Applied Intuition CEO Qasar Younis on being the arms dealer of autonomous vehicles — profitable, high-margin, and supplying 18 of the top 20 OEMs

preemptively. I don't even know if we have news, but I'm just excited for what he's up to. Oh, there he is. We haven't talked to you since DC. We talked to you at Hillen Valley. How you been? What's new in your world? Sorry to keep you waiting. We had to in my world.

Hill Valley seems Helen Valley seems like a lifetime ago. It really was. There's been like four other iconic DC tech crossover events. I have yet to make the to many of them, but uh uh it was a fun time and we appreciate Hill Valley is the only one that's uh that's worth uh that's worth it. So, so I think that's fine.

I mean, it used to be a dinner, now it's an organization that throws like some of the biggest and most impactful events. It's a fantastic crew over there. Uh shout out to them. Um but anyway, this isn't about Helen Valley. This is about This is about you. Welcome to the stream. How you doing? I'm doing great.

I'm doing great. Uh I, you know, following up Mark Cuban, I couldn't really watch the the thing. I I don't know this going to be This is the This is the you know, the slow let down to the end of the day.

No, no, we got Yeah, we're working on being able to feed back the show to you so you can watch it while you're in the waiting room, but uh we're we're sorry to keep you waiting, but give us the update.

Uh and and I mean maybe for those who are are new and maybe hopped on during the uh the Mark Cuban segment uh if you could introduce yourself and the company briefly and then go into the news that'd be great. Yeah, for everybody uh who who's who's not in the Bay Area ecosystem uh my name is Pastor Eunice.

My uh uh and the company is called Applied Intuition. Uh we are a late stage company. Uh we earlier this year raised a a series F if I got my numbers correct. uh led by Black Rockck and KP at 15 billion. The company is uh broadly uh there's a couple unique things about the company.

One is we've been historically uh profitable uh which is super rare. Uh we've preserved 100%. Yeah. That that word that pro word probably doesn't get thrown around a lot with AI companies. No, no. We talked to a lot of folks with high revenues. Uh gross margins not there yet.

Hoping on some very low very low gross margina you want. I and you know you can never be bragging about any of this stuff because you know it creates great fodder for when you fall. It's like look at but like you know every every bull cycle I think like maybe I should start playing around with hubris.

Maybe this time is different. I think hubris it might be fun to experiment with but never it it just never it never works. It never works.

the the but the three things that you want in a in a late stage company is you know uh things like profitability but you also want high gross margins and you want high growth y and uh we we've been fortunate we got triple digit growth for basically the history of the company and then uh and high gross margins but that's the finance side for all the people who are like engineers or technical people watching um we're a AI company that focuses specifically on vehicles so the broad category we talk about is vehicle intelligence uh it would be a subpart of physical AI sometimes you know you might hear Jensen or somebody talk about that this is I think the most pragmatic and real part of physical AI right now humanoids I think will come for sure but uh but in terms of like monetization it's cars trucks tanks that's the business that we're in and we bring AI to those systems so uh it's it's in a bunch of different we have dozens of products and all this stuff you know I won't get into it but yeah take me through the the the market structure because you have uh Whimo no consumer product whatsoever you have Tesla vertical ally integrated.

I they I mean they had a mobile eye deal a while ago. I don't even know if they have mobile eye anymore. Uh pretty much vertically integrated. Uh I I drive a Cadillac. It's a a product of Kyle vote over at Cruz. They bought Cruise. They were thinking about getting into the self-driving taxi market.

They kind of pulled back from that, but they have Super Cruise. Pretty great system. Um and then you got George Hots with Kama, the the bolt-on, but what is the shape? All the OEMs, they need a play here. How how is this going to play out in kind of the the the the vehicles that most people see?

We can go into the defense side later, but just in terms of like what the average American summary, they're coming for it. They're coming for it all. Yeah. I mean, you just said it like like uh GM's been a long customer of ours that that that you're using is built on our tools.

So, our our business our business is one where we are a supplier to the broad ecosystem. Sure. So, of the of the top 20 global automotive OEMs, uh we say 18 out of the 20 use our tools, but in really honestly, everybody does. Uh and so that's our play.

We are we're we're like the you know, I don't want to use the the like it's a very it's a very like risky analogy, but we're the arms dealer in this ecosystem. Okay. Yeah.

give me a little bit more context and shape of like what what what the product you're actually vending in is because there are physical cameras that need to go on cars if you're going to do an an a self-driving system. Uh there's also some sort of foundation model I imagine that gets trained on a lot of data.

There's data aggregation.

all sorts of uh you know uh some part is going to be in C++ the other is going to be in ML like are you doing an end toend system like like what's the shape of the product and how much is like solutions versus uh just like the the the packaged up software yeah so uh historically the what we announced yesterday and why why we're talking is historically we've been a tools manufacturer we've as in we give engineer we make tools that engineers use to build these systems the companies you know you're talking about then we got an operating system.

We still do. That's a huge part of business. But while ago, we got into autonomy, but we got into autonomy directly, like literally making the autonomous systems. That's in in your words, that's the algorithms, the models that run the vehicles. We've been in it for defense. We've been in it for commercial trucking.

We do L4 trucking. You know, we're we're running driverless trucks right now in in Japan as an example. So, we're already doing that. What we announced yesterday is an L2 plus system for automotive. Okay. So it's specifically it's kind of like you know the the average person would know Tesla FSD. Yep.

It's like that except it's one that you can buy from us. Y and so where we fit in the ecosystem is we're we're we're like so I come from the car business. So I went undergrad to the General Motors Institute. I used to work at Cadillac in the Cadillac building as an example. So you're John's hero.

You're you're John's hero. I love it. I love it. Yeah. The car the car business is an awesome business by the way. If you ever want to just nerd out in the car business, we can. It's going through lots of changes.

But one thing to understand the industry structure of the car business is historically the car business one was kind of like defense where you would procure all this technology as an OEM from other parties.

What's changed now is OEMs are like Tesla has shown you can actually verticalize do a lot of this stuff yourself and you kind of need to do it because these systems are way more integrated with each other. It used to be you could bolt on a mobiliz system and then that would give you lane keep and adaptive cruise.

But when these systems are much much more sophisticated and they're they're working with the other functions within a vehicle, you need like a white box solution. And so our our SDS product is a white box solution. And what I mean by that is, you know, access the source code agnostic to the silicon.

So if you're if you're buying, you know, like like an Nvidia system or if you're buying a Qualcomm system, you're going to use Nvidia and Qualcomm chips. So we being just a software supplier, we can ride on different silicon.

And then on the other end where you're talking about sensors, each company has a different sensor strategy, but the broad summary of passenger the car business is it's a cost business. And so all of the all the OEMs basically want to have the cheapest sensor suite they possibly can.

Like even more fundamental question, why can't we get all the Whimos tech into the passenger vehicle? It's because all the way to the compute that's being used, it's just very expensive.

And so another like feature quote unquote of our self-driving system is it's embedded which is another way of saying it runs on automotive grade silicon which is cheaper and has all these other things that you need for automotive grade uh products. How are the OEMs reacting to the the latest version of Apple CarPlay?

I saw it roll out in an Aston Martin SUV. From a consumer perspective, it seems awesome. The new CarPlay takes over all the dash. So even the volume control will be handled by CarPlay. But it feels like if you're an OEM, you're kind of giving away. You're letting the fox in the hen house potentially.

But what's the reaction been? And then what does that mean for your business basically? Yeah, I think so. So so let's kind of gear shift your that's that you know we go go from autonomy to now just let's say the inc cabin software experience for us. We call that business line vehicle OS.

It's it's something that that we build and sell. Um the the punch line there is the issue with CarPlay is if you're a Mercedes and you're in in your experience is the same as a Chevy Bolt which is the same as let's say Aston Martin.

You know OEMs are really good at two things that they're really the heart of their business is two things have to get bright and if they get it wrong they ultimately end up going bankrupt. The first one is just managing the cost side of the business supply chain getting all the suppliers wrangled.

So they put all the parts in a factory to because a factory is this big fixed cost and it pops out at a certain rate. The economy actually moves up and down at pretty significant you know consumer carb sales and consumer index are very very connected.

So all the global OEMs are extremely good at forecasting what they need to build where and when years in advance. The other thing that they have to do very well is brand management and and what like more fundamental question what's a brand like fundamentally what what's a Mercedes brand?

It's the collection of experiences you've had. Yep. That's what a brand is. And so if the collection of experiences you've had is with Apple CarPlay that does actually degrade your brand. And so the OEMs are extremely sensitive. I mean I think maybe a controversial thing to say.

I think we've seen car peak CarPlay and peak Android Auto has already happened. Um I mean multiple OEMs have gone out and said that they're not going to do CarPlay in the future. They're not going to do Android Auto in the future. And by the way, Tesla doesn't do CarPlay and Android Auto.

the emergent emergence, you know, the Lucids, the Rivians, they're all they're all similarly. They they build their own user experience. So, I think that's a tough business to be in. Now, if you're Google or if you're Apple, your your consumer brand has to be in that interface. If you're applied intuition, it doesn't.

We're we're a B2B software supplier. So, we can make the same thing that CarPlay and Android Auto do, except we can do it in a again white box.

And I view the self-driving system much more like seat belts or airbags where all I care if I'm driving a Mercedes or Cadillac is that I survive and I'm and I'm safe and and I and I people talk a little bit about the driving style of a self-driving system in a Bentley might be a little bit different than in a Chevy.

But in general, I feel like it's something where I'm very I would I would make the selection based on the benchmarks like how what are the incidents per vehicle miles traveled? Anyone is h how do you see the autonomous uh driving uh uh landscape evolving over the next few years?

A lot of people talk about this like two-horse race and Tesla, but using the arms dealer analogy, it's like Tesla and Whimo are nuclear war and you come and you're like, "Hey, I I'll give everybody nuclear weapons. " Is that is that Listen Listen, this is not the time to make jokes about my Pakistani heritage.

Yeah, we we'll skip that. But but is that is that is that really your play here is basically leveling the playing field? Yeah, absolutely. And and I I would take issue with a two two horse race.

I mean, you got to remember, well, it's more so I'm talking about that in the context of, oh, you're gonna be able to just like, you know, why would I buy a test something other than a Tesla if I could rent out my Tesla when I'm not using it? There's a section of the market that's excited about that. Yeah.

But I can imagine I think that that future is to be determined, right? Um, and so let me let me answer the f there's many and this is such a vast area. We I'm sure we could spend hours on it, but let me tackle each of those individual points first. For the first one is, is it a two- horse race? Absolutely not.

I mean, you talked about super cruise just earlier. Every manufacturer globally is absolutely building some version of an Al2 plus system or working with a partner like us. There's without exception, the smallest manufacturers that you know are doing that.

The a good petri dish of you seeing how this will un unravel is China. China is this kind of like walledoff ecosystem separate in the automotive industry and you there is no dynamic that says a winner take all will be effective and I I'll I'll do the 10-second pitch on why I think an SDS from us would be better.

We're taking data from all geographies from many manufacturers and not only that from many vehicle types like off-road defense etc. and our models therefore are just will be and already proving to be more performant.

So there you could have an an you know you could have a pretty plausible technical view that actually the two legs are are maybe the early entrance but when everything becomes autonomous it's going to be a and there's just no there's just no win or take all dynamics there. There's no winner take all dynamics there.

Uh and then and then in terms of like uh the the the broader what happens with autonomy next 5 to 10 years like this is the this is the autonomy moment.

It's happening now and we're you know when you're in the Bay Area you kind of live just maybe it used to you know Paul Graham used to say 6 months into the future maybe we live 3 months in the future maybe but you do live a little in the future and you hang around in any street corner on San Francisco you'll see Whimos after Whimo after Whimo and then you'll start using them and you see them eating at Uber's uh you know market share in terms of right so like that's absolutely going to happen pass and what that's doing is it's getting the public used to this concept of self-driving We in the tech industry are very comfortable with it.

A lot of us are Tesla owners. A lot of us use FSD. So we're comfortable with it. You go to Michigan. I'm from Detroit. You go to Detroit. People don't know any of this stuff. And the forget and Detroit's a car town. You go to Tulsa. You go to, you know, Dallas. It's just not what people are talking about.

So I think that in the next 5 to 10 years is the general availability of autonomy. And so if you want to use a good analogy, mobile, we're in like 2008, 2009. If you're in the Bay Area, you saw that the iPhone is coming. People talk about people talk about Whimos, but most people. So when does mobile really hit?

Well, mobile kind of hits in like, you could say it hits when WhatsApp or maybe Uber or maybe Instagram. Like Instagram you can't even think of before mobile and it requires an app store and requires a front-facing camera. So like when will that self-driving moment happen?

It's happening now, but I think I think the next two to five years I'm not just saying I'm not just pitching my book by the way. I like believe this like I think the next two to five years without driving it's it's going to be massive.

It's like the a it's like the area of AI that everyone I think it's just because it's not you know the hype happened 10 years ago.

So everyone wants to talk about LLMs and they want to talk about humanoids but it's like this is the thing where it's you know when we started the company reason we're called applied intuition by the way is we want to be on the applied side of this technology you can spend many years on the research side and if subtle dig in the name yeah like SDS the reason but people ask us like especially engineers who you know are working uh interviewing with us they're like well why don't you get into like this space like four years ago number one transformer former boom, you know, and the change hadn't like the technology just wasn't very good.

But also now if you get into it too late then the like timing is a really really important thing and I think like we always wanted to see hey when are we exiting the research phase of self-driving and when are we entering and the applied phase just to be very direct for folks who are not is it when it becomes an engineering problem and now the engineering problem is just about cost cost cost like you guys are not asking me is self-driving real like that conversation in 2015 that's maybe the first question is like is this like a real thing I know it's real.

I want to know when will self-driving be available in a Koigseg? When will it be in the next? When will it be in the next McLaren? Because this is San Francisco lives in the future. Everyone there is already driving P1's Mustang GTS. You got to get these into the general.

You're talking about for the people who don't know Koig Ziggs are which like by the way they make like six a year, right? Like the these cars aren't even crash tested. They're so they're so infrequent. Ferrari more of a mass mass car. Well, I think it'll be a while, but I'm challenging you. Sell your product to coding.

Get it in a coding. I'm throwing down the gauntlet. We we we have, you know, we have a large and public relationship with Porsche. They're big shareholders of ours as well. Um, never, you know, we we deal, like I said, with all the OEMs. We never want to expose any particular strategy.

But if you if you think about it, if you're from a buyer perspective, if you're looking at a Tesla Model S, what's the other thing you look at? You look at takeon. Sure. And a lot of time.

So like I think even the more exotic companies that are focused on driving dynamics, you have to think about this technology of good UX in the cabin and safety systems that prevent, you know, you from getting injured. I think will be like table stakes.

By the way, AE like the re another like a subtle revolution that's happened in the car business that people don't talk about is the automatic emergency braking stuff. now coming in.

It's it's it's like statistically making an improvement in like pass pedestrian deaths like that's wild like things that often can talk about. So I think even in the highest end stuff right now everyone talks about EPA and emissions stuff.

I think in 2035 and going forward it'll all be just like hey why are we still having deaths? Yeah.

like and and then and then that's the clone exit question will come up is like hey it should be aware enough it doesn't have to drive but it should be aware enough to take over from the driver when something really bad is about to happen. Well, thank you for last question. Just curious.

We're we're way we're keeping a series E company waiting. Just to talk about I was gonna say uh when uh how do you think about you know financing the business in the future? Uh it feels like I'm sure I'm sure many many spa uh spa uh sponsors would be begging but you I imagine we'll take the more traditional path.

How do you think about, you know? Yeah, we we've uh we've preserved 100% of the capital we've ever raised in the company's almost taken. So, uh so I stack is Hit that gong, John. Hit thatong. Yeah. Yeah. For the for the for the finance folks at home, they know what that actually mean. That that is that is no easy feat.

So, no spack is not I can there's many things that I'm speculative about. Spack is definitely what I can tell you affirmatively we wouldn't do. Um I think you know we fall into the very I mean there it's not random that Fidelity and Blackstone and you know Franklin Templeton are investors in the company.

I think in that way we're very traditional in the way we're not traditional is we're a very hard tech company. I mean the stuff we build there's virtually no other companies that that do it. So yeah the future I think the future is good you know how are we going to spend the money?

I mean or how do we think about capital allocation? Um I'm all of our values the company's values can be reduced to radical pragmatism. Mhm. If we had to if we had to raise a billion dollars to get into some specific technical area or fight that we think is worth fighting for, we'd do it.

Like it's like pretty pretty straightforward. It's fantastic. Well, congratulations. Always great to talk about. That was that was I know. I know. Well, just hop on next week. Yeah, we we could talk for hours. This is awesome. Uh thank you so much. Have a great rest of your day. We'll talk to you soon.

Uh we have been keeping Elise AI waiting, but we will let them in from the reream waiting room. Some big announcements today. Good thing we warmed up the gong because we got a big deal coming into the TVPN Ultradome from the reream waiting room. Um, hello. How