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Chris Hill: It’s the Motley Fool Money radio
show! I’m Chris Hill. Joining me in studio this week, senior analysts Matt Argersinger
and Aaron Bush. Happy new year, gentlemen! It’s our 2019 preview. We’ve got stocks to
watch, stocks to avoid, CEOs on the hot seat, and more. And, of course,
a few reckless predictions, as always. Before we get to the 2019 preview,
though, I think we have to talk about Apple. Shares of Apple falling 10% on Thursday after CEO
Tim Cook warned investors first quarter revenue was going to be about $5-$8 billion lower
than previously expected. Several reasons for that, Matty. The trade war in China, the economic
slowdown in China, the battery replacement program that they had last fall. This was
still pretty shocking development. Matt Argersinger: Lots of moving parts,
but you’re right. This was pretty bad. If you look back to their guidance in early November,
looking for between $89-$93 billion in revenue. To come in, then, at $84 billion, $5 billion
below the low end of your guided range, that’s a problem. CEO Tim Cook said that really 100%
of the miss was due to China and a contraction in the smartphone market there.
That’s a good excuse. It’s probably the right excuse. Investors have been questioning whether or not the
iPhone, especially the latest versions of the iPhones with the high price tags, could really penetrate
the highly competitive smartphone market in China. I think we’re starting to see the fact
that no, that’s not really the case. Aaron Bush: I don’t think it’s that surprising,
actually, that Apple has China issues. I was just thinking back, four years ago, when Matt
and I were talking about China in the context of our Supernova portfolio, talking about
opportunities and concerns, China was a big thing we were talking about. At the time,
we realized that China is a big opportunity simply because how many people are in that
country, but we didn’t necessarily expect it to play out the same way as it did in the
U.S. Since then, the stock is about roughly flat with the market, which is interesting.
I think we started to see the cracks in the foundation about two years ago. About that
time is when I started studying Tencent, which owns WeChat. It made me realize that iOS is
far less important in China because WeChat is an in-app operating system that people
do everything in. So, the same type of competitive advantage that Apple would have in the U.S.
with iMessage, Notes, various services, that doesn’t exist in China. It showed in the data.
At the time, the retention rate, people who would have an iPhone that would buy another
iPhone, outside of China it was over 80%. In China, it was 50%,
which is essentially a coin flip. I think now, because of the economic turbulence
that’s starting to happen, trade wars, slowdown, we’re starting to see that play out at an
accelerated rate. People who would be the Apple buyers either already own them or did
own them. Upgrade cycles are longer, and retention is still sub-optimal. Apple just has mediocre
market share, and I think that’s not necessarily going to change.
Argersinger: I agree. As long as the iPhone is such a large part of Apple’s core business,
they can talk about Services all they want, but this is still a product that’s about 70%
of revenue and the majority of operating profits. Now, I will say this, because we’re positive
people here at The Fool. Coming into this report, Apple was already down about 40% from
its high. Granted, it had a horrible day this week that took it down even further. But even
at the reduced earnings estimates now, you’re looking at a stock that’s only trading about
11X-12X earnings. Certainly below the average market multiple. Now, if earnings come down
further, the stock could certainly follow suit. But it’s hard not to call
it cheap right now. Hill: That’s the thing. Tim Cook talked
about how he hadn’t seen the December numbers, therefore there’s no way he’s seen the
January numbers, because they’re not in yet. Their first quarter report comes out in early February.
If you’re looking at this stock, and you’re thinking, “Boy, it looks cheap,” do you buy here?
Or you want to see what the actual numbers are before you put down a little
money to buy some stock? Bush: Oh, I don’t know. It sounds like another
coin flip to me. We don’t really know. I do think that the valuation is somewhat compelling.
You’re betting that iPhone sales stabilize, and you’re betting that the Services segment
can become much more than 15% of revenue, which it is now. I think that most people
think that is the case. Or, at least around here, that’s the bullish stance. Personally,
I have some more questions. When you have a monopoly taking 30% of
every single transaction that goes on your ecosystem, regulatory issues will one day be a concern. The same
thing that we’ve seen with Alphabet, the same thing we see with Facebook. One day,
those same headlines are going to be going on with Apple, too. And then the Services narrative
will slowly not seem so amazing anymore. Hill: Alright, let’s get to our 2019 preview.
Aaron, I’m going to start with you. What is one industry you’re
going to be watching this year? Bush: I’m really interested to be watching
the ride sharing industry. With Uber and Lyft, and maybe even DiDi, which is in China,
IPO-ing in 2019, it’s really exciting that public market investors will finally have access
to this new, massive, quickly growing industry. I’m excited to see what the numbers
look like. They probably won’t be great from a profitability perspective. But thinking about
transportation as a service, and what that means beyond just ride sharing, what it means
for logistics with food, and are they going to buy more bike and scooter companies?
That type of thing. I’m really interested to hear more about that longer-term game plan.
We’ll learn a lot about that in 2019. Hill: Matty, what about you?
Argersinger: It’s always interesting, but I think especially so this year,
I’m going to be watching the social network, social media space. We’re already seeing for the
first time ever a real, legitimate slowdown in user growth and usage rates,
especially if you look at the core Facebook platform. My questions are, how does Facebook,
how does Twitter, how do these companies solve for all the privacy risks that people seem to
be somehow aware of these days that they weren’t aware of years before? How do they prevent
all the vile and deceptive behavior without damaging free speech and freedom of expression
on the platforms? These are big challenges. Throwing money and bodies as we’ve seen
Facebook do, I’m not sure that’s going to solve it. It’s going to take a lot of innovation.
I don’t doubt Facebook and Twitter can do it, but I think there’s a real chance we actually
see a tipping point in 2019 where the powerful network effect that has sucked in so many
users over the years to these platforms starts to weaken, and we start to see meaningful
declines in time spent on the platforms. I think it’ll cause a reset of the businesses.
Hill: In terms of trends, Aaron, what’s got you excited in 2019?
Bush: Augmented reality. I think it’s been a long time since we’ve had a big new
consumer-facing technology to invest in. I have a hunch that AR, and probably VR associated with it,
is going to be one of the next big waves, even though some of the hype around it seems to
have fizzled out. I might be off by one year, but 2019 could be the year in which good AR
products are revealed by at least one major tech company, probably Apple. For Apple,
it makes sense. They’ve been acquiring companies with AR tech since 2013. They released their
AR kit, their developer toolkit in late 2017. They have all the pieces in place, controlling
the hardware and the software, plus the developer community to make it happen. They probably
recognize that winning over the AR market might be as big of a deal one
day as winning the smartphone wars was. I’m a bit iffy on timing, but I’m really
excited to see the pieces start to come together. You never know, Apple might have a big AR
glasses or something announcement and late 2019. Argersinger: So, you’re saying Apple has a chance?
Bush: I’m saying that they need to do this. Technology is going to shift past smartphones.
Services won’t be enough. Fingers crossed. Hill: The cash that Apple has on the balance sheet,
that probably also helps them sleep at night. Argersinger: It helps a little bit.
Hill: In terms of trends, Matty, what about you? Argersinger: Big trend this year, the past
year already but even bigger now this year, sports betting taking off. I’ve been known
to place a bet or two in my time. I think there are broader implications for the economy.
The world is far more efficient, far more innovative when it becomes gamified. A competitive
marketplace of ideas and dollars that are wagered, inefficiencies tend to get streamlined out. It’s interesting. If you go back to this fall,
you could place real money on which party was going to lead the House of Representatives
after the November election. You could have placed money on where Amazon was going to
open its second headquarters. We talked about that on the show. Imagine betting on things
like what the weather is going to be like tomorrow, who’s going to succeed Warren Buffett
as CEO of Berkshire Hathaway, what’s the over and under on the minutes it’s going to take
for Domino’s to deliver my pizza. These might seem like silly things to bet on,
but when you’re wagering real dollars at scale, it tends to be incredibly informative to the
marketplace. It makes the economy more efficient. I’m excited about all the innovations that
I think are going to come out of sports betting, especially when it becomes
so much more of a mobile application. Hill: One of the ripple effects that we saw
in 2018 in terms of sports betting and the legalization played out in media. In the subsequent
months, pretty much every major network, both on the regional level and on the national
level, started to roll out programming aimed specifically at betting.
Argersinger: Absolutely. You see it all the time now. Hill: Aaron Bush, what is a stock — or an industry; you can go broad if you want —
in terms of upside for investors? Let’s face it, it’s been a volatile couple of months
here. We’re looking for some upside. What do you have?
Bush: I’m going to go big and then narrow down. Software-as-a-service. The past two years have
been huge for emerging software companies. But I do think this is an instance
in which winners will keep on winning, and a lot of these stocks have
been beaten down in the recent turmoil, too. Unlike the consumer-facing innovation, which is occurring mainly in startups
and the massive tech companies, there are tons of great options to invest in small
and mid-cap software companies with lots of room to multiply. Some of these will turn into
the next Oracle or Salesforce. A basket of three stocks that I have super high conviction
in that I think will do well in 2019, definitely beyond: Twilio, which is a leading communications
platform; Alteryx, which is a leading data blending and analytics platform; and MongoDB,
which is a next-gen database services company. All of these companies are growing super-fast, are
dominant in what they do, have very little competition. At scale, they’re going to be
producing ridiculous amounts of cash flow. I’m super excited to see what these companies do,
even though they’ve already been hyped in the past years.
Hill: Also, a fun basket of names. It’s fun to say Twilio. What about you, Matt?
Argersinger: I’m going to jump way out and talk about an entire sector. Real estate
has really underperformed recently thanks to, as you’d expect, higher interest rates.
Homebuilders especially have been really hit hard. But the sector itself is what you want
to have some exposure to over the next few years. Despite what the conventional thinking
might be, real estate actually does quite well in periods of higher interest rates,
higher inflation. One safe, cheap way to play it is to buy the Vanguard Real Estate ETF,
ticker VNQ. It pays a nice 4% dividend yield, gives you a broad exposure to a bunch of publicly
traded real estate companies and REITs. I think it has a real chance of
outperforming the S&P over the next few years. Hill: On the other side of the spectrum,
it can be a stock to avoid, or maybe just one to have on a really short leash. In terms
of that category, Aaron, where are you? Bush: I think the marijuana industry is
super interesting, but it was so hyped in 2018, I think 2019 is going to bring disaster to
investors investing for the most part in that industry, but especially in the companies
that were the most hyped, like Canopy Growth, Tilray, Aurora Cannabis. If you’re investing
in those, watch out, 2019 is almost definitely going to be a rough year.
Argersinger: It was funny, Aaron and I talked back in the fall. We both said, watch out.
As soon as cannabis gets legalized in Canada, which was mid-October, you could almost draw
a straight line from that point on. That was the peak of a lot of these stocks.
They’re down huge since then, even more so than the market we’ve seen. It’s funny, it was one
of the easiest calls I think you could have made. And it still has more to go.
Hill: It was interesting in part because it wasn’t just individual investors who were
excited about this. We saw major companies, consumer brands that everybody knows,
investing hundreds of millions, and in some cases billions of dollars.
Argersinger: Coke, Philip Morris. Amazing. Hill: What do you have on a short leash?
Argersinger: You can probably guess. I’m going to say Facebook needs to be kept on
a short leash, if not avoided altogether. All the problems I mentioned regarding the social
networking space… the stock price looks cheap. You can call it that. If you assume
that they’re going to continue to grow their advertising revenue at a similar pace,
or even slightly slower pace, yes, the stock looks very, very compelling. I just think
there’s going to be a big reset in expectations across the space. I have big questions about
whether Facebook can effectively monetize Instagram and WhatsApp without damaging
user experience. And I’m not even getting into the leadership questions you have to have right now
around Mark Zuckerberg and Sheryl Sandberg. I just think you can do better elsewhere.
Don’t try to catch Facebook, even though it’s a snazzy name with now a cheap valuation.
Hill: This happens at this time every year: investors and particularly the business media
start to look ahead in terms of private companies going public. Despite the volatility that
we’ve seen recently, you’ve got executives on Wall Street saying, “Actually, that might
accelerate plans for private companies to go public.” In 2019, some of the best-known
names, Aaron — Uber, Slack, Airbnb, Lyft. Is there one that you’re either really hoping
goes public, or you’re just eager to get your hands on the S-1 filing?
Bush: I hope Stripe goes public sooner or later. It might not IPO this year.
They’re a payment platform that makes it super easy for companies to sell things online.
Their developer tools are known to be excellent. They continue to roll out new solutions.
The founder and CEO, Patrick Collison, seems to be a super thoughtful. It wouldn’t surprise
me if one day, because this market is so big, buying things online, that Stripe becomes
a larger payments company than PayPal. I think that’s super fascinating. Right now,
they have a market cap of about $20 billion, so I would love for them to go public sooner
than later, [laughs] before they start hitting the upper tens of billions in their valuation.
Hill: Do you think they’re at the point now where they’re way past the acquisition standpoint?
Bush: It would be a big acquisition. I doubt it would happen, at least from another
payments company. I bet they’ll go solo public. Hill: Matty, what are you eager
to get your hands on? Argersinger: You mentioned it, Airbnb.
My wife and I have actually been Airbnb hosts for over a decade now. What you have is essentially the
world’s largest, most expansive hotel company that really doesn’t own any of its rooms.
It’s fascinating to me. It has somewhere on the order of five million listings,
150 million users in close to 200 countries. It has a profound network effect, maybe
actually the strongest in the world. I think we’re going to realize that. I don’t know what the
market cap is going to be when it becomes public, but just in terms of room count and
customer count, it’s bigger than all the major publicly traded hotel companies combined.
Hill: OK, I really wasn’t expecting that at the end. I’m assuming the answer is yes. Do you
have a good rating? What kind of rating do you have. Argersinger: We have
almost a five-star rating across our listings.
Hill: Nice! I’m not surprised, but I’m very pleased for you. Alright, we’ve got just
a couple of minutes left before we wrap up. We do this every year, reckless predictions.
Make them reckless. They don’t have to be about business, although they can be about
business. You can go off the board to sports, pop culture, whatever.
Aaron, what do you have? Bush: Even though the Chinese trade wars and economic
slowdowns will continue to generate headlines, I predict that in 2019, we’ll see the
largest technology acquisition in which a Chinese company buys a U.S. company.
I don’t know if that’s Tencent buying one of the big three video game companies, maybe Alibaba
acquires eBay as a way to get into U.S. e-commerce. Maybe DiDi, which is larger than Uber at their
last valuation, acquires Lyft as a way to get to the U.S. markets and get a partnership with
Waymo. I don’t know. There are interesting possibilities. Hill: That would be fascinating! Matty, what about you?
Argersinger: I think Warren Buffett’s going to buy an airline.
Hill: [laughs] Really? Argersinger: Berkshire Hathaway already
owns major stakes in all the major U.S. airlines. The industry has changed. Consolidation has
made this much more a value creator than a value destroyer. You have a strong airline
like Delta that’s actually been assigned an investment grade credit rating. It’s buying
back shares and paying a dividend, and the valuation is very cheap. This is a different
industry now. Much like how Buffett viewed the railroads 10 or 15 years ago, I think
he views the same with airlines today. Hill: That would be maybe the greatest example
of someone taking emotion out of investing, when you think back on how much Buffett used
to openly hate the airlines as an industry. Argersinger: Oh, absolutely!
Hill: Alright, Matt Argersinger, Aaron Bush, guys, thanks for being here! Happy New Year!
Coming up: our 2019 preview rolls on with Ron Gross and Jason Moser.
Thanks for being here, gents! Ron Gross: How are you doing, Chris?
Hill: I’m doing well! The 2019 preview rolls on. Real quick, though. We talked about Apple
at the top of the show. Jason, any thoughts in terms of one of the largest companies
in America and where it is right now? Jason Moser: As Aaron was saying, I’m really
surprised that people are surprised by this. It’s not something that I’m all that taken
back by. In November, we were talking about Apple’s chip suppliers ratcheting back
their guidance, which was more or less implying that there may be some weakness in iPhone
performance like we’re seeing. Granted, they seem to be holding China accountable for
most of this. But it all makes total sense. As iPhones get better, they last longer,
you don’t have to upgrade as much. They can only raise prices so far until consumers become
a little bit more sensitive. Everybody wants to just get on Apple’s case here and predict
that this may be the beginning of the end. But let’s be clear, it’s still Apple.
They’re still selling millions upon millions of devices. They lost control of the conversation a little
bit because they’re not going to be announcing those unit sales anymore. But there are a
number of different ways they can win. It’s not going to be just Services. Services will
have to be part of it. But when you look at Services, other devices, the portfolio of
wearables, you can’t discount the potential big acquisition at some point or another,
either, with that balance sheet. iT’s all like just take a step back here…
Gross: I’m all for the take-a-step-back approach. I think that makes good sense.
I’m going to be really curious to see if Warren Buffett and Berkshire Hathaway are buying
stock during this period of weakness. I would be one of those analysts that would recommend
that investors take a position at these levels. 11X-12X forward earnings, there’s not a lot
of growth built into the stock at this price, and they’ve got a lot of ways they can win.
Moser: And let’s remember, too, we have a whole generation of smartphone users that
haven’t bought smartphones yet. There are going to be plenty of opportunities to get
new smartphones in new consumers’ hands, and there’s a brand loyalty
there that’s quite impressive. Hill: Ron, let’s get to the preview.
When you think about 2019, what’s your biggest question as an investor?
Gross: My biggest question is, will value investing rise from the dead? As most of us
are aware, growth has nicely outperformed value over the last, let’s call it a decade.
Not just a few months here and there, but quite a few years. FAANG stocks are perhaps
the most obvious examples of growth stocks that have led the way. Obviously, we’ve had
an extended bull market. That tends to favor growth stocks. So, my big question is,
do we see a resurgence of interest in stocks that are considered value? Growth often does
underperform in bear markets. If, perhaps, we are entering a bear market, are we going
to see a sustained bear market, then one would expect value to come back into vogue.
But, you know what? We haven’t seen it anytime in recent past.
Hill: What about you, Jason? Moser: We’ve talked a lot about Disney and
their move to over-the-top distribution. They own part of Hulu, which I think they’ve done
a good job building out, especially with that live Hulu offering. ESPN+ seems like it’s
gaining some traction. And now, Disney+ is going to be their service that launches sometime
in 2019. We talked before on the shows, they really need to make sure they execute there.
I do think that’s a compelling product. It’s going to take a lot of content away from other
streaming partners, namely Netflix. I find it interesting to see that the shows on Netflix
that garner the most views as a percentage are all shows that are not Netflix shows.
I think that’s telling. Netflix is still having to put up a lot of money to get content that
people want to see, and Netflix is not the one producing that content. They still, have
a little ways to go in succeeding on that original content front to justify all of that
money that they’re spending. I think that Disney+ is going to re-emphasize the
competitive advantage that they have there in that intellectual property. I’m excited to see how that product
arrives. I’m certain that we will at least be testing it in our house, if not becoming
full-fledged subscribers, unless they really drop the ball.
Hill: Wasn’t there a minor freak-out in the Netflix universe when they said they weren’t
going to renew the show Friends? Moser: Yeah.
Gross: In my household, for sure. Moser: That is something that they need to
pay attention to. As a percentage of views, Friends is No. 2 on the list just behind
The Office. When you look at that list of the shows that are garnering the most views
on Netflix, it takes you back, not a lot of their original content is on that list. It just
tells you they still have a little ways to go. Hill: What’s a trend you’re excited about this year, Ron?
Gross: It piggybacks off of what Jason was just discussing. 5G technology, fifth generation
wireless cellular technology, is coming, and it’s coming pretty quickly. It’s going to
be pretty exciting. It’s going to make devices more capable of accessing the internet,
it’s going to deliver much faster speed than 4G, some say 20X-100X faster than 4G.
Lots of companies are going to benefit here. The most common names would be AT&T, Verizon,
T-Mobile. But I think Nokia, even Apple will benefit as people upgrade to 5G-enabled phones.
It’s going to be a really exciting trend to watch from an investment perspective, but also from
a consumer perspective, because I think we’ll all benefit. Moser: I’m glad you mentioned Apple there. That’s another point with 5G. I think they’re
going to be a little bit behind others in getting their devices up to speed. But once
that does happen, that’s going to be another catalyst there in the upgrading.
For me, I’m excited about podcasts and where podcasts are heading.
Gross: Shameless plug! Moser: I’m not going to just pat ourselves
on the back here too much, but it’s worth noting that you and Mac and our partners here,
you had the senses to make some early bets in this market back in 2010 and 2011.
And lo and behold, now, in 2019, we’ve got a full-fledged family of podcasts. They’re doing
very well. We’ve seen Sirius XM acquire Pandora, noting in their call that, to their dismay,
they passed on podcasts for a while. They admitted that mistake, and they’re going to
start putting some resources into podcasts and building out that environment.
I think we’re in a day and age now where Netflix really changed the game for content for people
being able to watch what they want, when they want, and where they want. Now, we’re seeing
the same thing play out on the audio side. We’re able to give people what they want,
where they want it, when they want it. It’s nice to be a part of it.
Hill: Let’s talk stocks. Ron, whether it’s an industry or a specific stock,
what do you think is poised for upside this year? Gross: An industry I’m looking at,
it’s a sector/ industry. I’m not ready to call the big r-word yet, recession.
I’m not freaking people out yet. Hill: You are a little bit, by saying that.
Gross: I think it’s important to have some allocation to some defensive stocks in the
environment that we may be approaching. So, when I think of companies in those sectors,
I would say some utilities might be a good bet right here. Some of the discounters,
in fact, discount retailers. Costco, Dollar Tree, Walmart would be some nice stocks, defensive
stocks to have as we enter an economy that might not be as robust as it has been.
Hill: What about you, Jason? Moser: I don’t want to time when a recession
might hit, because really, that’s bad for everybody, but I do think we are entering
a period where banks are going to have some opportunities to boost their earnings a little
bit as interest rates continue to nudge upward. In particular, I’m looking more at small banks,
and one we’ve talked about before, Ameris Bancorp. This stock has a tremendous
risk-reward scenario playing out here. The stock is now trading around 15X earnings.
They recently announced this merger with Fidelity Bank in Georgia. It’s about a $750 million deal.
Given that Ameris is about a $1.5 billion company, you can see, it means a lot.
The market rightly sold the stock off. There’s some skepticism there. That’s rolling in a
big acquisition. But they’re two very similar cultures. It gives Ameris tremendous exposure
to the valuable Atlanta market. It’s also going to help grow that asset and
deposit base, particularly in a period where a lot of these banks are competing for getting those
deposit bases. So, to me, this could play out like the McCormick thing. Remember when
McCormick acquired RB Foods? The market thought, “Whoa, this is a big one to digest here,”
and they held off for a couple of quarters to see how things worked out. Lo and behold,
it worked out pretty well. The stock recovered nicely. I think we could be looking at the
same thing here with Ameris if they execute this acquisition well.
Hill: Ron, if defensive stocks have you interested, what’s at the other end of the spectrum?
What are you avoiding this year? Gross: Specifically, I have one stock
in mind. I come back to it often. It’s Fitbit. I’ve really never been excited and probably
will never be excited about this one. They entered the smartwatch market in 2018.
I give it to them, they’ve done pretty well. But this is a formidably competitive market,
with the likes of Apple, for one, right there behind them. You even have some Chinese upstarts
that could be a problem, as well. I don’t see Fitbit being the company that is constantly
able to innovate, either take market share or defend market share.
I’d be really careful about this one. Hill: What about you, Jason?
Moser: Zillow. I’ve changed my tone on this company over the past year. I used to be excited
about the potential there. I feel like they’ve failed to convince me of the sustainability here.
They’re yet to become meaningfully profitable at all. Now, in this most recent quarter,
they put in their shareholder letter that Zillow Group has entered a period of
transformational innovation. To me, that’s code for, “We’re not going to be profitable any time soon.”
For a company like this, a company that’s been around for a while in such a big market
opportunity as our housing market, they should not be entering this period. They should be
coming out of this period. I think that’s what they were trying to do over these past
few years. This instant offers business, it’s not up their alley. Buying homes and renovating
them and selling them, it’s not scalable. There are a lot of people out there doing it.
I don’t know that they have any real advantage there. Good will now represents essentially
half of the total assets on the balance sheet. It’s not a bad company. I’m just disappointed
in the way they’ve executed. They still have a ways to go before they
get to meaningful profitability. Hill: One of the things that ties these two
businesses together, Fitbit and Zillow, is the word “optionality” has been used in connection
to both of these businesses. They were seen as, “They have options, in terms of where
they can go.” Optionality is something we like to see as investors, but Ron, it almost
seems like optionality works better if you’ve got one dependable cash cow in your portfolio.
Gross: You nailed it. Optionality is great for additional upside. Maybe you can’t even
see the different options that a company might have three to five years down the road.
But if they don’t have that profitable cash flow producing segment of the company, then you’re
relying on all of the value of that company being in the optionality category,
and that’s just too much risk for me. Hill: Guys, 2019 has just begun,
but The Motley Fool is already looking for summer interns in investing, editorial, software development,
and much more. Come, spend the summer! Gross: Join us!
Hill: Join us here at Fool global headquarters this summer. Go to careers.fool.com for all
the information and to apply to be a summer intern here. That’s careers.fool.com.
Happens every year, Jason. There are a few CEOs who are on the hot seat. We’re long-term
investors, but let’s face it: over the long-term, if you’re not delivering, that means in the
short-term, you’re on the hot seat. What do you have? Moser: In 2018, I certainly had Kevin Plank of Under Armour on the hot seat.
He’s not off yet. I’m calling him out again. While we are seeing signs that he is embracing relying
more on his team, particularly the CFO and COO of the company, Frisk and Bergman,
when you look at the expectations we’ve had for this business over the course of the last
several years, as it’s been a recommendation in a number of our services, this has been a phenomenal
disappointment. The real disappointing part there is, they were essentially self-inflicted.
They just made some dumb investments for the sake of growing as opposed to making good
strategic decisions and letting the growth come from making good decisions.
I think he’s on the right track. We need to make sure that team stays intact here.
If we see that CFO or COO leave, we have a really big problem. But at this point, with the market
seeming like it wants to recover, if we don’t have a recession, this is a company that should
be performing a lot better than it is today. Hill: What about you, Ron?
Gross: I think Wells Fargo’s CEO, Timothy Sloan, probably should go. He was probably
the wrong choice from the get go, as he’s been at the company during all of the controversies.
Having taken over the CEO role in 2016, he’s really not done anything to turn the tide.
From an operations perspective, the company’s not really doing very well. From a controversy
perspective, as well, things don’t seem to be getting better. I think it’s time for some
outside blood to come in and right the ship. Hill: I think back to last year’s show.
I mentioned that John Flannery, who was CEO of General Electric at the time, I mentioned
that he was certainly a CEO to watch because I thought he was laying all his cards on
the table. I thought, “Boy, this is going to be a really interesting company to watch.”
In hindsight, I probably should have said he was on the hot seat. I didn’t think he was
on the hot seat! Then he didn’t make it to the end of the year.
Gross: That’s how it goes! Hill: As I talked about with Matt Argersinger
and Aaron Bush, it’s interesting to see not only the companies being named in the private
market as potential IPOs this year, but the possibility that the recent volatility we’ve
seen might accelerate those IPOs in the first six months of 2019. Whether it’s the S-1 that
you’re eager to look at, or a company where you just think, “I want this thing to go public
now so I can get a few shares,” what’s on your radar, Jason?
Moser: One that probably a lot of people are thinking won’t end up by IPO-ing. I hope
it does. SpaceX, Elon Musk’s rocket company. They’re set to raise $500 million at a
$30.5 billion valuation shortly. To me, space is one of these markets, one of these trends
that’s going to open up a lot of fascinating investment opportunities over the course of
the next decade and beyond. I think SpaceX is going to be a part of that.
One thing that SpaceX is doing today is this project called Starlink. Essentially,
the idea is looking to build out a constellation of satellites all over the globe in low orbit
that will basically be able to beam high speed internet connection to every corner of
the globe. It seems like he’s getting buy-in from all the regulators. We’ve seen what he’s been
able to do here in the rocket launches that have taken place thus far.
I think this is a fascinating company. It’s going to offer a lot of opportunities.
If we do get a chance to see it go public, I more than likely would want to own a few shares
just to be a part of it. But, I’d really want to read that S-1. Hill: Do you think Tesla shareholders are eager for the prospect of Elon Musk at the
helm of yet another public company? Moser: Maybe we save
that for another show. [laughs] Hill: Ron, what about you?
Gross: A favorite company in my household is fast casual Mediterranean restaurant Cava.
They recently acquired publicly traded Zoës Kitchen. I’ll give them a little time to digest
that acquisition, decide what they want to do with all the Zoës locations. But then,
let’s take the whole darn thing public. Some great capital that they can use for growth
to take the world by storm and expand the concept. Hill: Have they given any more color on what they plan to do with those locations? I remember,
we talked about that acquisition on this show. The only thing that surprised me was the fact
that they seem like, “No, we’re not necessarily going to turn these all into Cavas.”
I think our general reaction was, why not? Gross: I’ve seen more along the lines of
making some menu changes, changes to the way the kitchen operates to be more efficient
and have offerings that are more appealing to the consumer.
Hill: Alright, just a couple of minutes left. Reckless predictions for 2019.
What do you have, Jason? Moser: I was thinking about going with the
Red Sox repeating as World Series champions. Then I thought about it, that’s not that
far-fetched, really. I’m calling it, they’re going to repeat. That’s not my reckless prediction.
I’ll go with a more business-related story here. I was talking earlier about the potential
acquisitions that Apple could be looking at here. What would stop them from wanting to
acquire Square. You want to look at expanding your business and becoming a little bit more
of an integral part of the commerce scene here, not only domestically, but globally.
I think Square and Apple have a lot in common. They’re both in the business of developing
sleek hardware that people like to use, generating some pretty strong brand loyalty there.
Then, we know, of course, the payments space is one that’s growing very quickly.
I’m not saying it’ll happen, but it’s certainly an acquisition that Apple would
be capable of executing. Maybe it will happen. Hill: Ron?
Gross: I went a little off the rails here. There’s going to be more definitive signs
of previous life discovered on Mars in 2019. That’s going to build off of the work done
by the Mars Curiosity Rover that, earlier in 2018, found some organic molecules.
We’ll figure out where those actually came from and build on that. There aren’t going to be
any signs of actual Martians running around Hill: Or will there?
Gross: — but I think we’re going to see signs of some previous life. Moser: Alright, reckless prediction No. 2:
Ron Gross and Jason Moser will be heading up the new Motley Fool Space Investing
service to launch either late 2019 or 2020. Gross: [laughs] Sell that short.
Hill: I’m just going to say that regardless of where free agent Bryce Harper ends up,
the Washington Nationals are going to the World Series. Moser: Wow! That is reckless! Gross: I’ll take that bet.
Hill: Ron Gross, Jason Moser, guys, thanks for being here! That’s going to do it for
this week’s edition of Motley Fool Money. Our engineer is Dan Boyd. Producer Mac Greer
on a well-deserved vacation this week. I’m Chris Hill. Thanks for listening!
We’ll see you next week!
Subscribe Intellectual Indies and press the bell icon and never miss any update In a video, we talked about marketing mix First P of marketing mix is Product,so today we will talk about product mix Now what is Product Mix? Lets take Apple What all products do they have? iPhone,iPad,mac air,mac book pro and many others So these individuals are known as product line. More the number of product lines is called width Lets say my product width is 10 so I have 10 product lines Now one question is how will we differentiate various product lines? say of iPhone1,2,5S,6 All these are coming under same product line or no? Thats the biggest confusion All these are coming under 1 product line Lets take a product line which is similar in nature i.e giving similar things If I want to talk on phone then providing me that,catering similar needs Consumer wants to talk in phone,so the thing thats completing that need comes under a product line So all the iPhones are part of 1 product line So all the iPhone 1,2,3..10 etc,we call this as length,length of product line Now one more thing is there,depth..whats that? iPhone 6 comes under variants like 16GB,32,64 and so on Some special edition like colors and all..so that comes under depth We have confusion whether it will come under line or depth..so if it is fulfilling same need and are related then will come under depth LEts take motorola. all their comes under same product line? Moto E,C,Z,X..they have many categories like this So all these are coming under same product line or no? Tell me Tell me in comments..some must be saying under same and some no Now take moto c it is capturing different target audience z is capturing different..so we can put them in different product lines
Hey who’s the big-shot? Richard Rouse. VP of finance? He’s in from New York. Excuse me, I need a PC to run this on, is
there one I can use? Yes sir, you can use mine. Uhhh, no, I said a PC. This is a Windows disk. Yeah, you can run that on here. Hmm, I didn’t think this was a serious business
computer. Does that help?
Open the pod bay doors, HAL. I’m sorry Dave,
I’m afraid I can’t do that. Back during the 1960s, 70s, and 80s we were
mesmerized by computerized voices in our movies and television shows. Negative, a close copy.
No alternative possible, Master. I’m sorry Michael, but I can’t do that. No good, I’ve
got three. Warp energy has increased 14 oercent. There’s only one problem. They were all
a lie. None of these were actual computer voices. Even the movie war-games, with it’s
very convincing sounding computer, wasn’t actually real either. Shall we play a game?
If you are wondering why it sounds so artificial, what they did was have the actor read the
words in reverse. So, for example, instead of saying “would
you like to play a game of chess?” They had the actor read it like this, “Chess
of game a play to like you would?” I’ll use Audacity to illustrate what they did.
They cut the individual words out like this, and re-arranged them in the correct order.
would you like to play a game of chess? I think they also changed the pitch some, so
we’ll do that too. would you like to play a game of chess? And then, they probably added
some sort of effect, I’ll play with one here and see what I can get. would you like
to play a game of chess? So, anyway, that’s roughly how it was done. Now, why they didn’t just use a real speech
synthesizer, I have no idea. I mean, speech synthesizers did exist at that time. Being
the movie was made in 1983 however, it was probably in pre-production for a year or two
before that, so speech synthesizers, while they did exist, they weren’t terribly common
at the time, so who knows? Of course, there have been devices such as
talking dolls since Edison’s first model that came out in 1890. These essentially had
a miniature phonograph inside of them such as this one shown in Get Smart back in 1969.
My name is Mary Lou. Or better yet, the miniature Yogurt doll from SpaceBalls. May the Schwartz
be with you. These actually worked very similar to another device, the popular See N Say by
Mattel. The cow says moooo. The original model used a type of internal
phonograph as well. The design of these is quite interesting. I’ve taken this one apart
so you can see how it works. Everything fits inside of this mechanism here. Let me show
you what we’re actually looking at there. This is the actual record, which is made of
plastic. And this part here is the tone arm, and you can see the stylus, which is very
dirty at the moment, is slightly lifted from the record. This part here is a rudimentary
speaker. And it amplifies vibrations by staying in contact with the tone arm. So, let’s
show it in action. The cow says moooo. Now, you may notice that each time a track
is played, the stylus travels all the way across the record. So you may be wondering
how there is room for multiple sounds. Well, here’s how that works. Normally, you think of a vinyl album and it
has different songs and you can essentially see the divisions between those songs. But
the See N Say works very different. The tracks are all wound together like this. If you look
at the outer edge of the record closely, you’ll be able to see different entry point grooves.
Each one of these is the start of a specific track. And so, by pointing the arrow at the
sound you want to hear, it will align it with the entry groove of that track. Neat, huh?
Oh, and by the way, you can actually play sounds on this thing with just these two parts,
but it takes practice. So what about those talking cars of the 1980s?
Don’t forget your keys. Well, you might be tempted to think these are computerized
synthesizers, but they aren’t. Murilee Martin from Autoweek recently took one of the speech
boxes apart and showed that they were actually little phonographs that work extremely similar
to a See N Say. Parking brake is on. The only real difference is that the amplifier is electronic
instead of mechanical. They even have the same little selection of entry grooves to
pick which sound it needs to play. So, these aren’t real speech synthesizers either. So, what about these early computer games
that incorporated speech into them? Ghostbusters! These games were extremely impressive in the
early 1980s. And as cool as they were, they were not real speech synthesizers either.
These games are simply using digitized recordings of speech. I mean, These sounds could just
have easily been dogs barking or cats meowing, or any other sounds. So in essence, these
games used the digital equivalent of a See N Say. Hence, they’d never be able to say
anything other than what was pre-recorded for them. The Speak and Spell was one of the first consumer
devices that started to cross the line into actual speech synthesis. E A R N. That is
correct. Now spell one as in one word. But I hesitate to call the Speak and Spell
a true speech synthesizer, because it really only knows about a little over 200 words and
those words are all pre-recorded. So, in essence it’s like a See N Say that just happens
to know 200 some odd words. In fact, if you wanted to add more words to
your Speak and Spell, it was necessary to buy new vocabulary cartridges, which had additional
recorded sounds on ROM. These could be inserted through the battery compartment. Nevertheless,
having appeared on the market in 1978, it was one of the first talking electronic devices
to reach the consumer market. However, the Speak and Math starts to blur the lines. The
reason is, it can pronounce any number imaginable because it has recorded all of the sounds
that make up numbers. That’s correct! Now try forty five thousand eight hundred three.
So, to say a word like 45 thousand 8 hundred 3, there are 6 separate sounds that have been
recorded to make this phrase. And so, if you wanted to change it to 46 thousand 8 hundred
and 3, then you just replace one sound. This is very similar to how the Radio Shack
VoxClock works. It only has a few dozen pre-recorded sounds and it mixes and matches them to produce
the time. It’s five seventeen PM. Also similar is the Tel Star answering system
from around the same time period. The time is eleven forty two AM, March nineteen. Next, I want to show you the Commodore Magic
Voice speech cartridge. On the side it has an audio in and audio out. It just plugs into
your C64 like so, and all you would need to do is run an audio cable out to an amplifier,
or in my case the television I’m using. Of course, if you wanted to still hear the
internal sounds from the Commodore 64, then you would run that into the audio input like
so. Then, you just fire up the C64. And you can use the say command to type something
like this. Commodore! Or this. Computer! But it’s kind of limited
and you can only say one word at a time. So, to say something more complex, you could write
it as a BASIC program. Commodore Computer. But, what if I try something like this. As
you can see, it doesn’t work. Believe it or not, the Magic Voice cartridge is not a
true speech synthesizer. It has a list of 234 pre-recorded words that it can say. In
fact, if you give it a number it will say the word that corresponds with that number.
Control! In fact, I’ll demonstrate this further by writing a little BASIC program
that says all words between 100 and 200. Find! Get! Have! Hear! Help! IS! Know! Like! Presents! So, the Magic Voice cartridge is also just
a digital equivalent of a See n Say, that just happens to know 234 words. The rooster
Says, “cockadoodledoo!” Fortunately, other software can add new phrases to it. For example,
the cartridge game GORF adds additional phrases that are used with the game. I’ll just plug
it into the little passthrough connector here, and let’s check it out. Commodore presents
Gorf, a Bally/Midway game. As you play the game, the enemy will taunt
you with insults, among other information. Ha! Ha! Ha! Gorfian robots attack! attack!
It’s a neat gimmick, but doesn’t really add much to the game in my opinion. In fact,
very few games support this. Mattel also introduced a very similar device
for it’s Intellivision gaming console around the same time. It’s called the Intellivoice.
One side plugs into the game console, and the other end is where you put the game cartridge.
On the front is a volume control for the voice. There were only a total of 5 games that ever
supported it, and I have 3 of them right here. Now, these games will work without the intellivoice,
but they just won’t have any speech. So, let’s try this thing out. The first game
I’ll try is Bomb Squad. Let’s power it on. Mattel Electronics presents Bomb Squad!
They’ll never do it in time! The code! The code! Figure out the code! It won’t be easy.
Replace this first, this third, this second. Mattel electronics presents Tron. OK, let’s try out Tron Solar Sailer instead.
7 4 7 8 2 Energy High. Again, the speech is a nice gimmick, but isn’t really all that
useful. It’s not surprising that the product was considered a flop. So, up to this point, everything I have shown
you have been devices that, while they can speak, they are really only playing back select
pre-recorded sounds. So, they are pretty limited in the things that they can say. Now I want
to show you some true speech synthesizers. These devices can actually create words out
of allophones, which are basically the fundamental building blocks of speech such as vowels,
and consonants and some of the other sounds that we make when we talk. The first one I want to show you is the Currah
speech 64 cartridge for the Commodore 64. This was also marketed under the name of voice
messenger. Now you may notice this DIN cable hanging out the side. Let me show you how
this works. The cartridge plugs in like any other, but then this part plugs into the monitor
port on the C64. It’s actually making use of the seldom-used audio-input line on the
Commodore 64. This allows audio to pass through the sound chip and back out, at the same time
mixing the sound with the internal sound. Of course, most Commodore users back then
were actually using a television for a display, so this was actually a pretty elegant design. It was supposed to come with a breakout cable
if you were using the cartridge with a monitor. Mine didn’t come with it, so I will make
my own so that I’ll be able to get some clear recordings of it. OK, so when you power on your C64, you’ll
need to type INIT. Return! And at this point, it will literally tell you every key you are
pressing on the keyboard, A B C D E F G Return!, which is sort of annoying. However, you can
tell it to say a word. Return, hello! If you get tired of hearing every key press, you
can type KOFF to turn the keyboard speech off. K O F F Return Now, here’s where things
get interesting. Hello Not only can I say a single word. But I can type literally anything
inside these quotes and it will say it. Hello there, how are you doing? Of course, it works off of English spelling
rules, which to say the least aren’t very consistent. So it isn’t perfect. Let me
give you an example. Harry Potter. Ok, it gets pretty close on that. But let’s try
Hermione Granger. Hermione Granger. Yeah, it totally fails on that one.
You can also change to different voices by putting a 0 or a 1 in front of the sentence
to be spoken. So here’s voice zero. This is voice zero. And you’ve already heard
voice 1, which is the default. This is voice one. Next, I want to show you the speech sound
program pack for the Tandy color computer. This cartridge contains not only a speech
synthesizer, but also a slightly better sound chip for the CoCo. So, let’s pop this in
there. So, on boot up the computer doesn’t really
do anything different. There are no SAY commands in BASIC or anything like that. Fortunately,
mine has the users manual with it. It looks like if I want to test the speech, I’ll
have to type this little program in. Oh the joys of typing in BASIC programs from a book. OK, all done, now let’s test it out. Test. It works! This is a Tandy. So, as you can see this is a true speech synthesizer
that can say anything you type. Of course, just like the others, certain words will throw
it for a loop. Hermione Granger. However, you can always get around this by typing in
the correct sounds, like this. Hermione Granger. OK, I have another type speech synthesizer
to show you. This is called SAM. It’s a software-only speech program that was made
for the Commodore 64, Atari, and Apple 2 computers. This particular disk is for the Commodore
64, so I’ll put it in and load it up. So, first you have to load the actual speech part
into RAM, and then you load a small interface program. This was done so that you could use
SAM with other programs if you wanted. OK, let’s see what it sounds like. This
is a test. Let’s try some other things. I love the Commodore 64. SAM is a true speech
synthesizer as it can say anything you throw at it. I can say anything you want. Of course,
with certain limitations. Harry Potter. Again, you can’t expect a computer with 64K of
RAM to have a database of every possible English word, so it has to make some assumptions.
Hermione Granger. But, again, you can get around this by tweaking the spelling of the
words so that you get the pronunciation that you want. Hermione Granger. SAM was also very configurable. You could
change all sorts of aspects of the voice. So, here’s a higher pitch. I love the Commodore
64 And here’s me changing the mouth variable. I love the Commodore 64. So, you might ask, if you could do true speech
synthesis completely with software, then why did these cartridges exist? Well, one thing
you might notice is that every time you tell SAM to say something, it causes the screen
to blank because it requires every cycle of the CPU to produce the sound. So there’s
no time for the CPU to do anything else. In fact, even when you look at games that used
speech, typically the entire game comes to a halt while the speech occurs. On the other
hand, when you have a speech synthesizer cartridge, it can handle the work of producing sound,
while the computer can keep doing other things. Another enemy ship destroyed. Ha! Ha! Ha! By the way, it’s worth mentioning that SAM
has been reverse engineered and reprogrammed as a website you can use now. So it’s really
easy to try it out. Yes, I sound just like the Commodore 64 version. So what were the practical uses for speech
synthesis? Well, when we were 10 year old kids, probably the favorite thing that we
liked to do with them was to make the computer say all kinds of filthy curse words. And yes,
programs like SAM, they could absolutely say anything you wanted them to say. You know,
when we were 10 years old, that alone could provide hours worth of entertainment for us,
but I think the second most popular use for it was for making prank telephone calls. So, for example back in those days we had
phones like these, and no caller ID. So we didn’t know who was calling until we answered
the phone talked to somebody. So, it was hilarious to type out some insulting message like this.
And then we’d just dial somebody’s phone number and put the handset up to the television
like this and wait for them to answer. Hello? Hey there Techmoan! I just have to
tell you that your YouTube channel is total crap! Flippin’ idiot! But seriously, speech synthesis has found
numerous uses over the years, such as being the voice of Stephen Hawking. The first question
they asked it was, is there a God? And even automated telephone services like these. Hello
and welcome to moviefone. If you know the name of the movie you’d like to see, press
1. And it has continued to improve over the years
with things like Siri. Hey Siri, What is speech synthesis? Speech synthesis is the
artificial production of human speech. A computer system used for this purpose is called a speech
computer or speech synthesizer. In fact, I’m using an online speech service to narrate
this section of the video. Pretty neat, huh? If you are interested in the early development
of speech synthesizers, I recommend that you check out the VODER, which was one of the
first of its kind. It came out back in the 1930s. It was completely analog. Say “She
saw me” with no expression. She saw me. Now say it in answer to these questions. Who
saw you? She saw me. Since it had no CPU, of course, it required a human to actually
like play the different sounds almost like playing a piano. And, so that about wraps
it up for this episode. So, as always, thanks for watching!
A loser: profitability. The most disruptive company in the largest economy, Amazon, is setting the cue for a new relationship between investors and companies. Simply put, vision and growth have replaced profitability. Amazon wasn’t profitable until 2001, seven years after it was founded, and since then its profits have been negligible. What happens when Amazon reports a big profit? Jeff Bezos calls senior management into a room and says you fucked up and greenlights a bunch of very expensive initiatives that will deliver against long-term advantage. This gestalt around capital formation has moved all the way down the ecosystem. Small companies now pursue leadership versus profits. Why? The market doesn’t seem to demand profits from quote-unquote innovators. A continued loser: Ad-supported television. There’s almost triple the amount of sports content than there was ten years ago, but fewer people are watching it. On top of that, tech giants are buying the digital rights to sporting events. Amazon recently purchased NFL streaming rights for $50 million, quintupling the bid from last year from Twitter. Facebook also signed deals in March to stream Major League Soccer matches and is in talks to buy the digital rights for Major League Baseball games. Prediction? In the next 24 months, we’re going to have one of the Big Four – Apple, Amazon, Facebook or Google – buy the rights to the Olympics, March Madness or the Super Bowl. This is one of the last bricks to fall from the wall protecting the industrial ad complex. The winner: Viewers, who will have more options to view content on their own terms and hopefully, for at least now, fewer shitty ads shoved down their throats. The losers? Those of us that wouldn’t have known unless we watched ad-supported TV that there was a treatment for opioid-induced constipation. Hi, I’m Frank, I take Movantic for OIC – opioid-induced constipation. I tried prunes, laxatives, still constipated. Had to talk to my doctor. She said how long you been holding this in? What the fuck. A winner? Reviews, which have fundamentally changed the way we shop. Most adults under 50 read online reviews before buying new products and one in four shoppers check Amazon reviews even when they’re inside a store. A third of online shoppers claim they won’t buy products that don’t have positive reviews. The average consumer rating on Amazon is 4.4 stars. We’re living in Lake Wobegon. All the women are strong, all the men are good-looking and now all the products are above average. This is the part of the episode where I usually make some snarky comment about my prostate or porn. However, many of us were having a difficult time coming up with something humorous with all the images coming out of Syria. We wanted to spend this time talking about some of the things we can all do to try and help. You can donate or volunteer at the following charities. The International Rescue Committee has rescue workers in Syria providing medical services and emergency shelter, Save the Children is addressing the emotional scars of Syrian children and Oxfam is helping settle Syrian refugees in over 90 countries. I’m going to spend some time investigating Lifeline Syria where you can sponsor a Syrian family. I will let you know what I find out. We’ll see you next week.
Don’t mind me I’m just shuttling pictures of computer barb people’s basis. It’s not at all weird Oh In the last video we talked about how do you find faces quickly in an image? that’s I guess nowadays only half the story if you want to unlock a face of your phone or You want to unlock it with your computer or you want to just recognize who’s in a picture? That’s face recognition not face detection. We can’t just train a classifier We can’t just say here’s 1,500 images of Shawn and 1,500 images of Mike what work out what the difference is because it will do that and then I’ll say well here’s a picture of Steve and it will Go Mike you know because it’s only got two options like so then we have to retrain it and you’ll notice that when you sign up For your phone the first time and it recognizes your face It doesn’t have to train a network right because that would take way too long. How does it do it? Will be answer is basically we train a network to distinguish the differences between faces rather than actually recognizing individual faces I’ve got some printer here with his max Here’s me Shawn and Dave and so on right I’ve got lots of lots of computer power hosts in here So what I could do is I could say well here’s a picture of Max and here’s a picture of Mike So I have some you know some convolutional layers or something and I have a network here and that goes all the way deep network up to a classification but lights up with Max or Mike The problem is that we bring in Shawn and everything’s ruined you’re put in a funny face That doesn’t help the standard way of training a network which is giving it an image and a label and saying learn to be better With predicting that isn’t going to work because we don’t know how many people are going to use this system We can’t put them all in All right, otherwise companies have been tapping you up for face pictures before they even release the phone we say well Why don’t we train a network to instead of saying bitties? Definitely someone to just say these are their features, right? And hopefully when we if it’s good at it, it will say that their features are different to someone else’s features. That’s the idea So what we’re actually doing is we’re training a network to separate people out Let’s say you put me in and this network that I’m designing has a lot of layers in it all the way along here But instead of outputting a single decision as to who this is it outputs a series of numbers So let’s say a vector of numbers here like this I didn’t maybe matter how many there are for now and what we’re saying is when we put me in these numbers need to be different than when we put Maxine or when we put let’s see Who else we got Dave right when we put Dave in his numbers come out different to mine, right? And it’s those numbers which are kind of like a fingerprint for each person. So, how do we do this? well We use a special kind of learning or a special kind of loss function called a triplet loss Right all this is one of the ways you can do it. There were a few So what we say is we say what we put in three images at once so we say here’s two images of me and one image of Dave and what we want to do if We want to change the network so that when we put these fujas through these two are rated very similar and these two pairs Are rated is very different And actually what we’d usually do is we label this one and anchor this one a positive sample and this one a negative sample So we’re saying but a distance between these two has to be very similar and the distance between these has to be very far apart So let’s imagine it was only two numbers out. So we’re putting ourselves on a sort of 2d. Grid, right? So this this is variable one and this is available to that come out of our network, right? So this is our network like my anchor is is a picture of me a positive sample and a negative sample, which is Dave right so I put them through the network and what we trained it to do is separate out the pictures of me in the pictures of Dave so I maybe get put over here So I get a very high value for – and a very low value for number one. Let’s say all right Dave gets a very high value for number one and a very low value for number two And then we start to repeat this process with different pairs of people and different positives and different negative samples. So let’s say I Mean, why did I shuffle these? That’s a real? Okay. So let’s say two pictures of op miles. That’s why he’s not nice to avoid my printer and one picture of Sean, right? So maybe what miles gets put over here near me, which is not so good But we’ll get to that and then you’re put over here like this and then maybe later on We have two pictures of me and one of Rob which moves Rob down here a little bit and then Dave gets put over here And you know max gets put over here somewhere negative values are also allowed and what we’re trying to do Is make sure that everyone is nicely separate, okay? now if you do this for just a few people what you’re actually doing is just classifying them but if you do this for Thousands of different humans of all different ethnicities and different poses and different lighting conditions eventually The network is going to start to learn how to I mean actually that’s not right because Dave’s far away from Dave, right? So hopefully we start to come together But that’s you’ve got a train for a long time And let’s not let Steve off. The hook is Steve over here high value of two high value of one, whatever That means the interesting thing about this is we’re not performing a classification which is performing a dimensionality reduction We’re saying how do we represent people as just these two numbers right or in the case of actual? Deployments of this maybe 128 or 256 numbers somewhere in this space when you put my face in I’ll appear and when you put Steve’s face in it’ll peer somewhere else and this actually solves a really Nice problem right? It’s called the one-shot learning problem How do we convince a phone to let me in having only seen one ever picture of my face? Which is when I first, you know Calibrated it the first time and the answer is we don’t train a neural network to classify me We just use the existing network that we trained on thousands of thousands of people doing this To put me somewhere on here and then we record that location and then when I come in again and try and unlock the phone Do does my new image go to the same place in this space as my last one? So let’s say I get put over here with a high value of two and a low value of one I take another picture of myself on my camera and I come in over here and it goes well, that’s pretty close Okay, we’ll let them unlock the phone. Right but max comes in and gets put over here that’s judged as to higher difference and Access is denied, right this is how it works And this is really clever because it means that the actual decision making process on whether you’re allowed in or not It’s based on just the distance of these numbers right in which case is like 128 numbers. Sure. This is Susceptible to problems Yeah So it is and this is one of the things that Apple for example with their face ID Have yeah, if you bear in mind, of course haven’t told me how they do it, right? So nor would they but we can presume it works something like this. We have a depth camera as well But they will have included in their training set pictures of people in masks and pictures of people with different hair and pictures of people in strange locations and things So the network learned to ignore those things, right? If you never showed it to the network, you’re right B will just miss classifier all the time That’s that’s the problem If you only train this to separate me in day when you put Steve in its behavior is going to be undefined Right, so but that’s kind of how neural networks work. They often undefined you hope that you put in a good enough training set So but for the vast majority 99.999% of cases it works very consistently and it says no they come out over here, which is not close enough So we’re not unlocking the phone The interesting thing is it’s much harder to gain this system than it is to gain a system based on simple decision-making, right? So yes, you might be able to trick this to unlock a phone once or twice, right? But if you try and recreate that same process with my face and unlock my phone, for example maybe you won’t have as much luck because Exactly how its network works isn’t clear even to the people that chain to trained it Which is quite kind of its strength in this case, right? Maybe it’s security for obscurity, right? Maybe there’s a certain thing you can hold up in front and it’ll always unlock right? It doesn’t seem very likely but we don’t know until we find those things. So It’s the air as an interesting one for further study I guess you were mentioning these features here people will ensure that as what can arise we’ve got all the hair We’ve got I mean, is that what’s going on? Okay, we don’t know right so we call this feature space for latent space It’s a kind of space just before Classification where it’s you’ve got features but these features in a deep network are or mean We’ve had a look at sort of inside and your network before and they kind of a sort of Combinations of edges and things like this it is going to be bored leaf or something trained on human faces It’s going to be broadly the kind of face related features because otherwise it wouldn’t work as a as a trained network But exactly what it does. We don’t know does it wait hairs more important than eye color I don’t know and neither do the people that run it I expect they’re trained with different haircuts So so that they forego this kind of issue But of course you have to be careful doing that, right? Because if you can shave your head and still unlock the phone, is that as secure as a phone But you couldn’t do that on my it’s not usable So that’s the other reason they do it, but you get the idea but you’ve noticed from this two dimensional space Which I’ve done just for simplicity. It becomes difficult to separate out everyone in this space. So who else have we got? So you’re in here you’re in over here. So maybe your images are here blobs. Images are here They start to take up quite a lot of room one got a few of them And that’s a bit of a weird one, right? So that goes over here and and and maxes over here So it’s getting a bit cluttered, right? So the decision on whether to unlock a phone becomes more difficult, so we don’t usually do this in two dimensions We do it in 128 or 256 dimensions. So but spacing these things out for many many people is much much easier I would say that it’s likely that someone on earth will be able to unlock Someone’s phone like this because they look similar enough to them But the chances of that person being the one that steals your phone is pretty slim so I really wouldn’t worry about it too much And this pixel was going to be always three. So that’s going to be 12 14 23 and now we fast forward while I do a bit of math in my head 8 On a computer. This is much much faster likely to be on a network which is limited in what it can connect to It’s probably likely to be able to connect to other board management controllers on the same network
Hi welcome to another ColdFusion video According to the World Health Organization 16 percent of all deaths worldwide are from cancer about 9 million per year The annual cost on the healthcare system is about one trillion dollars Chances are you’ve probably known someone who’s had cancer Well today. There’s good news. There’s been some rapid progress in the battle against cancer It comes in the form of a new treatment for aggressive types of cancer that can’t be cured with chemo or radiation therapy Trained to kill. Right now there’s a new cancer treatment the doctors say really works And we’re already seeing success stories here in San Diego Yeah, 10 News reporter, Jessica Chen is in the newsroom with the treatment that trained cells to find and destroy cancer, Jessica Yeah, that’s right Anna and Arielle. I met a guy his name was Robert and his cancer Well it just kept coming back, but he underwent this new treatment called car-T Cell therapy and within weeks He’s cancer-free. Now here’s a picture of what it kind of looks like now this red. It’s a red T Cell It’s trained to kill and here it is attaching itself to the white that’s the cancer eventually killing it The success rate has been above 83 percent in some trials and the best part is it’s just been approved by the FDA In the United States and has been trialed in selected hospitals around the world In this video we’ll take a look The new treatment is called chimeric antigen receptor t cell therapy or car-T for short. In basic terms the therapy uses the patient’s own blood to create a kind of living medicine After just one dose the medicine will work for an extended period of time to seek out and destroy cancer. It sounds far-fetched But I’ll explain how it works in more detail later on in the video The breakthrough here is as follows Normally the immune system fails to recognize cancer and some studies suggest that the immune system even mistakenly protects cancer cells Through genetic engineering car-T treatment causes the body to recognize and fight the patient’s specific case of cancer Car-T cell therapy I think is quite likely to change the landscape for treatment of patients with blood cancer It involves a genetic modification of a patient’s immune system Such that the white blood cells a specific white blood so called the T lymphocyte Is modified in such a way to attack and destroy cancer cells. It’s very exciting. So basically it’s extracted from the patient modified and then reinjected so your body can fight with its own body, I guess. that’s exactly right. Wow, that’s that’s incredible. using the body’s own immune system to fight cancer is called Immunotherapy and car-T is the most promising form of this approach The reason people are so excited about this is because it produced incredible results and patients where all other treatments fail to work Right now the treatment has been approved for children with the most aggressive forms of leukemia a cancer that spreads through the blood But other approvals are close in the pipeline At first I was skeptical, but the more I researched into it the more miraculous cases. I found of the treatment working We’ve checked her bone marrow for the possibility of disease but had two points we checked her three months and now six months out from her treatment She has no disease whatsoever Seems like the cells stick around for a long time that actually might provide long term disease control That is of course the most exciting potential part. Scott was one of the first people to receive car t-cell therapy As a trial he was at a point in his fight with cancer where he had no other options But Car-T gave him a chance Michael Bishop is one of the doctors who provided care to Scott to say them excited would be a major understatement next scan will behold Cancer-free John remission, so I’ve been remission now for about 15 months Every month it gets better and better my strength has come back stamina has come back Basically, I’m back living a full life again. Enjoying things. I like to enjoy so it just absolutely been a Miracle and I owe so much to the team at University of Chicago, so how does it work exactly ? As mentioned earlier the treatment is a custom living drug taken from the patient’s blood and fights cancer within the patient for extended periods of time The treatment begins by extracting something called t-cells from the patient’s blood T-cells are a type of white blood cells that are integral to the immune system They’re naturally built to seek out and attack infections in the body Next these t-cells are mixed with a disarmed virus. That’s engineered to produce a special kind of receptor on its surface These receptors are synthetic molecules that don’t exist naturally These newly engineered receptors allow the t-cells to find recognize and destroy cancer cells They do this by attaching the artificially engineered receptors onto the surface of the cancer cells Injecting them with poison and destroying it the scientists then grow millions of clients of these new t-cells in the lab The engineered t-cells then multiply and live within the body providing long-term relief Because these cells multiply you never have to go in again for a top-up dose Think of it as a one-time treatment of a personalized medicine I would ask you about that clinical trial a lot of questions people have around the durability of their responses how long are people actually Staying with their cancer in check what have you been seeing and what do you expect to see as the results mature? What we can infer is for patients with it that were treated in early smaller studies at the NIH Some of the patients are now approaching five years These are patients that had no evidence of any cancer them now while in the past They have failed every possible therapy The treatment has been tested extensively on both children and adults suffering leukemia with unprecedented rates of success This includes stubborn cases of reoccurring cancer that failed to respond to traditional treatments In one early study all signs of cancer disappeared in 27 out of 30 participants That’s a 90% success rate in another more recent study There was an overall remission rate of 83% within 3 months for a trial of 63 patients Car-T cells have produced strong results not only in patients with leukemia But also patients with lymphoma a cancer of the lymph glands for example James Kochenderfer medical doctor of the National Cancer Institute states quote our data is the first true glimpse of the potential of this approach in patients with aggressive Lymphomas who until this point were virtually untreatable end quote In other words this treatment cured patients that would otherwise have most likely died Dr.. Steven Rosenberg chief of the surgery branch also at the National Cancer Institute Mentions that in just the last few years progress of car t-cells and similar approaches have greatly accelerated quote in the next few years I think we’re going to see dramatic progress and push the boundaries of what many people thought was possible with these adoptive cell transfer based treatments end quote Dr. Brent Jones of the Memorial Sloan Kettering Cancer Center was skeptical and initially thought that this treatment would be a boutique therapy limited To a small defined patient group, but what he’s seen over the past years has made him change his mind quote we have Cohorts of patients who have been considered terminal and are now in durable and meaningful remissions with good quality of life for up to five years, so Enthusiasm for this technology is now quite high end quote So is this all too good to be true? Well, not quiet, but there are a couple of major downsides The first one there’s a serious and potentially fatal side-effect swelling of the brain known as cerebral edema This is serious and hasn’t fortunately led to some deaths However the problem seems to be extremely limited and many of the other Car-t cell therapies have reported no such instances of the complication Now the second downside is probably the most heartbreaking part It’s the price Novartis one of the first companies to have the commercial version of the treatment available is charging four hundred seventy-five thousand dollars for the one-time treatment although They’re promising not to charge patients who don’t respond within a month Some experts in the field say that the price will come down as the manufacturing process becomes Standardized and argue that even at this price it may not even be profitable for the company But still this is a point of contention for me But regardless the research on car t-cells is continuing at a swift pace mostly in patients with blood cancers But also in patients with solid tumors The number of clinical trials testing car t-cells has expanded dramatically From just a handful a number of years ago to over a hundred and Counting Doctors are turning their attention to solid cancer tumors with talk of a super t-cell Earlier this year doctors have now reported success in prostate cancer The Car-T treatment is the first ever cell based gene therapy now publicly available in the United States and the FDA calls its decision a historic action And I could agree unlike previous claims of revolutionary cancer treatments this does look like it’s going to be something truly historic So in conclusion although, it’s in its early stages and is quite expensive I see this as a beacon of hope in the fight against cancer the numbers and the success rate are hard to argue it So that’s really it I realized that this story isn’t widely known to the general public So I really wanted to shine a light on it and get people talking about it So what do you guys think let me know your thoughts in the comment section below so anyway Thanks for watching this has been Dagogo you’ve been watching cold fusion Feel free to subscribe if you’ve just stumbled across this channel And I’ll see you soon again for the next video cheers guys. Have a good one