1/ Interesting thing happening in the LIDAR industry right now. 5+ companies will soon or have SPAC'd. Their value is based on *projected* revenue that comes from *entirely overlapping* potential customers, with very little discount applied to future projections. Is this bad?

2/ And how did we end up here? SPACs aren't subject to the same effective restrictions on future revenue projections as traditional IPOs. It's totally possible the numbers will be correct for one of these companies. But it's not possible for all to be correct.

3/ SPACs may be a good thing for pre-revenue companies or companies that have chosen to go public before they meet the more customary milestones for an IPO ($100m in ARR, for example).

4/ If these companies were to be valued based on earnings today, they would be severely undervalued. But if you look at the market caps for each of these companies, they're each being valued as if they had already realized some of their ambitious future projections.

5/ Of course, it's certainly not unusual for startups to be valued based on future revenue projections, even in a highly competitive space. But I typically see private markets put a much larger discount on these future projections than what we see with these SPACs.

1/ Today @Cruise announced over $2 billion of new funding from Microsoft, GM, Honda, and some great institutional investors.

The vanity metric: $30 billion post-money valuation
The real metric: 0 million customers

Wait… what?

2/ Food. Energy. Real Estate. Transportation. The handful of true multi-trillion dollar markets and the building blocks of human life. Substantial change here requires - at minimum - the proverbial “10x better” product. That is a hard thing to build.

3/ Cars are driven by humans. Humans improved safety by ~2x in ~50x years. We suck. Robots are likely to improve this by 100x or more in 3-5 years. That is a big deal. Car accidents are the #1 killer of teenagers in the US, a very uncomfortable fact.

4/ But safety ain’t enough (sadly). Self-driving cars also give you *time* back, one of the most precious resources. They’ll also cost less than using rideshare, which is still priced as a luxury. And soon much less than owning a car. Ours also feel like riding in a spaceship.

5/ AVs will be a major lifestyle upgrade for billions of people, and one that requires almost zero effort to unlock.