combination of faster, more profitable growth. What’s new?  Tonight’s results are further evidence of the magnitude of the opportunity ahead of Nvidia. Its products are a foundational part of the future of technology, based on their use in data centers, autonomous vehicles, virtual and augmented reality platforms, cryptocurrency mining, and eSports. We remain believers in the long-term Nvidia story. While shares of NVDA are up 100% over the past year (market cap of $129 billion), we think there’s further upside given Nvidia’s foundational exposure to frontier technologies.

Earnings and model recap. Nvidia reported Dec-17 revenues of $2.9B vs. Street at $2.7B (up 34% y/y), and EPS of $1.72 vs. Street at $1.16. Updated model here.

Pole position in three green field growth markets: As we’ve written about previously, gaming, datacenter, and automotive, all have open-ended growth opportunities.

1. Gaming

Nvidia’s gaming business revenue was $1.74B, up 29% y/y. This was driven by high-quality, hit games in the market, notably PlayerUnknown’s Battlegrounds (PubG), Destiny 2, Call of Duty WWII, and Star Wars Battlefront II. PubG has reached 30 million players in 9 months, two months faster than Activision’s Overwatch. It’s worth noting the new Overwatch league launched last month and recorded 10 million unique users in its first week. The success of these games is leading to both an increase in the number of GPUs sold, as well as ASPs for Nvidia.

Additionally, demand for GPUs for cryptocurrency mining has boosted Nvidia’s gaming segment results. The rise in cryptocurrency demand has contributed to historically low channel inventory levels of GPUs being reported.

Long-term, the outlook for gaming remains promising.

I’ve always believed that the video game market is going to be literally everyone. In 10-years’ time, 15-years’ time there’s going to be another billion people on earth. And those people are going to be gamers. Not to mention that, almost every single sport could be a virtual-reality sport. – Jensen Huang

Part of the upbeat guidance for the April quarter is because gaming channel inventory is at historically low levels and the company expects to fill channel inventory during the quarter.

2. Datacenter

Nvidia’s datacenter revenues were $606M, up 105% y/y. For the 7th consecutive quarter, Nvidia’s datacenter revenues saw three-digit growth.

Driving datacenter growth are investments in artificial intelligence from a broad range of companies. Nvidia commented on the earnings call that every major cloud provider, including Alibaba, Amazon, Baidu, Google, IBM, Microsoft, Oracle, and Tencent have adopted Nvidia’s Tesla V100 GPUs for training deep learning networks.

We’re in the early innings artificial intelligence and just as all companies evolved to be internet companies in the early 2000s and mobile companies in the late 2000s, they will soon evolve to be AI companies.

3. Automotive

Nvidia’s automotive revenue was $132M, up 3% y/y. Despite little growth, remains Nvidia’s biggest opportunity. On tonight’s call, Jensen Huang outlined three near-term opportunities in Automotive:

  1. Nvidia’s DGX system is used to train neural networks for autonomous driving at data centers.
  2. Nvidia’s DRIVE PX platform provides cars with the necessary on-board computing strength for autonomous capabilities.
  3. Nvidia is reaching development agreements with major OEMs, ride-hailing companies, startups, tech companies, and many others to support their efforts in autonomy. Each project is engineering intensive, and companies rely on Nvidia for help.

Longer-term, the market for autonomous vehicles will be larger than most people think. Today, automotive accounts for 6% of revenue, and we expect it to rise to 13% by 2023. As we outlined in our Auto Outlook 2040, we expect 90% of vehicles on the road in 2040 to have level 4 or 5 automation, which would require a platform such as Nvidia’s DRIVE PX. 

Transportation is a $10 trillion industry. Between cars and shuttles and buses, delivery vehicles, I mean, it’s just an extraordinary, extraordinary market. Everything that’s going to move in the future will be autonomous. – Jensen Huang

Disclaimer: We actively write about the themes in which we invest: artificial intelligence, robotics, virtual reality, and augmented reality. From time to time, we will write about companies that are in our portfolio. Content on this site including opinions on specific themes in technology, market estimates, and estimates and commentary regarding publicly traded or private companies is not intended for use in making investment decisions. We hold no obligation to update any of our projections. We express no warranties about any estimates or opinions we make.