South by Southwest, one of the biggest tech and media expos of the year, kicks off later this week and there will be a few Fools on the ground in Austin taking it all in.
In this week's episode of Industry Focus: Tech, Sean O'Reilly and Dylan Lewis list off the three presentations they're most excited to see. Listen in to hear why they want to hear from Alphabet's (NASDAQ:GOOGL) (NASDAQ:GOOG) Chris Urmson, Under Armour's (NYSE:UAA) CEO Kevin Plank and Nom.com's Steve Chen.
A full transcript follows the video.
This podcast was recorded on March 4, 2016.
Sean O'Reilly: Hello America! This is President Francis Underwood. A vote for me is a vote for American technological progress. Hear me discuss my vision for America on this technology edition of Industry Focus.
Greetings Motley Fool listeners! This is President Frank Underwood in studio at Motley Fool headquarters just ten miles south of the White House, in Alexandria, Virginia. It is Friday March the 4th, 2016. Joining me to talk about my technology-focused initiatives is my Chief Technology Advisor, Mr. Dylan Lewis. Dylan, thank you for joining me in giving America a push in the right direction.
Dylan Lewis: It is an honor to be in the studio with probably my favorite fictional president.
O'Reilly: I try.
Lewis: That was, Sean, that was phenomenal!
Lewis: I was cracking up on the side. I was trying to stay away from the microphone so that I wouldn't mess up the recording.
O'Reilly: Listeners, if you haven't figured it out, Dylan and I are both huge House of Cards fans.
O'Reilly: It dropped season four last night. 3 AM.
Lewis: 3 AM.
O'Reilly: They did that for Pacific Time.
Lewis: I think they did it so it was on the same day across the country.
O'Reilly: Right. Okay.
Lewis: Which was inconvenient for me because I probably would have watched it last night if it didn't drop at 3:00 in the morning.
O'Reilly: Yeah, Netflix of course is a big Foolish pick. Gosh, how long has David Gardner liked that stock?
Lewis: Long time.
O'Reilly: Like five, ten years or something? Absolute brilliant move in picking up Kevin Spacey to do this very original thing. It was originally a show from the '70s or the '80s on the BBC in England.
Lewis: It just cost $5 million an episode and ...
O'Reilly: People signed up for Netflix just to watch it.
Lewis: Original content makes platform sticky, you know?
O'Reilly: Yeah. Anyway, so we do apologize for any plagiarizing I did there. All of that was original words of my own, but anyway. Kevin Spacey, if you're listening, we love you. All right. I'm sorry to say we do not have the president in the studio.
Lewis: No, unfortunately.
O'Reilly: Although what we are going to be talking about is the South by Southwest Conference and the real president might be there.
O'Reilly: Do you think you're going to run into him?
Lewis: We might bump shoulders. We'll see what happens.
O'Reilly: That'd be cool, yeah.
Lewis: That was amazing. I'm going to South by Southwest next week.
O'Reilly: We'll miss you.
Lewis: I'm going to be joined by I think maybe six or seven other Fools, a couple folks from our premium team, a couple folks from our marketing team. I think Chris Hill will be doing some Market Foolery shows there with Simon Erickson, Matt Argersinger, I think.
O'Reilly: For our listeners that don't know, thirty seconds, what is South by Southwest? Where is it?
Lewis: South by Southwest is a tech and just general digital media publishing conference in Austin, Texas. Basically it breaks down to three different ... I think it's been going on for like twenty-something years, thirty years, something like that. The conference itself breaks out into three different categories. There is interactive which I'll be going to with all these other Fools. Then there are maybe perhaps the better known film and music shows. You also will see a lot like that.
O'Reilly: Are you going to try to go to that stuff?
Lewis: It's the film ...
O'Reilly: Oh, different days. Okay.
Lewis: I think the film is concurrent, but the music is after I'm going to be there. I'm like I can't really swing being away from the office for twelve days.
O'Reilly: We need you for Industry Focus, Dylan.
Lewis: You need me for Industry Focus.
O'Reilly: What are the three events you're looking forward to the most?
Lewis: Yeah, so it is ridiculous looking at the South by Southwest.
O'Reilly: Because that's all over the city, right? Hotels and everything?
Lewis: Yeah, it is not like, like CES is very centralized from what I understand. I have not been there. South by Southwest is totally de-centralized. You're in all these different rooms all over Austin. Looking at the event list and the keynote speakers and the folks that are going to be there as you mentioned, Barack Obama is going to be there.
O'Reilly: Both he and Michelle are going to talk or something, right?
Lewis: Yeah, he's giving one of the keynotes on Friday morning.
O'Reilly: Is he going to talk about technology or what?
Lewis: I think it's civic engagement with technology. I think that's the premise for his keynote.
O'Reilly: Oh my God.
Lewis: It is a daunting schedule to look at to say the least. There is so much going on.
O'Reilly: Red Bull.
O'Reilly: Red Bull.
Lewis: Just get me hopped up on caffeine the entire time I'm there. I thought it would be fun to preview South by Southwest by looking at three events that I am particularly interested in and how they relate to investors and some things going on in the marketplace right now.
Lewis: First one, Google self-driving car project. So the director, Chris Urmson, is going to be there and he's going to be talking a little bit about what the path to a driver-less car looks like. Just what the timeline might be and some things like that. Obviously something that is kind of on the tech and industrial side.
The tech informing what will be happening within the car itself. A very interesting thing to be checking in on. Just kind of as an update to what has been going on with Google self-driving car so far, they have logged over I believe it is like 1.3 million miles on roads in Mountain View, California, Austin, Texas and Kirkland, Washington thus far. Their current fleet is a mix of modified Lexus SUVs and then the bespoke driverless cars that they've created.
O'Reilly: Little pod thingys.
Lewis: Yeah, I don't even know how to describe them to somebody.
O'Reilly: They're like the monorail cars from forty years ago ...
O'Reilly: ... Disney World.
Lewis: Yeah, there's something kind of European looking about them. They're cute I guess. That is their flagship prototype and so they've been out on the roads as well. Just the track record of safety so far the cars have had, their vehicles have been in come minor accidents in the past. Up until mid-February I think it was somewhere in the teens, somewhere around fifteen or so accidents. The car and the tech on Google side was not at fault for any of these. It was drivers doing something stupid or people stopping short or what have you. Up until mid-February is the operative, the thing to hone in on there.
O'Reilly: Vince and I did our tech CG crossover show and of course we talked about driverless cars. And a week later, a week later the Google, I think it was one of the little pod things, I don't know which type of car it was.
Lewis: It was a Lexus RX.
O'Reilly: Oh, I'm sorry. Okay. It gets into an accident with a stinking bus. A week later, after 1.3 million miles. Then I do a show about it, hits a bus.
Lewis: Yeah, just don't talk about any airlines anytime soon.
O'Reilly: Right. The thing that I took away from it though is partially at fault, Google says we're probably partially responsible, but everybody walked away.
Lewis: Yeah. To give you an idea of what happened, basically Google's car was in the right lane of a city street and it was going to make a right turn. I think that there were some sandbags in the drainpipe.
O'Reilly: Which of course messed with the sensors and they do that to keep leaves and stuff out of the drainpipes.
Lewis: I think the car beared left a little bit so that it could go around it and make the right. There was a bus coming up on its left. Bus was coming at fifteen miles an hour and the Google car was moving at about two miles an hour and I think it was one of those situations where the Google car thought the bus was going to yield. The bus did not expect the Google car to make the cut. In their statement Google said, "This type of misunderstanding happens between human drivers on the road everyday. This is a classic example of the negotiation that's a normal part of driving. We're all trying to predict each other's movements."
O'Reilly: Not only that, but and this lends itself to the previous accidents where it's just a computer interacting with a human and it's just unpredictable, but I just ten, twenty years from now if and when all this stuff happens, the bus would have been communicating with the car. It probably would have been avoided. This does not concern me in the least.
Lewis: Yeah, that is something that people cite all the time. The biggest problem with these very sophisticated, smart devices is when you add the human element to them.
Lewis: If they're communicating on the same plane, they're speaking the same language, they know what each other are going to do.
O'Reilly: Then all of a sudden it's like a roller coaster ride or whatever. Maybe that's a bad example, but all of a sudden it's like a monorail ride, like with the Google car.
O'Reilly: Because it's safe and everybody knows what's going on and all that stuff. Anyway, sorry.
Lewis: I'm sure within the conference he's going to have to spend some time talking about this. People will ask him about it.
O'Reilly: The whole time.
Lewis: I think really this is a minor hiccup for them. It's not a huge deal. This is not going to be something that causes people to, "No, there's no way. We don't want driverless cars." It's not going to be some gross overreaction there. Really my interest in him and the driverless car market in general is just kind of get a sense of the big picture and what the timeline might look like for adoption.
O'Reilly: What are you hoping to hear from him is the bottom line.
Lewis: I think one of the biggest things is the regulatory hurdles that are currently facing driverless cars and how they're going to overcome that and just sweeten up a little bit to the legislative environment. I think one of the really prime examples of this is I think there may be a handful of states that have autonomous vehicle laws on the books right now. California being one of them. They seem to have laws that were very conducive to innovation and driverless cars, that kind of thing. Then recently California, their DMV, proposed a draft rule that would require driverless cars to have a licensed driver in them at all times. This was something that happened I think in late 2015.
In a Medium post Urmson said, "Instead of putting a ceiling on the potential of self-driving cars, let's have the courage to imagine what California would be like if we could live without the shackles of stressful commutes, wasted hours and restricted mobility for those who want independence that the automobile has always represented."
So, on one hand needing a licensed driver makes sense if the car needs that or if there's an override that would allow someone to operate the car, but I think one of the really important things that driverless cars enable are people that are either too old or physically cannot drive to get around and be independent. This type of rule, this type of legislation is a barrier in them I think reaching people that would be most benefited by driverless cars.
Some of it is just some of these very small case examples, but more broadly what is the company doing and what are some of the major hurdles that they're going to have to overcome more on the legal side, the regulatory side to get and reach some of these estimates that we've seen. I remember seeing that IHS, Institute of Highway Safety, I think that's what the acronym stands for, estimated that by 2035 10% of light vehicles, 10% of the light vehicles sold will be driverless.
O'Reilly: I'm down.
Lewis: That's awesome. That's pretty soon actually. That's not too far off.
O'Reilly: Twenty years, I'll be, yeah.
Lewis: To have that kind of market share, but obviously for that to happen there are a lot of issues that they're going to have to get through. Just getting a little bit more clarity on what the biggest roadblocks are and how they're planning to address them.
O'Reilly: Cool. Onto another Fool favorite, Under Armour. What are they going to be doing at South by Southwest because I thought they just sold t-shirts?
Lewis: Yeah, we are rehashing our conversation on CES a little bit, the Consumer Electronics Show.
Lewis: Yeah, yeah. If you'll remember, Under Armour unveiled their UA HealthBox at CES. Ken Plank, CEO of Under Armour, will be speaking at South by Southwest again. Just as a refresher for what the HealthBox is, what goes into it, basically it's the world's first connected fitness system. That's what they're billing it as. The components for it are the UA Band which is automatically tracks steps, distance, resting heart rate, sleep, all that stuff. Everything that you're used to with a Fitbit, Garmin, health tracker, that kind of thing.
The UA Scale is a Bluetooth and Wi-Fi enabled scale that measures weight and body fat percentage. Then UA Heart Rate which is a compact heart rate monitor, features innovative micro-snap technology designed to provide comfort during workouts.
O'Reilly: Oh boy. All yours for the low, low price of $400.
Lewis: Yeah. The whole package sells for 400 bucks. The individual components sell for $180, $180 and $80 respectively. We got some insight into ... We had the launch itself and some insight into what their broader plan is. At CES he talked with a CEO of IBM, Ginni Rometty ...
O'Reilly: Okay, sure.
Lewis: ... about UA Record, which is like their kind of hub for, it's a health hub. The way he described it during their conference was just basically like a daily health dash. He said that wearables, in this conference call he said, "Wearables have been very effective in telling you how many steps you took or how many hours you slept, but they haven't been effective in giving you a proactive information and how to utilize that data to make your life better. Put simply there's no call to action until now. IBM's Watson, a platform that executes cognitive thinking will provide personalized insights in real time to the user based on the information we collect for UA Record and will take the experience and service to a whole new level."
O'Reilly: How does a computer that plays Jeopardy help you become healthier?
Lewis: Yeah, I think when you hear IBM Watson you have that whoa, this is some serious data analytics and serious AI-type work that they're going to be doing. The idea here is to be able to mine and find patterns in people's health habits and also provide more insight into their health habits. You know I mean, it was something as simple as in the CES demo he did something where within an app there's a one to ten scale of how are you feeling today.
O'Reilly: It's telling me how I feel?
Lewis: No, no.
O'Reilly: Oh OK.
Lewis: It's soliciting, how are you feeling on a scale from one to ten? Then it wants to sync up your behavior, the things you've done, the things you've eaten with that feeling.
O'Reilly: Oh, yeah.
Lewis: So that you have a better sense. He pointed to, he said, "If I were to ask you how many days have you felt like you were sick in the past year, you have no clue right?"
O'Reilly: I have no idea.
Lewis: Yeah. That seems like something that you should know, but ...
O'Reilly: That would be really useful. I'd like to ... Yeah, OK.
Lewis: Spotting patterns. If it's something where if I had lunch before I work out and I don't feel as good or whatever, if I eat dairy I realize that my stomach doesn't feel awesome. Things like that, just providing more insight into that. The recent conference call that Under Armour had was shortly after HealthBox launched, so obviously no product insight there.
I doubt that we're going to get anything in terms of sales, anything like that, but I'm really just looking more to see if they have any updates on that product launch, anything favorable they can tell us in terms of units, anything like that. Just kind of what else they're playing to do in the wearable fitness space.
O'Reilly: Cool. All right, well before we move on I wanted to point our listeners to the newly redesigned Focus.Fool.com. There you'll discover a special offer to join the Motley Fool Stock Advisor newsletter to start your off Foolishly. All loyal IF listeners have access to a special discount of Stock Advisor that works out to $129 for a full two year subscription. Once again, that is Focus.Fool.com.
All right, so Dylan I've got to tell you I was a little surprised at this last choice of yours for South by Southwest. Are you a foodie? What's the deal here?
Lewis: Yeah, so this last one, Meet Nom, this is the name of ...
O'Reilly: Like nom, nom, nom, nom, nom!
Lewis: Yeah, this is the name of the speaker at the event.
O'Reilly: His name isn't Nom.
Lewis: No. Food and the Future of Live Video. The person speaking at this event is Steve Chen, founder of Nom and co-founder of YouTube. That is, that's part of the reason I really honed in on this one. I realize that when you have Kevin Plank, CEO of a highly successful company and you have the director of Google self-driving car project, the guy running a live food-based platform ...
O'Reilly: Food, YouTube thing?
Lewis: ... might be kind of a head scratcher. First off, yeah, guy that co-founded YouTube, so a ton of insight into the world of video online and what works, what doesn't work. That's one of the reasons I'm interested in attending this. I think really in their tag here and what they're kind of trying to do is share your love of food live. That is Nom's mission I guess at this point.
Details are kind of scarce, so it might seem odd that I'm interested in this live food blogging type thing, but I'm less interested in this for the specific platform and more curious about what it means for digital media and live content specifically. If you remember correctly, and I think this might have been the first show we did together.
O'Reilly: Oh, I don't remember that.
Lewis: Yeah, we were doing a recap of I think private companies and the tech bubble.
O'Reilly: Oh, and the unicorns and all that. Okay.
Lewis: Yes. At last year's South by Southwest, Meerkat kind of was the belle of the ball which is a live broadcasting app.
Lewis: Then Twitter bought Periscope and just rained on their parade basically. That acquisition, a lot of people thought oh, this is going to be huge for Twitter. The live broadcasting plays in so well to the news update kind of immediacy that you expect with that platform. Obviously it hasn't quite been the catalyst that people have expected yet, but I think Twitter is getting way better at integrating it into their product.
I think a recent update brought Periscope broadcasts into Twitter seamlessly so you don't need Periscope's app. You can just be scrolling through your feeds, see someone that is live recording something, click into it and you're watching it as a broadcast. Other public companies are making use of live content so far and I'm curious to see what someone that is clearly an innovator into video space is going to be doing.
Also I think when you look at some of the product changes that Facebook has undergone, they are pushing, pushing, pushing video content. The reason they're doing that is because people respond to it. The engagement rate is incredible on video content. Live content is a really cheap and easy way to feed that hunger, right? We can sit here in the studio and put together well-produced shows with Austin behind the glass and have it be well recorded and well lit and have this nice backdrop and everything, but people are also going to still click on live videos of maybe people like Jason Moser does the Periscope's ...
O'Reilly: I was about to say we should do Periscope here.
O'Reilly: Anyway ...
Lewis: I just think from a digital media standpoint it's going to be very interesting to see what happens with live video in the next couple years. Nom itself, not the platform to be watching for investors, right? They're private, they're small, whatever, but you are going to see live video on all of these huge platforms like Facebook, like Google, like Twitter, probably LinkedIn as well. So, feeding that appetite for video content and how they're going to do it I think is very interesting. That's kind of why I honed in on this one.
O'Reilly: Cool. Well we cannot wait to hear all of your coverage from South by Southwest. We expect you to Periscope when you're walking down the streets of Austin and everything.
Lewis: My battery, I think I'm going to need to get a backup phone battery just to make sure I won't be running out.
O'Reilly: Yeah, you can get that stupid case with the thing that pops out with the backup battery.
Lewis: Yeah, that is the worst. I will plug ... I think Market Foolery I think will be doing a couple shows live from Austin. They have a podcast booth reserved for an hour a day. They will be doing shows there. Be sure to follow what Chris Hill is doing on Market Foolery and I think the Twitter account is @MarketFoolery. I will be trying to live tweet some stuff @WilyLewis and of course we'll update you on Fool.com with all the stuff that we're putting out.
O'Reilly: Perfect. Well, thank you for your thoughts, Dylan as always.
Lewis: Always a pleasure.
O'Reilly: Do you think I should do the disclosure as Frank?
Lewis: I would love that.
O'Reilly: Okay. If you're a loyal listener and have questions or comments we would love to hear from you. Just email us at IndustryFocus@Fool.com. Again that is IndustryFocus@Fool.com. As always people on this program may have interests in the stocks they talk about and The Motley Fool may have formal recommendations for or against those stocks, so don't buy or sell anything based solely on what you've heard on this program. For Dylan Lewis, I am Frank Underwood. Fool on!