The Talk Show

00:00:00 ◼   ► I understand, you know, I realize that record-breaking profits alone does not mean anything. It's,

00:00:05 ◼   ► you know, all about growth, but it's the most profitable quarter that any corporation has

00:00:11 ◼   ► ever had in the history of corporations, and the stock dived. And yes, I understand there

00:00:18 ◼   ► are some reasons for that, but still, there's some hyperbole. Some hysteria, I should say,

00:00:27 ◼   ► hysteria involved.

00:00:30 ◼   ► And then in the aftermath of it, and I don't know what's a leak and what's not, but trying

00:00:34 ◼   ► to steer the narrative another way, now all the rumors come piling out of the woodwork

00:00:41 ◼   ► about the bright, rosy future that...

00:00:43 ◼   ► Right.

00:00:44 ◼   ► The converse and many varied interests of Apple.

00:00:48 ◼   ► Right.

00:00:49 ◼   ► And one of them is that today it's all over the place.

00:00:52 ◼   ► I forget who started it, but that Apple has quietly put together a 200 person team working

00:00:58 ◼   ► on VR.

00:00:59 ◼   ► Right.

00:01:00 ◼   ► And the part that makes me roll my eyes is, of course, they have a lot of people working

00:01:08 ◼   ► on VR.

00:01:11 ◼   ► The only thing that would be shocking, what would be truly shocking and would be, to me,

00:01:15 ◼   ► cause for alarm would be if a report came out that said nobody within Apple is working

00:01:19 ◼   ► on VR.

00:01:20 ◼   ► Apple has no plans for VR and it thinks VR is trash.

00:01:24 ◼   ► It's just one guy named Dave who works on the cinema display team.

00:01:28 ◼   ► Right. Dave thinks this VR thing is kind of cool.

00:01:32 ◼   ► Yeah, it's like one guy named Dave who's sort of jury rigged something with it,

00:01:36 ◼   ► you know, with one of those cardboard boxes.

00:01:38 ◼   ► Right, yeah.

00:01:39 ◼   ► That would be shocking. The fact that they're looking at this is...

00:01:44 ◼   ► that this is treated as news really, really.

00:01:49 ◼   ► Yeah, actually I think that was from the FT.

00:01:53 ◼   ► You know, the story itself was none, as you mentioned, none too shocking.

00:02:00 ◼   ► I mean, what they got going on there is there's a bunch of people working on VR.

00:02:05 ◼   ► Apple takes it fairly seriously in terms of like, "Hey, we should explore this."

00:02:10 ◼   ► And that's pretty standard. It's par for the course. Any major

00:02:13 ◼   ► big technological kind of, you know, invention or, or, or infusion of new tech into an industry,

00:02:22 ◼   ► you've got to bet a corporation as big as Apple, doesn't matter what their philosophies are,

00:02:26 ◼   ► they're going to at least experiment with it and play with it and see if it fits within their

00:02:29 ◼   ► milieu, you know, right in the way that you could have written the same thing about touchscreens,

00:02:34 ◼   ► five, six, maybe even 10 years before the iPhone came out, that they were, you know, investigating

00:02:40 ◼   ► and trying to see if they could, you know, is there a product to be made out of this?

00:02:44 ◼   ► Yeah, exactly. And Tim Bradshaw had that report at the FT, and Tim is usually pretty well

00:02:49 ◼   ► sourced and stuff, so I don't really doubt much in his report. But you're right in the

00:02:55 ◼   ► fact that it's like everybody treats it as like a, like a, you know, a holy grail moment,

00:03:00 ◼   ► and it's like, yeah, yeah, sure. I mean, I can tell you that I think it was maybe three

00:03:05 ◼   ► years ago that I first heard Apple was sort of like hiring a few people in like the games

00:03:12 ◼   ► industry and graphics industries and sort of looking at VR, maybe two years ago. And

00:03:18 ◼   ► so I, you know, nothing more than scuttle butts, so nothing really to report on. And

00:03:22 ◼   ► you know, kudos to Tim for like, getting a bunch of triangulations on that. But I think

00:03:28 ◼   ► it would be really silly to assume that they weren't working on it. That would be the bigger

00:03:32 ◼   ► thing.

00:03:33 ◼   ► And I'm not trying to say that Tim Bradshaw's original report is the one that is saying

00:03:36 ◼   ► that it's a shocker, but it's just the reaction, though, across the web to it as, "Wow, I thought

00:03:43 ◼   ► Apple was done making new products."

00:03:46 ◼   ► Yes, yes.

00:03:47 ◼   ► Actually, that does seem to be the assumption in a lot of these stories.

00:03:51 ◼   ► And you have to wonder, and not just VR, but every time, right?

00:03:55 ◼   ► Like every time, "Oh, it's like a dual lens thing or a VR thing or whatever, or car thing."

00:04:00 ◼   ► And it's like the assumption is always that you think the reader is stupid enough to believe

00:04:05 ◼   ► that Apple was like done, that was it, you know what I mean, for them.

00:04:09 ◼   ► And they're never going to release anything different than the iPhone ever again, you

00:04:14 ◼   ► know.

00:04:15 ◼   ► Right, and the other part that gets me is the undercurrent.

00:04:18 ◼   ► And nobody will quite come out and say it because if they came out and said it point

00:04:21 ◼   ► blank it would sound stupid.

00:04:22 ◼   ► But the way that they react though is when something like this comes out and it's a,

00:04:27 ◼   ► I'm not going to say pie in the sky, but it's something that is almost certainly years in

00:04:32 ◼   ► the future from being the actual product on the market.

00:04:35 ◼   ► It's exciting and a sign that maybe Apple's best days are ahead of it.

00:04:39 ◼   ► Then let's just say that some kind of VR-driven thing comes out from Apple in 2017 or 2018.

00:04:48 ◼   ► Then it comes out and then it only sells like two million units in the first year.

00:04:55 ◼   ► quote-unquote only makes you know four or five billion dollars in revenue in

00:04:59 ◼   ► the first year. Well then it is a dud, it's not going to move the needle, it's

00:05:06 ◼   ► pointless, it's a failure and let's move on to the next thing. You know that when

00:05:12 ◼   ► it's a vague notion it's super exciting and then when it's an actual

00:05:16 ◼   ► product it and it isn't the biggest thing that since the iPhone then it's

00:05:22 ◼   ► It's no good. And you see that all week long, in my opinion, with the reaction people have had to the watch.

00:05:28 ◼   ► And Apple's quarterly finances and stuff like that.

00:05:32 ◼   ► Yeah, and you may... It is more...

00:05:35 ◼   ► I mean, anytime you get something, you get a concept that involves more gray and more complexities,

00:05:41 ◼   ► it's gonna be hard to either make it the narrative, and it's gonna be hard to convince people to want to buy into it,

00:05:48 ◼   ► because it's not as exciting, right? It's more about nuance. It's talking to somebody

00:05:52 ◼   ► about the difference between two different jazz singers, not the difference between rock

00:05:56 ◼   ► and roll and R&B or rock and roll and classical music or whatever. There's more subtlety involved.

00:06:03 ◼   ► If you get into an area where Apple is a company that's made up of a bunch of really solid

00:06:08 ◼   ► smaller businesses and one massive business, nobody wants that. They want Apple to have

00:06:14 ◼   ► another blockbuster business like the iPhone to replace the iPhone.

00:06:20 ◼   ► That's the narrative currently anyway.

00:06:22 ◼   ► Right.

00:06:23 ◼   ► And there's nothing that can be done to dismiss it.

00:06:27 ◼   ► VR in particular, it's an interesting thing to think about from Apple's perspective or

00:06:35 ◼   ► from someone who appreciates Apple's perspective because it could mean anything.

00:06:40 ◼   ► Whereas Apple is building a car, it's pretty specific.

00:06:45 ◼   ► We know what a car is, it's a thing that you get.

00:06:47 ◼   ► And there's all sorts of, well, how are they gonna charge the, assuming it's an electric,

00:06:51 ◼   ► how are they gonna charge it and what kind of battery technology they have.

00:06:54 ◼   ► And there's all sorts of details to be worked out, but we still know what a car is.

00:06:57 ◼   ► Whereas the idea of Apple getting involved with VR, it really could be any or all of

00:07:02 ◼   ► the various different things.

00:07:03 ◼   ► It could be something completely entertainment driven, like an extension of Apple TV and

00:07:08 ◼   ► it's for gaming and stuff like that. And that's a lot of, you know, I don't know what you

00:07:12 ◼   ► saw at Sundance, but I'm guessing at Sundance in particular, it's a lot of entertainment

00:07:16 ◼   ► in some way.

00:07:17 ◼   ► Yeah, mostly mostly entertainment stuff. There's some documentary stuff and and a large, large

00:07:24 ◼   ► majority of it is based around sort of three 360 photography, and not as much 3d environments

00:07:33 ◼   ► yet although I did play in some 3d environments there are some studios making stories you know

00:07:39 ◼   ► telling stories in 3d environments which is a whole other thing the whole studio system or

00:07:44 ◼   ► content creation system for vr but majority of it right now all film based entertainment based yeah

00:07:50 ◼   ► well the other the thing that apple could do that might be different than anything we've seen so far

00:07:55 ◼   ► is this could be something that is meant for you know being like a display for the mac

00:08:00 ◼   ► and it could be a way to get like, you know, some sort of heretofore science fiction-ist-y style

00:08:08 ◼   ► super wide display that is right in front of you while you do your work.

00:08:12 ◼   ► - Mm-hmm, mm-hmm. Yeah, it could be. I mean, the VR... So VR, if you want to think about what

00:08:20 ◼   ► Apple's going to do and how Apple might use VR, you have to sort of think about VR in the macro

00:08:26 ◼   ► for just a sec. And the macro for VR right now is you have two diverging pathways. You

00:08:33 ◼   ► have the people that are really pushing the technology forward and doing the most advanced,

00:08:41 ◼   ► craziest things you can think of. And those are the VR headsets that are hooked up to

00:08:45 ◼   ► a powerful computer. This is all the stories that came out about Oculus. Like, "Oh, sure,

00:08:50 ◼   ► the Oculus is $600, but you have to have a $15 computer to run it," which is true. And

00:08:55 ◼   ► And those are the, that's like the gamer segment.

00:08:58 ◼   ► You know, gamers, game, games and pornography have always driven technology forward, right?

00:09:03 ◼   ► Like the internet, computing power, home video.

00:09:06 ◼   ► Yeah, home video, exactly.

00:09:07 ◼   ► A lot of those things have really been driven off of gamers and, and pornography.

00:09:13 ◼   ► And that's, you know, it's neither here nor there.

00:09:15 ◼   ► I'm not making any value judgments on either one of those.

00:09:18 ◼   ► I'm just saying that's the reality of it.

00:09:20 ◼   ► So when you look at VR, you look at pornography and gamers, that is going to be driven, usually

00:09:25 ◼   ► usually, probably, at least a gaming segment, by more powerful experiences driven by powerful

00:09:31 ◼   ► computing devices.

00:09:32 ◼   ► A desktop computer, essentially, that is powering your big, complex virtual experience, whatever

00:09:40 ◼   ► that may be, whether it's a game or a communal world where a bunch of people live in it,

00:09:45 ◼   ► like a snow crash type thing, or whatever.

00:09:49 ◼   ► That's all that branch.

00:09:50 ◼   ► So that's really one school of thought, one branch of exploration of VR.

00:09:54 ◼   ► The other half is the Samsung Gear VR, which is a headset that you snap a phone into and

00:10:04 ◼   ► it becomes a VR headset.

00:10:05 ◼   ► It's like a plastic shell with a couple lenses in it.

00:10:09 ◼   ► Not much beyond the Google Cardboard, except that it's not made out of cardboard, it's

00:10:14 ◼   ► made out of plastic.

00:10:15 ◼   ► And you snap your phone into it and it becomes a VR headset.

00:10:19 ◼   ► And that mobile VR experience is much more a mass-market product.

00:10:25 ◼   ► That's something you could take on vacation and your kid plays within the backseat or

00:10:30 ◼   ► whatever.

00:10:31 ◼   ► And that kind of mass-market VR is the other branch.

00:10:35 ◼   ► And I feel that we won't really see anything from Apple that's consumer-focused until those

00:10:42 ◼   ► branches converge.

00:10:44 ◼   ► So we have a mobile platform that has enough power to power fairly robust VR experiences

00:10:51 ◼   ► that you can do without wires.

00:10:53 ◼   ► Because I just don't see an Apple headset with a bunch of wires connected to a big computer.

00:10:57 ◼   ► That's just not the kind of company they are anymore.

00:11:00 ◼   ► Does that make sense?

00:11:02 ◼   ► Yeah, I think it does make sense.

00:11:06 ◼   ► It's intriguing though to think about.

00:11:09 ◼   ► I wonder if the route to get there without wires isn't necessarily, it would still involve

00:11:16 ◼   ► having, I can only assume, the GPU in the headset.

00:11:21 ◼   ► It's just that waiting for like the, you know, A12 or A13 system on a chip where there's

00:11:27 ◼   ► this insane graphics processor on a, you know, super low power, low weight, low heat chip

00:11:34 ◼   ► that it can also be sold at a very consumer-y sort of price.

00:11:40 ◼   ► Yeah, and so the question is whether or not

00:11:41 ◼   ► we see anything in between those two products from Apple, right?

00:11:44 ◼   ► Right.

00:11:45 ◼   ► Yeah, so maybe they do release something where it is cabled,

00:11:48 ◼   ► and shows off what it can do.

00:11:51 ◼   ► And it's like, well, this is V1, and then V2 maybe, oh, look,

00:11:54 ◼   ► there's no cable anymore, or whatever.

00:11:56 ◼   ► But I mean, I think that the processor in the iPad Pro,

00:11:59 ◼   ► if you can get that into a scenario where you have

00:12:02 ◼   ► like a, you know, an eight ounce battery or whatever that that fits in a headset

00:12:06 ◼   ► and can power that for four or five hours or six hours. I don't know. That

00:12:10 ◼   ► seems like a pretty powerful little utility, you know? Yeah. Yeah, I don't

00:12:15 ◼   ► know. It's, you know, is it entertainment? Is it work? I don't know. It could be

00:12:19 ◼   ► both. I don't know. But I, you know, it's obviously a huge source of what ifs, you

00:12:26 ◼   ► know? Right. And I think I think a large portion of the VR industry is based off

00:12:31 ◼   ► of what-ifs at the moment because not only is there not enough consumer endpoints, I

00:12:35 ◼   ► mean the Oculus just shipped its sort of like retail unit and I mean not shipped but rather

00:12:41 ◼   ► but open pre-orders for it.

00:12:43 ◼   ► It got thousands of pre-orders but until that hits, there really is a very, very, very tiny

00:12:49 ◼   ► amount of people that can even experiment with a decent VR headset.

00:12:55 ◼   ► There's a long way to go before there are enough consumer endpoints for Apple to even

00:12:59 ◼   ► consider releasing a product in that field.

00:13:03 ◼   ► Everybody's got a wrist.

00:13:05 ◼   ► Everybody needs a phone.

00:13:08 ◼   ► There's just not that need in the VR yet.

00:13:16 ◼   ► I don't know.

00:13:17 ◼   ► I feel like it's too hard to figure out what they're doing with it yet, but of course they're

00:13:22 ◼   ► working on it.

00:13:23 ◼   ► It could be interesting.

00:13:24 ◼   ► It would be funny if it was...

00:13:26 ◼   ► It would be funny if it was part of the car.

00:13:31 ◼   ► Yeah, yeah.

00:13:34 ◼   ► That would be interesting, wouldn't it?

00:13:37 ◼   ► That augmented reality, which many people do lump in with virtual reality because it

00:13:43 ◼   ► has some similar characteristics, I think that's a given on the car.

00:13:49 ◼   ► I can't see how Apple releases a "car of the future" according to Apple and doesn't include

00:13:56 ◼   ► the ability to overlay information on your view. You know what I mean?

00:14:00 ◼   ► I mean, every car makers that have been doing versions of that for,

00:14:03 ◼   ► for almost a decade now or more with like your speed or like left turn,

00:14:08 ◼   ► right turn, or even a traffic warning or whatever, you know, a HUD,

00:14:12 ◼   ► like Mercedes does that BMW does that on some of their cars.

00:14:15 ◼   ► So imagine like a,

00:14:16 ◼   ► a live map display that shows you exactly which turns to make overlaid on the

00:14:22 ◼   ► street itself, you know, so it's not distracting.

00:14:25 ◼   ► it maps one to one with the street. It's not something that

00:14:28 ◼   ► you're looking at and then looking back at the street and

00:14:30 ◼   ► then looking at your windshield in the back of the street, you

00:14:32 ◼   ► know, there's lots of really cool opportunities. I think if

00:14:35 ◼   ► they would be crazy not to ship something like that together,

00:14:38 ◼   ► you know,

00:14:38 ◼   ► yeah, and it's exactly the sort of thing that Apple gets right.

00:14:44 ◼   ► You know, I think that it's there. I don't think there's any

00:14:47 ◼   ► doubt whatsoever that that the future of turn by turn

00:14:50 ◼   ► directions is in the actual view you get out of the car, not secondary. In the same way

00:14:59 ◼   ► that part of the magic of the iPhone compared to the GUI computers that came before it was

00:15:05 ◼   ► the direct manipulation. You're not moving a pointer to click a button, you're just clicking

00:15:09 ◼   ► the button with your finger.

00:15:11 ◼   ► Yeah, that's a good point.

00:15:14 ◼   ► It makes sense that that's better, but I feel like the advantages of it aren't even in the

00:15:19 ◼   ► way that it makes sense there in at like a lower level part of your brain that it's so

00:15:24 ◼   ► much cognitively unburdened because there's a level of abstraction that's gone. Same way

00:15:30 ◼   ► that it'll be with whether it's directions or whatever else you want. Like just show

00:15:35 ◼   ► me you know show me restaurants that are open and they highlight in the actual field of

00:15:39 ◼   ► view as you drive by them stuff like that. Right. Or just a little indication that a

00:15:44 ◼   ► places open or closed at this at 9 o'clock as you drive by.

00:15:48 ◼   ► Mm-hmm. Yeah, and one of the things I like to do when I think about possibilities like this,

00:15:54 ◼   ► and this is really kind of silly, it's a dumb device, but I like to seriously think,

00:15:59 ◼   ► like, could I imagine them announcing this on stage, right? Like, how would I see them pitching

00:16:05 ◼   ► it? And yeah, this is not, like, it's not hyper-original or anything, but if you imagine

00:16:10 ◼   ► somebody like, you know, Schiller on stage introducing the car. And he goes, you know,

00:16:15 ◼   ► and he's saying, like, look, you know, there are so many accidents caused by people looking down

00:16:20 ◼   ► at their phones, texting and driving, or even just looking for directions. Even if it's something

00:16:24 ◼   ► that's allowed by the state or federal governments, we still know it's not safe. And yet we do it

00:16:29 ◼   ► anyway, because we have to, we feel we have, we need the directions, or we need the information.

00:16:35 ◼   ► But now you don't have to. Now here's how we at Apple felt by working together with hardware and software manufacturers and everything working as one big unit.

00:16:45 ◼   ► Here's how it could improve your life, blah, blah, blah, right?

00:16:48 ◼   ► And it's just like if you imagine that, it seems like an easy sell. It's like, yeah, they could sell that, you know?

00:16:53 ◼   ► And yeah, it seems silly enough to think that that's a part of it.

00:16:56 ◼   ► Yeah. Yeah. So I almost—I really do think—and it comes to—it's an old Steve Jobs line,

00:17:02 ◼   ► but that the whole argument about whether or not anything in particular, I mean, famously,

00:17:07 ◼   ► I think he said this to the Dropbox kids, but, you know, is this a technology or is it a product?

00:17:13 ◼   ► And, you know, the other thing he's, he, you know, repeated it many times is that you,

00:17:17 ◼   ► the only way he knows to make a great product is to start with the idea for the product

00:17:22 ◼   ► and then work backwards and find the technology to make it realistic, not to start with, wow,

00:17:27 ◼   ► we've got this amazing technology, right? Let's figure out a way to turn this into a

00:17:32 ◼   ► product, which is to me where, and not to like put Oculus Rift down, but to me, Oculus

00:17:39 ◼   ► Rift is that type of product at this point.

00:17:43 ◼   ► And I know they have great people working on it, and I know, you know, that they could

00:17:48 ◼   ► make that happen.

00:17:49 ◼   ► And it's the sort of thing where maybe the technology itself is so standalone that it's,

00:17:53 ◼   ► in this case, like with a display, which is effectively what it is.

00:17:57 ◼   ► It's just a display.

00:17:58 ◼   ► Maybe you can make that work.

00:17:59 ◼   ► But with Apple, it's never going to be that way.

00:18:02 ◼   ► And I could see that the team that they have working isn't even working on one specific

00:18:07 ◼   ► thing, but three, four, five different things.

00:18:09 ◼   ► Well, I think one of the reasons that Oculus sold to Facebook and that Facebook bought

00:18:13 ◼   ► them and that was a mutually agreeable thing between them is they looked at it and they

00:18:18 ◼   ► realized that, "Oh, shit.

00:18:19 ◼   ► We're going to have to spend a bunch of money trying to get this platform, essentially

00:18:26 ◼   ► hardware platform up and running and out to people before we even start creating things

00:18:31 ◼   ► on it.

00:18:32 ◼   ► And so they thought, "Hmm, well how can we remove the worry about having to fund in a

00:18:38 ◼   ► very expensive hardware manufacturing phase and then move right into what we think will

00:18:45 ◼   ► actually be the money, which is the worlds, right?

00:18:48 ◼   ► The things that you create on top of it."

00:18:51 ◼   ► Because I talked to Brendan N'Ribet, who's the CEO of Oculus, and he was very involved

00:18:58 ◼   ► in gaming for some time. He was involved in Sony's--well, Sony bought it, but their PlayStation

00:19:06 ◼   ► gaming streaming service and whatnot. So he's not a dummy. He knows that the services on

00:19:11 ◼   ► top of VR are where people are going to make their money. And in terms of Oculus, they

00:19:19 ◼   ► don't have to worry now about how are we going to sell these things at an affordable price

00:19:25 ◼   ► point.

00:19:26 ◼   ► They even said that the Oculus Rips, as they are, they're selling them really close to

00:19:29 ◼   ► cost for $600 or whatever.

00:19:32 ◼   ► Instead, they can get stuff out there and see what people build, and then those social

00:19:38 ◼   ► experiences and games and whatever else that gets built on top of them, that's what will

00:19:43 ◼   ► actually take off and be a thing.

00:19:46 ◼   ► Right now, it doesn't make any sense for anybody to go, "Oh, let's get into hardware," unless

00:19:52 ◼   ► they're already in the business of manufacturing commodity hardware, because that's what it

00:19:56 ◼   ► is.

00:19:58 ◼   ► You should be able to buy a VR headset for 50 bucks and put it in your bag.

00:20:03 ◼   ► You'll be able to buy better ones that do better stuff and whatnot, but you should be

00:20:07 ◼   ► able to buy one for 50 bucks, shove it in your bag, and have it hook up to your mobile

00:20:12 ◼   ► phone wirelessly and it'll be powered by internal GPU and it'll transport you to

00:20:18 ◼   ► whatever world you want mobile on a mobile basis and until they're there and

00:20:23 ◼   ► the content is there

00:20:24 ◼   ► nobody's gonna make any money at it you know yeah

00:20:27 ◼   ► here's another rumor of the week or at least rumor of the day is is a story

00:20:34 ◼   ► Bloomberg had today that apple is working on wireless charging

00:20:41 ◼   ► [laughter]

00:20:44 ◼   ► And I laugh again because...

00:20:49 ◼   ► Like, it's the dawn of time. Everybody's wanted to charge with the wires.

00:20:54 ◼   ► Of course they're working on

00:20:57 ◼   ► wireless charging. And you know, I guess the news angle of it is that

00:21:01 ◼   ► according to the story at Bloomberg that it might be ready as early as 2017.

00:21:06 ◼   ► Right.

00:21:10 ◼   ► is a little weird because it doesn't really match up

00:21:12 ◼   ► with the TikTok schedule of iPhones.

00:21:17 ◼   ► That it seems more likely to me

00:21:19 ◼   ► that if it doesn't happen this year in the iPhone 7,

00:21:24 ◼   ► it's probably not gonna happen till 2018 in the iPhone 8.

00:21:27 ◼   ► On the assumption that this year's iPhone 7

00:21:31 ◼   ► will be followed by the iPhone 7S next year.

00:21:34 ◼   ► But maybe not in a way that things like Touch ID

00:21:39 ◼   ► appeared in an S year, you know, and that maybe the wireless

00:21:43 ◼   ► charging wouldn't replace the lightning port, it would be just

00:21:45 ◼   ► something that just magically happens when you connect a wire,

00:21:49 ◼   ► you know, something on the back of the phone. So it's possible

00:21:51 ◼   ► that it could happen in an S year. But overall, the basic

00:21:56 ◼   ► idea, you know, it's great. I hope it happens. But I just

00:22:00 ◼   ► can't, I just can't, can't make my head understand the excited

00:22:05 ◼   ► reaction that people have to this to this report.

00:22:08 ◼   ► You know what I think it is? And I mean, I think this is partially a construct construct of the media. But it is something Apple has probably, I don't hesitate to use the word blame, but they have responsibility for. And that's that they do execute on things, right? So like, there's been wireless charging Android phones for some time, this Qi wireless standard, whatever is, it's okay. I have a couple Android phones that charge that way. And it does work. It works. It works fine. You know, you put it on a little pad and it charges and whatnot. But it's not really wireless, you still have a

00:22:38 ◼   ► pad with the wire attached. And the only thing you're doing is you're just not physically

00:22:42 ◼   ► plugging it in, right? So the execution of wireless charging in terms of, oh, I can stand

00:22:49 ◼   ► near my charger and it when it charges or I can be, you know, within 10 feet of the

00:22:54 ◼   ► charger and my phone will charge, it'll probably be much closer than that in reality. But you

00:22:59 ◼   ► know that that I think that execution thing is what gets people excited about Apple. And

00:23:03 ◼   ► it's where I can sort of forgive people for going, yes, finally, Apple is going to do

00:23:07 ◼   ► and it's because they know that if Apple does it,

00:23:10 ◼   ► there's at least some, I mean, people bitch about the way

00:23:12 ◼   ► that Apple executes on stuff a lot, right?

00:23:14 ◼   ► Because they do claim a lot about their things.

00:23:18 ◼   ► They claim that things they do are really good and awesome.

00:23:21 ◼   ► And that's their fault, I guess you'd call it.

00:23:24 ◼   ► But people just expect the level of execution out of them.

00:23:28 ◼   ► So when they hear that Apple's gonna do X or Y,

00:23:31 ◼   ► they're like, "Oh, this is gonna probably be

00:23:32 ◼   ► "a really good X or Y."

00:23:34 ◼   ► - Well, and it's also human nature.

00:23:36 ◼   ► It's actually easier to criticize something that's sort of in the uncanny Valley between

00:23:40 ◼   ► It's way definitely way better than a pile of shit, but it's not great

00:23:45 ◼   ► Then it's really it's a lot easier to figure out exactly what's wrong. Right and

00:23:50 ◼   ► And when a product is really truly just a garbage product

00:23:56 ◼   ► It's actually harder to say exactly what's wrong with it because it's you don't even know where to start. I

00:24:02 ◼   ► I mean, it's really true. I mean, I know it sounds over and and Apple at their worst usually is the

00:24:08 ◼   ► Has a couple of glaring problems that stick out like sore throat thumbs

00:24:12 ◼   ► Not the this is like sore sore battery pack humps, right?

00:24:16 ◼   ► Like the as an example of a product that I would consider total dogshit would be like the original

00:24:22 ◼   ► HTC Android phone from 2008. Mm-hmm. Oh, yeah the the one they end the one

00:24:31 ◼   ► Android, what do you call it, the Nexus One.

00:24:33 ◼   ► And it was, wasn't it brown?

00:24:35 ◼   ► I think it was. No, maybe I'm confusing it.

00:24:37 ◼   ► They're brown and gray maybe?

00:24:39 ◼   ► I don't know. They had a couple of colors, but yeah.

00:24:41 ◼   ► But it was, it really just,

00:24:43 ◼   ► the only way it made any sense at all

00:24:45 ◼   ► is if you knew, as a

00:24:47 ◼   ► designer, that Android

00:24:49 ◼   ► had started life, and until like

00:24:51 ◼   ► the iPhone was unveiled a year before, it was

00:24:53 ◼   ► sort of a Blackberry style operating system

00:24:55 ◼   ► with an up-down-left-right

00:24:57 ◼   ► input method, and

00:24:59 ◼   ► without a touchscreen. And then they had this device that was like half and half

00:25:04 ◼   ► where all sorts of stuff like text editing all had to be done with up down

00:25:08 ◼   ► left right. And with no touch at all and then other things they tried to

00:25:13 ◼   ► glom on. It was so bad that it was hard to criticize.

00:25:17 ◼   ► Yeah, in that context you'd be like, "Hey, this is pretty good." In comparison to what they had a year ago.

00:25:23 ◼   ► Yeah, I do think... and there's a daring Fireball reader, I forget who it is, and I

00:25:27 ◼   ► I apologize if you listen to the show too,

00:25:28 ◼   ► who sent me a really great note

00:25:30 ◼   ► that I really appreciated that I was,

00:25:32 ◼   ► I think when I linked to something a few weeks ago

00:25:35 ◼   ► that was quote unquote using wireless charging,

00:25:38 ◼   ► took me to task for it because it wasn't wireless at all.

00:25:40 ◼   ► And as an example, so for example,

00:25:42 ◼   ► Apple Watch does not charge wirelessly.

00:25:44 ◼   ► You definitely need a wire

00:25:47 ◼   ► and it needs to be in physical contact.

00:25:49 ◼   ► It's just charges, it is a magnetic adapter.

00:25:52 ◼   ► And if you actually look at Apple's marketing

00:25:55 ◼   ► for the Apple Watch,

00:25:55 ◼   ► Apple never claims that Apple Watch charges wirelessly.

00:25:59 ◼   ► Like that's not wireless.

00:26:00 ◼   ► And you know, for example, if your networking worked that way, you would definitely not

00:26:06 ◼   ► call it wireless networking.

00:26:08 ◼   ► Like if you – to get on your Wi-Fi, you had to magnetically connect your MacBook to

00:26:13 ◼   ► your router.

00:26:14 ◼   ► It might be better than plugging and unplugging in the – an Ethernet adapter.

00:26:20 ◼   ► You know, magnetic would be better than that.

00:26:22 ◼   ► But it's definitely not wireless.

00:26:24 ◼   ► is like Wi-Fi where if you're in the room you've got the network like and so

00:26:29 ◼   ► if that is what Apple's working on for charging that would be actually pretty

00:26:32 ◼   ► amazing mm-hmm yeah and they there's a lot of this kind of loaded topic this

00:26:38 ◼   ► whole wireless charging thing because there's a lot of arguments about the

00:26:41 ◼   ► physics right right because like there's a lot of people that say the physics of

00:26:45 ◼   ► it just doesn't make sense because of the power loss over distance and then

00:26:49 ◼   ► also there's some you know some safe basic safety concerns as well because

00:26:52 ◼   ► You're sending a relatively high-powered radio signal to transmit this power

00:26:58 ◼   ► You have this energy from your charging device to the phone, but there's a startup called you beam which is founded by this

00:27:06 ◼   ► woman named Meredith parody and it's probably the poster child for

00:27:11 ◼   ► a huge promise and like big big attention spike and everybody's thinking hey

00:27:18 ◼   ► This is revolutionary if it actually ships this way and then also the cross

00:27:22 ◼   ► The cross section of people who are like this is bs

00:27:26 ◼   ► And how can this actually work the physics don't work and whatnot you know and there's there's lots of question marks until they actually ship

00:27:33 ◼   ► A product they're getting ready this year to ship a case that supposedly will charge this way wirelessly

00:27:39 ◼   ► And so I think that'll be an interesting proof of concept if that ships and they are able to prove that it does then all

00:27:45 ◼   ► of a sudden, you know, every manufacturer is going to have to have it built in.

00:27:49 ◼   ► Yeah.

00:27:49 ◼   ► And, you know, somebody will probably end up acquiring U-beam or whatever,

00:27:53 ◼   ► and if Apple's working on it internally and they ship it, you know, sure as heck,

00:27:57 ◼   ► Samsung or somebody will try to acquire U-beam so that they can catch up on that front.

00:28:01 ◼   ► Yeah. There's, you know, it does sound good, too good to be true. I mean, but I struggled with

00:28:09 ◼   ► the later physics courses in college, so I really don't want to pass judgment on this.

00:28:14 ◼   ► Yeah.

00:28:14 ◼   ► The basic layman's argument that you laid out that this is not physically possible or not within a reasonable degree of efficiency makes sense to me,

00:28:25 ◼   ► but on the other hand, Wi-Fi honestly still doesn't make much sense to me that it works.

00:28:31 ◼   ► Yeah, Wi-Fi there's exactly like Ethernet. I totally understand how Ethernet works and right and you know the whole idea that

00:28:39 ◼   ► As many people as can get on a Wi-Fi network can get on a Wi-Fi network

00:28:43 ◼   ► And that it all works and everybody gets the right packets

00:28:46 ◼   ► It's right still seems a little too good to be true to me

00:28:49 ◼   ► So if they could make Wi-Fi work starting in the late 90s, I don't know maybe wireless charging

00:28:54 ◼   ► You know I'm not ruling it out

00:28:56 ◼   ► Yeah, it'll be like the gods must be crazy moment like you know the soda can to fall from the sky

00:29:01 ◼   ► and everybody will just be like, "Oh my God, everything has to have this."

00:29:04 ◼   ► I mean, I'm the same way. I don't know, you know, I don't know, Jack, about the physics of it.

00:29:09 ◼   ► I just talk to smart people and that's what they tell me.

00:29:11 ◼   ► So it'll be very, very interesting to see what happens when and if it ships and it works,

00:29:18 ◼   ► because I think that's probably going to be a watershed moment for a lot of technology,

00:29:22 ◼   ► because think about all the technologies that would work pretty great if you had a continuous

00:29:27 ◼   ► source of power that was not attached by a wire and that and that battery you

00:29:34 ◼   ► know is not enough to support so it's just the beginning of a lot of really

00:29:38 ◼   ► cool technologies if if that's the case because like let's say you could stand

00:29:43 ◼   ► within 20 feet of your car and it would charge every all your electronic devices

00:29:46 ◼   ► you had on you you know yeah lots of interesting possibilities there so I'm

00:29:51 ◼   ► excited about it but cautiously optimistic is the the right phrase I

00:29:55 ◼   ► I think right all you have to do is get in your car and your phone and watch are already charging

00:30:02 ◼   ► Right right you didn't do anything you just got in and turn on the car and started going to work

00:30:06 ◼   ► And you're thinking what I want to listen to and maybe that's the only thing you're paying attention to because the car can drive itself

00:30:13 ◼   ► And you're just trying to figure out what you how you want to entertain yourself on the way

00:30:18 ◼   ► Right meantime you're without having to worry about it. You're watching phone or charging. It's a heck of a way

00:30:24 ◼   ► It's an interesting, it's also a very interesting way for Apple to get from the,

00:30:27 ◼   ► "Hey, one day of battery life kind of sucks for the watch," to a couple of days of battery life

00:30:34 ◼   ► without really changing the basic nature of batteries. Because it's really more about

00:30:45 ◼   ► making it so much easier and convenient to sort of trickle charge throughout the day.

00:30:49 ◼   ► Mm-hmm. Mm-hmm. Yep, exactly. A nice way to sidestep the whole… Because speaking of physics,

00:30:55 ◼   ► right now there are a couple of physics problems that are essentially preventing any progress in

00:31:00 ◼   ► the battery department. Like every company is spending millions or billions of dollars,

00:31:04 ◼   ► if they have them, you know, every big electronics company, to try and figure out the battery issue,

00:31:09 ◼   ► right? The problem of how the capacity and longevity of batteries. But nobody is really

00:31:16 ◼   ► able to make any huge progress because there are some physics problems that have not been

00:31:21 ◼   ► solved yet and everybody's trying to figure out what materials to use and like carbon

00:31:26 ◼   ► nanotubes and you know all kinds of other mechanics that try to make batteries better.

00:31:33 ◼   ► But the fact of the matter is that there's not much you can do right now until somebody

00:31:38 ◼   ► figures out that some crack or hole in the world is there that wasn't there before and

00:31:44 ◼   ► figures out how to either create a new material or put materials

00:31:47 ◼   ► to work in a new way. So it if you can charge it, just like

00:31:53 ◼   ► Apple has been doing with processor optimization and chip

00:31:55 ◼   ► optimization for years, they've essentially been sidestepping

00:31:59 ◼   ► this thing, you know, kind of by making their stuff more

00:32:02 ◼   ► efficient. It's a similar kind of thing. So maybe we can't

00:32:05 ◼   ► break through batteries, but we can charge them constantly

00:32:07 ◼   ► throughout the day.

00:32:08 ◼   ► Yeah, I do think I that's that's the main thing I take away from

00:32:12 ◼   ► that that's sort of a big goal for the next 10 years. Let me take a break and

00:32:17 ◼   ► thank our first sponsors, our good friends at audible.com. These are the

00:32:23 ◼   ► guys, they're the audiobook people. They have over a hundred and eighty

00:32:26 ◼   ► thousand audiobooks and spoken word audio products and you can get a 30-day

00:32:32 ◼   ► trial, free trial, at audible.com/talkshow. If you want to listen to it,

00:32:39 ◼   ► Audible has it. They have audio books from virtually every genre. And you can get them

00:32:45 ◼   ► anytime, anywhere. And you can listen to them on your phone, your tablet, your computer,

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00:32:59 ◼   ► to I think this is why they sponsor podcasts. If you're listening to podcasts, you know the

00:33:04 ◼   ► advantage of having long form spoken word audio content. Audio books are a great way to add to the

00:33:11 ◼   ► playlist, the listening, you know, what you have queued up for your commutes or your flights,

00:33:17 ◼   ► road trips. I know for a fact, just without even doing any kind of research, I know tons and tons

00:33:23 ◼   ► and tons of you who are listening to my voice right now are doing it on your daily commute.

00:33:27 ◼   ► And I know from how often you email me about maybe trying to get more episodes of the talk show out

00:33:31 ◼   ► than I do that you need more content. Well, audiobooks are a great way to do that.

00:33:35 ◼   ► A lot of them these days are actually read by the authors themselves. It brings

00:33:40 ◼   ► an extra dimension to the text. And when you sign up as an audible customer and

00:33:47 ◼   ► you have a subscription, you can take risks and try new authors without regret

00:33:52 ◼   ► because they have this great listen guarantee. If you start an audiobook and

00:33:55 ◼   ► you don't like it, you can exchange it for another one for free. So see and

00:34:00 ◼   ► listen for yourself when you begin your free 30 day trial, you get your first audio book

00:34:05 ◼   ► for free. And there's no stress, no obligation, you can cancel your membership at any time.

00:34:11 ◼   ► So once again, go get that free trial at audible.com slash talk show. Usually they ask for like

00:34:18 ◼   ► a recommendation, I'll give you a recommendation, I'll tell you a book I just finished. And

00:34:22 ◼   ► they do have it on audio book. It's Philip K. Dix, the man in the high tower, which is

00:34:28 ◼   ► It's a book I've read.

00:34:30 ◼   ► I have, like, Philip K. Dick is one of those guys who I've been a fan of since I was a

00:34:33 ◼   ► teenager but never, like, finished reading everything he had written.

00:34:38 ◼   ► And I remember I had a friend in college who swore up and down that the best Philip K.

00:34:42 ◼   ► Dick book ever written was The Man in the High Tower.

00:34:45 ◼   ► And it was, like, the high praise for that book that made me file it away.

00:34:48 ◼   ► It's, like, sometimes I'm stupid like that and there's books that I really want to read

00:34:51 ◼   ► that if I'm really looking forward to it, I save it.

00:34:54 ◼   ► and then, you know, eventually I'm gonna die and have those books go unread.

00:34:59 ◼   ► The basic gist of "The Man in a High Tower" is what if the United States had never gotten

00:35:05 ◼   ► involved with World War II and Germany and Japan had won and then carved up a more or

00:35:10 ◼   ► less defenseless United States that woke up too late to the threat.

00:35:14 ◼   ► Takes place like in the early '60s.

00:35:17 ◼   ► And what pushed me to read it is that—I was about to say Netflix, but it's Amazon

00:35:23 ◼   ► came out with a TV series based on it and I wanted to read the book before I

00:35:26 ◼   ► watched the show and so I did and it was fantastic so if you want a

00:35:31 ◼   ► recommendation I would say get the get the audio book for the man in the high

00:35:34 ◼   ► tower never read that no I haven't read it I know of it I've read other Philip

00:35:41 ◼   ► Kidek stuff but not that so I'll put that on my deathbed list yeah then I

00:35:47 ◼   ► watched episode 1 of the Amazon show and I didn't like it at all I don't know

00:35:53 ◼   ► I don't know why, but maybe I have to give it, I'll give it another episode or two just

00:35:57 ◼   ► to see, but I thought that it was, it just wasn't what I liked about the book.

00:36:06 ◼   ► But we'll see.

00:36:09 ◼   ► So what else?

00:36:10 ◼   ► What else is going on?

00:36:11 ◼   ► I don't know.

00:36:15 ◼   ► Lots going on right now.

00:36:16 ◼   ► I mean, I think that there's this little, right now is sort of like a stretch of time

00:36:22 ◼   ► where it's earnings report after earnings report, you know, all the Q1 stuff.

00:36:25 ◼   ► Like everybody figures out how all the big companies did in Q4 or fiscal Q1, whatever

00:36:32 ◼   ► you want to call it.

00:36:33 ◼   ► And then after this, it starts, like people start announcing stuff again, you know.

00:36:38 ◼   ► They kind of want to get their wave off of how they did, if they did good or whatever.

00:36:42 ◼   ► Facebook announced an enormous, just an absolutely blockbuster quarter.

00:36:47 ◼   ► Yeah, and everybody seems unanimous to agree that that was about as good as quarter as

00:36:56 ◼   ► Facebook could have announced.

00:36:57 ◼   ► In terms of any metric that they're tracking, revenue and profit and active users, whatever

00:37:03 ◼   ► else, that it's just great.

00:37:08 ◼   ► Seems to be a very well-run company.

00:37:10 ◼   ► Yeah, I think so.

00:37:13 ◼   ► I think they know what their core competencies are now and are executing on those really

00:37:19 ◼   ► well.

00:37:20 ◼   ► I think Facebook is one of those companies that almost everything it did during 2015

00:37:25 ◼   ► just worked.

00:37:26 ◼   ► I mean, they had a few things here and there, like individual spin-off apps that they released.

00:37:32 ◼   ► Maybe didn't set the world on fire or anything, but they were still interesting experiments.

00:37:36 ◼   ► It's just almost everything they tried to do, they did a really, really good job with.

00:37:43 ◼   ► They had like a, during the, I don't know if you saw, but during like the, the, um,

00:37:50 ◼   ► problem in France, uh, the terrorist attack in France, they had this sort of safety check,

00:37:54 ◼   ► um, feature they launched.

00:37:56 ◼   ► And that's indicative of something that only makes sense for a platform on Facebook scale.

00:38:03 ◼   ► Like you literally say, Hey, is your family member?

00:38:05 ◼   ► Okay.

00:38:06 ◼   ► And of course they can check in on Facebook because of course they have an account, you

00:38:09 ◼   ► know?

00:38:10 ◼   ► there's 1.59 billion people on Facebook every month. That's just every month, right?

00:38:17 ◼   ► So maybe somebody has an account but doesn't go and check in every month.

00:38:20 ◼   ► It's probably in the several billions that have an account.

00:38:23 ◼   ► So if you see that there's a terrorist attack and you go, "You know, I don't really log on on my Facebook,

00:38:28 ◼   ► but I'm going to go on there and see if anybody's okay," you can see that safety check thing

00:38:32 ◼   ► and see that your loved one or friend has checked in safe.

00:38:35 ◼   ► safe. I mean, that's a pretty impressive thing to a roll out and execute well, but also the

00:38:42 ◼   ► fact that they can even do it at all, but it's feasible for them to do so. You know,

00:38:46 ◼   ► it speaks to the how enormous that platform is and how well they've executed.

00:38:53 ◼   ► I think it's crazy, though. And again, I don't want to make this an investor investor hour.

00:39:00 ◼   ► But I like thinking about and especially I think you're right that the the holiday quarter

00:39:05 ◼   ► both for especially for Apple but for everybody is sort of like the biggest

00:39:09 ◼   ► one because it's sort of the referendum on the calendar year coming to a close

00:39:13 ◼   ► I the fact that Facebook is trading at a price to earnings ratio of 109 is to me

00:39:23 ◼   ► I again I'm not an expert it just says to me maybe people are a little too

00:39:29 ◼   ► excited about Facebook and where they're going maybe not maybe not but it's

00:39:34 ◼   ► That's a pretty high PE ratio.

00:39:37 ◼   ► Mm-hmm.

00:39:38 ◼   ► Because I'm not quite sure if they've already got 1.5 billion active users, there's not

00:39:48 ◼   ► a lot of upside there in terms of how many more people they can get using it.

00:39:53 ◼   ► Yeah, because their delta is the amount of people that have access to the internet versus

00:39:57 ◼   ► how many people are already on Facebook, right?

00:39:59 ◼   ► That's their growth delta.

00:40:01 ◼   ► And that's not huge.

00:40:02 ◼   ► there, but it's not all 8 billion. All 8 billion people are not on Facebook.

00:40:09 ◼   ► This is almost funny, but it's like, if you could spool it out a little bit further, it

00:40:18 ◼   ► would get really dystopian because Facebook's growth strategy currently is not get more

00:40:25 ◼   ► people on Facebook. It's get more people on the internet, which is pretty crazy when you

00:40:31 ◼   ► think about it because it's like clone people or birth people that can use our product,

00:40:38 ◼   ► right? That's essentially their strategy. It's like if Apple said, "Oh, well, we're

00:40:43 ◼   ► going to create breeding farms that breed people who can buy more iPhones if they choose."

00:40:48 ◼   ► Yeah, I've thought about this too that it's sort of like that... and Google is in a similar

00:40:53 ◼   ► situation where Google is similarly a part of their growth strategy is to get more people

00:40:59 ◼   ► on the internet. And that's why you see companies like Facebook and Google launching these programs

00:41:04 ◼   ► like Google had the one where they had wireless internet routers connected to balloons. I think

00:41:10 ◼   ► they still have it. I don't think they've stopped it, but that they're going to launch balloons

00:41:13 ◼   ► around the world that rain wireless networking down into areas that don't have good internet

00:41:21 ◼   ► access. And again, it's one of those things that just sort of circle back to the magic of Wi-Fi,

00:41:28 ◼   ► that wireless solves that problem in a way that wired networking never would.

00:41:31 ◼   ► You know, and that trying to get people when most of the Western world was first

00:41:37 ◼   ► connected, you know, in a communications network, it was the phone network. And the

00:41:41 ◼   ► way that we did it was by literally stringing copper wire in and out of

00:41:45 ◼   ► every room, in every building, in every house, across multiple continents, which

00:41:51 ◼   ► is not cost-effective, you know. Like, as much as it sounds like a science fiction

00:41:56 ◼   ► idea to have these balloons floating over Africa that give people wireless networking.

00:42:02 ◼   ► It's actually, just look at the back of the envelope, it seems a lot easier and a lot

00:42:07 ◼   ► more financially feasible than stringing cable to everybody.

00:42:13 ◼   ► But again, it's in their own interest, like you said, really, it's getting more people

00:42:17 ◼   ► on the internet is the only way that they can grow.

00:42:20 ◼   ► And the point I'm getting to is that the strategy is sort of like the Catholic Church.

00:42:26 ◼   ► You need to have a lot of babies.

00:42:27 ◼   ► Yeah, how do we spread the religion?

00:42:31 ◼   ► Have six or more babies.

00:42:32 ◼   ► We need you to have as many children as possible so that they can be Facebook and Google users

00:42:37 ◼   ► 12 and 13 years from now.

00:42:39 ◼   ► Yeah, make some new Catholics.

00:42:41 ◼   ► Right.

00:42:42 ◼   ► Oh, man.

00:42:43 ◼   ► I don't know.

00:42:46 ◼   ► I think that there's plenty of opportunity there for people to do interesting things

00:42:51 ◼   ► with big, big networks that are really exciting.

00:42:55 ◼   ► But then you also, the other side of it, the other half of it is, Facebook is their conduit

00:43:01 ◼   ► to the internet, right?

00:43:02 ◼   ► And so Facebook is not a non-profit, right?

00:43:06 ◼   ► They're not an entity that has no interests.

00:43:11 ◼   ► And it's not, you know, it's not a fault of theirs, it just is what it is, right?

00:43:15 ◼   ► So they have a definite desire to get people on the internet so that more people can use

00:43:21 ◼   ► Facebook.

00:43:22 ◼   ► But those people that come on the internet are going to come into an internet that is

00:43:25 ◼   ► hosted and absorbed by Facebook.

00:43:31 ◼   ► And I gotta worry about that.

00:43:35 ◼   ► You gotta think, "Man, I wonder how that could distort their view of the world."

00:43:41 ◼   ► People already talk about Facebook's newsfeed and how it presents certain things or doesn't

00:43:45 ◼   ► present other things to its users, which is a completely valid concern.

00:43:50 ◼   ► And you know, hey, Facebook is probably trying to do its best

00:43:52 ◼   ► to make more people use it and that's fine.

00:43:54 ◼   ► But at the same time, you know, what's the deal?

00:43:57 ◼   ► Like, are we going to get a view of the world,

00:44:02 ◼   ► the developing world is gonna get a view

00:44:05 ◼   ► of the larger world that it's connected to

00:44:08 ◼   ► through Facebook's lens.

00:44:09 ◼   ► And is that a good thing?

00:44:10 ◼   ► Is it a bad thing?

00:44:11 ◼   ► It's probably somewhere in between.

00:44:13 ◼   ► It's just a thing, but it's sort of a creepy thing.

00:44:15 ◼   ► - Yeah.

00:44:19 ◼   ► Here's a question I got from a Daring Fireball reader.

00:44:21 ◼   ► I'll just read it, I'm not gonna mention it.

00:44:23 ◼   ► I think it's a reasonable question.

00:44:24 ◼   ► I think it's the wrong way to think about it,

00:44:26 ◼   ► so I'm not gonna use his name because, you know,

00:44:28 ◼   ► but it's, here's the question I got.

00:44:30 ◼   ► This is two days ago.

00:44:33 ◼   ► Do you think Apple's decision not to get into

00:44:35 ◼   ► the social space will turn out to be a mistake?

00:44:37 ◼   ► Facebook stock is up 12% today.

00:44:39 ◼   ► There are one billion iOS devices.

00:44:43 ◼   ► At the very least, why not an Instagram competitor?

00:44:45 ◼   ► They're already storing the photos.

00:44:47 ◼   ► It seems like a no-brainer to me.

00:44:48 ◼   ► if nothing else, they could slow down Facebook's growth a bit.

00:44:51 ◼   ► Tim Cook didn't sound good yesterday.

00:44:53 ◼   ► Can you only imagine the stress he's under?

00:44:56 ◼   ► And here's what I wrote back real quickly.

00:44:58 ◼   ► But I think it's true.

00:45:00 ◼   ► I think the worst thing Apple could do is chase after ideas

00:45:03 ◼   ► just because they're profitable.

00:45:04 ◼   ► That's the sort of thinking that led Microsoft to stray.

00:45:09 ◼   ► To me, this was Microsoft in its heyday,

00:45:12 ◼   ► like circa the mid-1990s, was they

00:45:17 ◼   ► were making all this money and they had all this engineering talent and

00:45:20 ◼   ► everything was that was happening was happening on Windows computers and that

00:45:27 ◼   ► they would look at any idea that anybody came up with that gained any sort of

00:45:31 ◼   ► traction whether it was financial or just interest because you know like

00:45:35 ◼   ► Netscape for example wasn't really making a lot of money but they were

00:45:37 ◼   ► gaining tons of users and had all its attention and anybody who had anything

00:45:42 ◼   ► Microsoft would look at and say well we got to get into that too and then they

00:45:45 ◼   ► They did and I feel like that's a terrible way to run a company

00:45:49 ◼   ► Because it's it's

00:45:52 ◼   ► And it's sort of to me

00:45:54 ◼   ► It's the opposite of the way Apple is always has achieved the success that they've had which is to be very you know

00:45:59 ◼   ► Pick and choose the things where they can make a difference and where they they really want to be

00:46:03 ◼   ► Like so it has Apple directly profited from the rise of social networking

00:46:10 ◼   ► No, really. I mean the only thing that they ever really tried was ping and what they did our heart wasn't really in that

00:46:16 ◼   ► That was just a way to try to sell more music

00:46:18 ◼   ► and

00:46:19 ◼   ► But on the like sort of secondary level

00:46:22 ◼   ► They've profited greatly because people have social networking is a huge reason why people want to carry

00:46:28 ◼   ► Cellphones smartphones with them everywhere they go and take them out of their pocket whenever they have a few minutes

00:46:34 ◼   ► It's the fact that people are doing so much on Facebook throughout the day

00:46:40 ◼   ► on their phones and doing Instagram on their phones or doing Twitter from their

00:46:44 ◼   ► phones that they care so much about their iPhone. The Apple benefit, you know,

00:46:49 ◼   ► there is it's, you know, they don't get to, you know, their stock doesn't go up

00:46:54 ◼   ► just because more people are using Facebook. But at some level, part of the

00:46:58 ◼   ► iPhone's success and therefore part of Apple's success is the success of things

00:47:02 ◼   ► and popularity and the way that everybody, I mean, just, you know, regular

00:47:07 ◼   ► normal people have taken to these networks like fish to water.

00:47:14 ◼   ► Yeah, I think that there is an argument that if they are going to invest in anything, like

00:47:21 ◼   ► you think about their statements, their repeated statements, that it's important that they

00:47:26 ◼   ► own their technology, right?

00:47:30 ◼   ► To a degree, owning your technology these days doesn't just mean owning the bits of

00:47:35 ◼   ► hardware that go into it. It means, of course, the software stack too, right? And the software

00:47:40 ◼   ► stack includes the underpinnings, but also the things that run on it, right? So the things

00:47:46 ◼   ► that run it, are also the things that run on it. So Apple goes, "Hey, you know, we made

00:47:51 ◼   ► this great thing. We're gonna get developers to build great apps, or we're gonna encourage

00:47:55 ◼   ► them to build great apps, and they're gonna build amazing apps." And they have benefited

00:47:58 ◼   ► significantly from that. So then you have to go, "Well, at some point, Apple's gotta

00:48:03 ◼   ► go these particular segments and categories of apps are so popular and so important to

00:48:09 ◼   ► the iPhone's success. You can look at the battery indicator on your phone, the new little

00:48:18 ◼   ► thing in iOS that tells you how much battery each app is using. Unless some app is acting

00:48:24 ◼   ► naughty, you get basically a cross section of what's important to you, like which apps

00:48:29 ◼   ► are important to you and which ones you use your phones for.

00:48:33 ◼   ► And that kind of gives you the heads up of like, "Oh, these are the things that are most

00:48:36 ◼   ► important to me.

00:48:37 ◼   ► This is how I use my iPhone."

00:48:40 ◼   ► And so I'm sure Apple has all those statistics as well.

00:48:42 ◼   ► So they know exactly what people are using their phones for the most.

00:48:46 ◼   ► So then you have to say, "Hmm, I wonder if at some point they go, 'People use their phones

00:48:51 ◼   ► 60% of the time for messaging.

00:48:54 ◼   ► Why are we not building iMessage out into a true messaging platform?"

00:48:59 ◼   ► They have done some of that.

00:49:00 ◼   ► They have done a little bit of that.

00:49:02 ◼   ► Then you go, "Well, why isn't it a social network?

00:49:04 ◼   ► Why isn't iMessage a social network?"

00:49:06 ◼   ► I guarantee you top battery usage is probably Twitter and Facebook on many people's phones,

00:49:12 ◼   ► or Twitter and Facebook.

00:49:14 ◼   ► There's a definite thought process that you could see churning there where it's like,

00:49:20 ◼   ► Yes, we don't like to spread ourselves too thin, but if we were going to take on a project,

00:49:26 ◼   ► wouldn't the things that people use their phone for the most and second most be something

00:49:30 ◼   ► that we might be interested in?

00:49:33 ◼   ► My guess is that in the aggregate, if you looked at everybody who's used an iPhone in

00:49:39 ◼   ► the last month, my guess is Facebook would be in the top spot the most time, more than

00:49:47 ◼   ► any other app.

00:49:49 ◼   ► My guess from number two and three, it's hard to say because I don't know.

00:49:56 ◼   ► Facebook is the one where you just know that there's that many people using it.

00:50:00 ◼   ► Where Twitter would be, I don't know.

00:50:03 ◼   ► I guess it's up there but I wouldn't be surprised if it's not even close, if it's not number

00:50:07 ◼   ► two.

00:50:08 ◼   ► I would guess the other app that for some people has got to be way up there is mail.

00:50:14 ◼   ► Obviously, that brands you as an old person or a work person.

00:50:20 ◼   ► But for people whose jobs largely revolve around email or email is a primary part of

00:50:26 ◼   ► it, boy, mail can really suck up the time on your phone.

00:50:31 ◼   ► Mm-hmm.

00:50:32 ◼   ► Yeah.

00:50:33 ◼   ► Yeah.

00:50:34 ◼   ► I think you're right in that you're going to get a demographic slice.

00:50:37 ◼   ► There's going to be some things that certain people use a significant amount and then other

00:50:43 ◼   ► people don't like it might if I'm if I go into mine let me go in here I'm just

00:50:49 ◼   ► gonna look at mine so if I go to where's this damn thing they keep moving around

00:51:00 ◼   ► yeah battery it's first level but it's in the third group battery oh there it

00:51:06 ◼   ► is okay so yeah if I look at my top list here wait for it to refresh so it's

00:51:10 ◼   ► It's phone because I have a lot of conference calls.

00:51:16 ◼   ► I actually am laughing because I literally did not expect it to be everyone.

00:51:20 ◼   ► That's really funny.

00:51:22 ◼   ► Phone is my number one.

00:51:23 ◼   ► I'm guessing that's because I just spend an enormous amount of time on the phone talking

00:51:28 ◼   ► to people either in meetings or sources and that sort of thing.

00:51:33 ◼   ► I've also been doing a lot of work, doing some hiring right now.

00:51:36 ◼   ► I've been talking to a lot of potential hires.

00:51:38 ◼   ► I'll just chalk that up to abnormal because I don't think it's usually number one.

00:51:41 ◼   ► But then number two is Twitter. Number three is Instagram,

00:51:44 ◼   ► which is owned by Facebook. Number four is mail.

00:51:47 ◼   ► Then home and lock screen messages, Slack, Safari,

00:51:52 ◼   ► and then it kind of dwindles down to below 1% for the rest of them.

00:51:55 ◼   ► Yeah. Mine, mine for the last 24 hours. Tweetbot is 65% male,

00:52:00 ◼   ► 8% Safari, 6% messages, 4%.

00:52:04 ◼   ► I have a feeling we're kind of boring.

00:52:06 ◼   ► Like I think a lot of people's would be Snapchat.

00:52:08 ◼   ► Like I think Snapchat would be up there.

00:52:10 ◼   ► Here's, here's my seven days.

00:52:12 ◼   ► It's probably more accurate.

00:52:14 ◼   ► Tweetbot 49%, Safari 21%, Mail 7%, Slack 3%, Messages 3%, Phone 3%.

00:52:22 ◼   ► Yeah.

00:52:23 ◼   ► Everything else sort of dwindles off in there.

00:52:24 ◼   ► Now my tweetbot is super high because I really, that's really just the

00:52:28 ◼   ► majority of what I do is I'm either reading the actual tweets or, um,

00:52:33 ◼   ► especially now that they have this Safari view controller, when I find a link to read,

00:52:37 ◼   ► I read it right there in Tweetbot.

00:52:41 ◼   ► So it's really misleading. Like I think if you could separate my

00:52:44 ◼   ► Tweetbot when I'm actually reading tweets versus Tweetbot when I'm reading a web

00:52:47 ◼   ► view, it would be very different.

00:52:49 ◼   ► And it's not any kind of indication in my

00:52:52 ◼   ► personal experience that Tweetbot is an egregious battery user.

00:52:56 ◼   ► It's really that my... it's just by so far and away the most used

00:52:59 ◼   ► app on my phone.

00:53:03 ◼   ► Yeah. And I think that those, you look at those opportunities and Apple probably looks at that data as well.

00:53:09 ◼   ► And then they go, "Hey, you know, should we be in this particular area?"

00:53:14 ◼   ► And I think that usually, usually the decisions are probably made by, "Can we 10x this?"

00:53:22 ◼   ► Right? And if they can't 10x it, if they can't do something 10 times better, then they just leave it alone.

00:53:28 ◼   ► and be like, "Well, we'll make the best platform we can for this particular use case

00:53:33 ◼   ► and let somebody else build it."

00:53:35 ◼   ► Yeah, that to me is the sweet spot of where Apple's opportunities for future growth are

00:53:40 ◼   ► or just maintaining them thing they have now is to make sure that the platform is the place

00:53:45 ◼   ► where the next thing is going to be built as opposed to trying to build that next thing

00:53:49 ◼   ► themselves.

00:53:50 ◼   ► Right.

00:53:51 ◼   ► And if you spend too much time trying to build the thing, then you end up sending a signal

00:53:55 ◼   ► to people who could potentially build some random thing you haven't heard of,

00:53:59 ◼   ► right? Right. That, that is super successful. Like Snapchat for instance,

00:54:04 ◼   ► or whatever. Right.

00:54:05 ◼   ► You kill that desire for them to innovate on your platform because you're sending

00:54:09 ◼   ► them a signal like, Oh,

00:54:10 ◼   ► we're going to subsume you at some point or rethink we can do this better.

00:54:14 ◼   ► So we're not going to offer you the best tools.

00:54:16 ◼   ► And that's always a danger with Apple because they do have native apps as well

00:54:19 ◼   ► and native functionality. And so they have to balance the needs,

00:54:24 ◼   ► their own needs versus the needs of the developer so that they're signaling properly that this

00:54:29 ◼   ► is a hospitable environment for people that want to build new things.

00:54:35 ◼   ► And yeah, that's important.

00:54:36 ◼   ► It's important for any big platform, which is why I think people were so kind of pissed

00:54:40 ◼   ► at Facebook this week with the whole parse thing.

00:54:42 ◼   ► So...

00:54:43 ◼   ► All right, well, we should talk about that, I guess.

00:54:47 ◼   ► I don't know enough about the developer details of it, but more or less...

00:54:51 ◼   ► Well, maybe you should explain it.

00:54:53 ◼   ► Yeah, I mean, you know, I'm nobody's parse engineer either, but I do it basically is a

00:54:59 ◼   ► Backend service that allows people to spin up mobile apps and

00:55:04 ◼   ► Utilize its services for the backside of the app all of the database handling and a variety of other things

00:55:11 ◼   ► So they can build UI and concentrate on overall user experience without having to build all of the infrastructure themselves

00:55:19 ◼   ► This was essentially a kind of a buy that Facebook made Facebook acquired them for I think like 38 million dollars or something

00:55:25 ◼   ► Couple years ago and they acquired them at a time when their stock was kind of hurting

00:55:29 ◼   ► They were hedging their bets because they weren't doing well on mobile ads. They weren't converting well their users well to to

00:55:37 ◼   ► Mobile ads or revenue to mobile ads which now by the way, they are like something 80%

00:55:41 ◼   ► Right of the revenue comes from mobile ads, which is insane

00:55:46 ◼   ► But they were hedging bets and so they thought we need a service like Amazon has with AWS where we can be

00:55:53 ◼   ► like the service provider for all of these other apps and if we don't if we don't end up being in a

00:56:00 ◼   ► Consumer facing success with our revenue. We'll have this other source of revenue to back it up

00:56:06 ◼   ► you know because they could see the writing on the wall finally that you know, everybody's going to mobile people want native and

00:56:11 ◼   ► Their ads weren't converting well, so this was a sort of hedge thing for them

00:56:16 ◼   ► And then I guess they figured I mean from what I've heard all they all they looked at was like not a lot of people

00:56:23 ◼   ► Were using it they could do without it

00:56:24 ◼   ► So they shut it down

00:56:25 ◼   ► But it did send a lot of signals to people who develop on Facebook that if Facebook doesn't feel like they needed

00:56:32 ◼   ► You know, it's going away and you're gonna be stuck in the lurch

00:56:35 ◼   ► If a large portion of your app was built using this, you know tool that Facebook acquired or maintained

00:56:42 ◼   ► which is a danger, I think.

00:56:44 ◼   ► - Right, and the whole appeal of something like this is,

00:56:47 ◼   ► look, this way you can keep your team small.

00:56:50 ◼   ► Focus on what it is your app actually does.

00:56:52 ◼   ► Mostly, think about the app itself

00:56:54 ◼   ► as opposed to having to worry about the backend

00:56:56 ◼   ► and all this backend engineering.

00:56:58 ◼   ► You'll get your thing built faster.

00:57:01 ◼   ► You'll be able to parlay off our expertise

00:57:03 ◼   ► at keeping these backend services up and running

00:57:06 ◼   ► with a very high performance, high reliability.

00:57:11 ◼   ► And then all of a sudden...

00:57:13 ◼   ► Now the one thing that I have seen a lot of people say about Parse is that

00:57:16 ◼   ► okay, it sucks that Facebook is shutting it down, but that when Facebook shuts

00:57:21 ◼   ► something like this down, they do it better than anybody else. And I think

00:57:24 ◼   ► it's a year from now when they've said that.

00:57:26 ◼   ► Yeah, one year.

00:57:28 ◼   ► Which, you know,

00:57:30 ◼   ► isn't good news to anybody out there who wasn't, you know, whose plans for their

00:57:34 ◼   ► app that is currently using it

00:57:36 ◼   ► didn't have any kind of allocation for let's spend seven months rewriting the

00:57:41 ◼   ► back end in 2016, and now all of a sudden, that's sort of, they have to, but it's a heck

00:57:48 ◼   ► of a lot better than it's going away April 1st or something like that, which is how some

00:57:53 ◼   ► of these things go down.

00:57:55 ◼   ► Oh, yeah. Actually, recently, a lot of web services, there's been a variety of them run

00:58:02 ◼   ► by the giants that have decided that they're no longer necessary, and they're shut down

00:58:08 ◼   ► within a couple of weeks, man, like really quickly.

00:58:12 ◼   ► And it makes people jumpy.

00:58:13 ◼   ► I mean, it makes developers I talk to really, really, really jumpy, like, "Why should we

00:58:18 ◼   ► use any of this stuff if we don't know where it's going to be?"

00:58:22 ◼   ► So anyhow, I mean, the roundabout route there was Facebook has to deal with very similar

00:58:27 ◼   ► issues to Apple when it comes to creating a hospitable environment, because I think

00:58:31 ◼   ► you're absolutely correct in that a lot of Apple's continued success is based on them

00:58:37 ◼   ► being hospitable to the next big thing, and their platform being welcoming, and people

00:58:44 ◼   ► seeing it as a desirable place to be.

00:58:47 ◼   ► So far, they're good there, but you can't count on that being forever because that's

00:58:51 ◼   ► when you end up in trouble and end up slipping.

00:58:56 ◼   ► Yeah.

00:58:58 ◼   ► What did you think of—I thought that Apple's whole earnings, the phone call especially,

00:59:06 ◼   ► It was weird, I thought, because it was inevitably weird because I think Apple knew exactly how

00:59:11 ◼   ► well the news and numbers they had were going to play out, which was not well.

00:59:17 ◼   ► But on the other hand, they're not going to...

00:59:21 ◼   ► The spin on it was a very tricky dance because they're not going to sit there and apologize

00:59:26 ◼   ► for having the most profitable...

00:59:28 ◼   ► The best quarter of any company ever.

00:59:30 ◼   ► Right.

00:59:31 ◼   ► for themselves and the most profit of any company that anybody's ever had and a reasonably,

00:59:41 ◼   ► you know, part of the spin was the very, very reasonable to me argument that a big part

00:59:47 ◼   ► of the reason why it was almost flat year over year was the currency exchange problems

00:59:55 ◼   ► that they had around the world and that with the, you know, incredible amount of sales

01:00:00 ◼   ► they have now that there's definitely not a US only company like they used to be in

01:00:05 ◼   ► the old days that they sell tons throughout Europe and China is this huge growing market

01:00:09 ◼   ► and Japan is a big market. But that basically the dollar, US dollar is so strong that they

01:00:17 ◼   ► had to raise prices around the world just to try to keep even and that they lost somewhere

01:00:21 ◼   ► around $8 billion in currency exchange for the quarter.

01:00:30 ◼   ► But let's face it, they're making excuses.

01:00:35 ◼   ► They're trying to put it in the best possible light.

01:00:37 ◼   ► The other thing that they came up with, and it's interesting, I'm not saying that it's

01:00:40 ◼   ► pointless, I'm not saying it's an empty number, but I'm curious about what you think about

01:00:46 ◼   ► it because I'm still not sure, is they came up with this new number, monthly active devices.

01:00:50 ◼   ► And that they said that from the tracking that they can do of when you opt into, "Hey,

01:00:59 ◼   ► will you allow Apple to see what you're doing on your device?"

01:01:04 ◼   ► They now estimate that there's one billion active devices, iPhones, iPads, Macs, I guess

01:01:11 ◼   ► watches get counted in that.

01:01:16 ◼   ► That's not a billion people.

01:01:18 ◼   ► clearly they're emphasizing that it's devices and that an awful lot of the company's success

01:01:23 ◼   ► is the fact that there are people like the people who listen to the show who have an

01:01:27 ◼   ► iPhone and iPad and a Mac or maybe two Macs. So a billion devices is definitely not a billion

01:01:34 ◼   ► people but it's an interesting number nonetheless compared to the number of people in the world

01:01:40 ◼   ► which is what, like around 7 billion.

01:01:43 ◼   ► Yeah, I don't know what to make of it either.

01:01:47 ◼   ► I mean, I think it's definitely a more accurate number than number of devices sold total.

01:01:55 ◼   ► Or not more accurate, but more interesting, right?

01:01:59 ◼   ► Because the number of devices sold does not include, of course, devices that have been

01:02:03 ◼   ► put into a drawer and ignored or whatever.

01:02:08 ◼   ► So they're signaling that this is how many people, this is your addressable market.

01:02:13 ◼   ► That's the signal, right?

01:02:14 ◼   ► So the signal to anybody in the Apple ecosystem and a signal to any investor is, you know,

01:02:22 ◼   ► that wants to buy Apple stock or whatever, is that this is their addressable market.

01:02:27 ◼   ► And that addressable market has two sort of components.

01:02:32 ◼   ► One, accessory makers, app developers, anybody in the external ecosystem can look at that

01:02:41 ◼   ► and go, "Oh, well, this is how many people we can hope to sell to directly."

01:02:47 ◼   ► And then the other aspect of it is that Apple is saying, "This is how many people we can

01:02:54 ◼   ► sell anything new we make to."

01:02:57 ◼   ► These are the people that are actively already using it, that have bought into the Apple

01:03:01 ◼   ► way of doing things and are willing to buy the things that we make.

01:03:09 ◼   ► That is a growth signal and that's the kind of thing that they're trying to counteract

01:03:13 ◼   ► is this feeling that Apple can't grow anymore.

01:03:17 ◼   ► That doesn't have any room to grow.

01:03:20 ◼   ► To me, that's exactly why they've introduced this number.

01:03:25 ◼   ► Part of it is that it hit the nice even one billion, so it makes it like it somewhat adds

01:03:30 ◼   ► to the "here's why we're going to bring this up."

01:03:33 ◼   ► But if they track this every quarter, it's a way to show growth that takes into account

01:03:40 ◼   ► the fact that people buy a lot of Apple's products and use them until they break, which

01:03:47 ◼   ► to me is a large part of the "why are the iPad numbers lower than they were in its heyday?"

01:03:56 ◼   ► And I really do, and a lot of this is based on just the anecdotal evidence of what I see

01:03:59 ◼   ► and the people in my extended family doing with their iPads, which is using them until

01:04:04 ◼   ► they break.

01:04:06 ◼   ► And that's when they go to buy another iPad, because all of the things that they bought

01:04:10 ◼   ► the iPad for, we can focus on all the new features like retina displays and Touch ID

01:04:19 ◼   ► and the pen, the pencil for the iPad Pro or whatever.

01:04:23 ◼   ► Whereas everybody I know bought it to do email and play Candy Crush and watch videos, or

01:04:30 ◼   ► a lot of people my age, my generation who have kids, to have it to give to kids to watch

01:04:37 ◼   ► videos and stuff like that on.

01:04:41 ◼   ► No matter which iPad you have, if it still is working, it still does all of those things

01:04:46 ◼   ► as good as it did when it started.

01:04:48 ◼   ► And I really feel like this monthly active device thing is a number that can keep, should

01:04:53 ◼   ► keep growing even in a quarter where the year over year number of iPhones sold is not showing

01:05:02 ◼   ► a lot of growth.

01:05:03 ◼   ► Right, right.

01:05:04 ◼   ► Yeah.

01:05:05 ◼   ► That makes sense because they can say, look, you know, people are keeping them, but they're

01:05:08 ◼   ► still using them.

01:05:09 ◼   ► You know, so even if we didn't sell quite as many, there's still a ton of devices on

01:05:13 ◼   ► our platform.

01:05:14 ◼   ► So when those do break, we're going to get those sales and that sort of thing.

01:05:17 ◼   ► So it's a recurring revenue versus a new revenue thing.

01:05:21 ◼   ► But see, Wall Street is really obsessed with growth, right?

01:05:25 ◼   ► They base their stock prices on future revenue, not current.

01:05:30 ◼   ► You know, like, "Congrats, you did amazing, but we don't care."

01:05:33 ◼   ► Like, that's their attitude, right?

01:05:35 ◼   ► And it's like, "What could you do for me in the future?"

01:05:37 ◼   ► Not, "What have you done for me?"

01:05:39 ◼   ► Man, that's just the nature of the beast, you know?

01:05:41 ◼   ► That's the way it works.

01:05:42 ◼   ► So I think that Apple's going to have a very interesting story to tell, because this is

01:05:50 ◼   ► one of those really funny, I guess it depends on who you are, whether it's funny or not,

01:05:56 ◼   ► but it's sort of funny in a really macabre way to me.

01:05:59 ◼   ► But Apple actually looks less valuable to Wall Street because its products are built

01:06:05 ◼   ► better and work better and don't need to be replaced as much because they are still quite

01:06:10 ◼   ► functional even several generations down the line.

01:06:15 ◼   ► Whereas one generation or two, an Android device is usually, unless it's a really, really

01:06:21 ◼   ► well built one, is disposable, and that's being generous.

01:06:26 ◼   ► So I think that it's a funny situation where it's like, "Oh, your company is not worth

01:06:30 ◼   ► as much because you build your products too well."

01:06:32 ◼   ► And I find that really, really amusing, but I'm sure Apple doesn't find it as amusing.

01:06:36 ◼   ► No, I don't think so either.

01:06:38 ◼   ► And if you really think about it deeply, it's the conflict of short-term interest which

01:06:47 ◼   ► Wall Street infamously is focused on, hyper-focused on.

01:06:50 ◼   ► What do you do?

01:06:51 ◼   ► You know, just looking three months ahead at a time, three months, three months, three

01:06:54 ◼   ► months, as opposed to looking at years or even decades of building loyal customer relationships.

01:07:03 ◼   ► Using iPhones that are reliable enough and wear and tear well enough that people can

01:07:10 ◼   ► maybe extend the two-year cycle and maybe only buy every three or four years and have

01:07:16 ◼   ► reasonably good experiences right up until the end when they do it is great for the customer

01:07:22 ◼   ► relation between Apple and our customers where their customers think I'm getting great value

01:07:26 ◼   ► for this because look I bought this three or four years ago and I'm now only replacing

01:07:30 ◼   ► it now.

01:07:31 ◼   ► great if you're looking for record-breaking quarter after quarter.

01:07:36 ◼   ► No, right. Yeah, it's a sucky situation to be in, which is maybe why we're seeing these new metrics

01:07:44 ◼   ► and seeing some dances with those numbers. I mean, I was laughing because before the call,

01:07:54 ◼   ► because the earnings drop several minutes before the call, about 30 minutes before the call usually,

01:08:00 ◼   ► and you'll get some time to pour over the numbers and publish whatever you want to about the basic numbers of the situation.

01:08:07 ◼   ► But during that space, somebody tweeted it at me, and I can't remember who, I apologize at this moment,

01:08:15 ◼   ► but they said it was the first time that they can remember seeing supplemental materials attached to the report

01:08:21 ◼   ► that were specifically about currency headwinds, about foreign exchange and problems.

01:08:25 ◼   ► And that is true. They've mentioned Forex for several years now as a major factor in why their profits haven't looked quite as good.

01:08:34 ◼   ► Because, you know, essentially what they said is like $100 today, or $100 in 2014 is $85 today.

01:08:43 ◼   ► So that's a significant portion, you know, it's an enormous chunk of money that just disappears, a profit that disappears for them.

01:08:49 ◼   ► for them. But I laugh because they started the call and there was two sentences in and

01:08:56 ◼   ► they mentioned currency headwinds as a factor. So it's a huge deal for them because those

01:09:03 ◼   ► numbers, those growth numbers are what they can base future growth on. And people go,

01:09:10 ◼   ► "Yeah, yeah, but it doesn't matter to Apple. They have so much cash in a bank and blah,

01:09:14 ◼   ► And that is true like to a large degree. I mean Apple does not really care about what

01:09:20 ◼   ► Wall Street values its stock at in general and that isn't really that the CEO's job is it's not to maximize the stock price

01:09:28 ◼   ► although lots of people think that is it's not actually true and

01:09:31 ◼   ► The thing the factor the big issue with that happening is not the immediate

01:09:40 ◼   ► Oh apples in trouble with Wall Street, you know, Nina Nina

01:09:42 ◼   ► It's Apple's hiring and retention of employees is largely based on stock

01:09:49 ◼   ► Because Apple does not pay very well. I mean they pay well, I shouldn't say that that's unfair

01:09:55 ◼   ► They pay fairly but they don't pay exorbitant sums

01:09:58 ◼   ► It's not commensurate that Apple's average salary is not commensurate to Apple's corporate average

01:10:05 ◼   ► Profits which are extraordinary Apple's profits are truly extraordinary. They are literally the most profitable company right now

01:10:11 ◼   ► I mean who knows how long that'll last but at the moment they're the most profitable

01:10:16 ◼   ► company in the world.

01:10:17 ◼   ► Their average salary to engineers and regular talent is not.

01:10:22 ◼   ► Correct.

01:10:24 ◼   ► And so that compensation, that additional compensation, whatever you want to call it,

01:10:28 ◼   ► has to come from the stock.

01:10:31 ◼   ► So people, they go, "Hey, here's a very nice, maybe even better than average stock compensation

01:10:40 ◼   ► for you to offset the fact that we don't pay crazy Google engineer rates, you know?

01:10:49 ◼   ► And that, I think, is, it's gonna hurt them, so that's why they care so much about this

01:10:53 ◼   ► stuff and why they're trying to communicate so much to, besides the fact that yeah, of

01:10:57 ◼   ► course you wanna have a good earnings report, you know, and they're not saying, "Forget

01:11:00 ◼   ► the stock, who cares?"

01:11:01 ◼   ► It's just that's the most important thing to them.

01:11:04 ◼   ► Because Apple faces an enormous amount of competition against the, I mean, up until

01:11:09 ◼   ► what was very recently an extremely favorable funding environment and it's

01:11:13 ◼   ► still much better than it has been in years and years. So an engineer, a talented

01:11:18 ◼   ► one, says "Hey, why don't I just become a technical founder of my own company and

01:11:22 ◼   ► and build it or scale it to whatever and sell it for millions or whatever the

01:11:26 ◼   ► case? Why should I go work at Apple instead? Why don't I just start my own company?

01:11:31 ◼   ► Or why don't I go to one of these companies that are offering just an

01:11:36 ◼   ► insane retention or acquisition package for engineers, because they absolutely must have

01:11:41 ◼   ► engineers. It's one of the most competitive hiring environments in the history of ever

01:11:47 ◼   ► for engineers. So that's going to hurt their ability to hire and retain. And that's, I

01:11:53 ◼   ► think, the big reason they're trying to communicate this growth potential to Wall Street in such

01:12:00 ◼   ► an aggressive way.

01:12:03 ◼   ► Yeah, I definitely agree. And it does, I think, I think that that is the connection to retention

01:12:10 ◼   ► and retention of existing talent and attracting the new talent that they need. It's absolutely

01:12:17 ◼   ► the way that the stock price most directly affects the way Apple is managed in the short

01:12:24 ◼   ► term.

01:12:25 ◼   ► Yeah, and it's like the difference between, you know, Apple employee buying a bicycle

01:12:31 ◼   ► or a Porsche. That's what the difference is between the stock price a year ago and the

01:12:36 ◼   ► stock price now. It's pretty substantial. It's not like I'm saying everybody needs a

01:12:43 ◼   ► sports car, but it does. When you look at it in the aggregate, you have a certain value

01:12:49 ◼   ► as an engineer, and that value is really high right now. Apple's got to play in that same

01:12:57 ◼   ► field as everybody else. It's either that or they start spending cash, just flat out

01:13:00 ◼   ► cash on hiring people and paying them a lot of money. That's never the way they've hired,

01:13:07 ◼   ► but it is a question about whether or not they may have to start.

01:13:10 ◼   ► Yeah. I wonder, I feel like if they needed to go that route, they could. Part of the

01:13:20 ◼   ► reason why is that they make high margin, relatively low volume products, meaning low

01:13:27 ◼   ► volume even the iPhone, which is the most successful product anybody's ever had in the

01:13:32 ◼   ► whole industry. It still is not famously. I mean nobody really talks about it anymore

01:13:36 ◼   ► because everybody has sort of gotten it pounded through their heads that it doesn't really

01:13:40 ◼   ► matter, but isn't the majority of smartphones, that Android as a whole in the aggregate outsells

01:13:45 ◼   ► the iPhone. It's just that each one is very high average selling price, etc. They sell

01:13:52 ◼   ► enough of them that the scale is there that they can pay. It's not quite that they need

01:14:00 ◼   ► to hire engineers at a one-to-one ratio with the number of devices they sell.

01:14:09 ◼   ► Right now they're so, they actually, I mean, you know, they have turnover like everybody

01:14:14 ◼   ► else, but they're so packed right now.

01:14:17 ◼   ► Like I've heard all the buildings are like two to a desk, you know, stuff like that.

01:14:20 ◼   ► Like they're, they're really like their amount of real estate.

01:14:23 ◼   ► They have a lot of people hired and packed in there, which is why they're building this

01:14:27 ◼   ► new, you know, headquarters.

01:14:29 ◼   ► And they're already planning another big building because it's just like they're growing.

01:14:33 ◼   ► They've grown like crazy on the back of iPhone growth, you know?

01:14:37 ◼   ► I think that they don't want to say it.

01:14:39 ◼   ► They just don't-- I mean, it's just because it's--

01:14:42 ◼   ► not embarrassing, but they don't want to put a negative spin

01:14:44 ◼   ► on something.

01:14:44 ◼   ► Like, the new campus still isn't even finished.

01:14:46 ◼   ► They haven't had a grand opening yet.

01:14:48 ◼   ► And they want the grand opening to be

01:14:49 ◼   ► like this great celebration of, look

01:14:52 ◼   ► at this beautiful building and all these great features.

01:14:54 ◼   ► But I really do feel like the fundamental truth

01:14:57 ◼   ► is they vastly underestimated the size

01:15:00 ◼   ► that the new headquarters should be.

01:15:03 ◼   ► that they, if they knew then what they know now,

01:15:08 ◼   ► like if Tim Cook could send back a message to his,

01:15:12 ◼   ► you know, at the point where they were committing

01:15:14 ◼   ► to break ground, you know, what was that, around 2010, 2011,

01:15:18 ◼   ► whenever that was, like when Steve Jobs was going,

01:15:21 ◼   ► still going before like the Cupertino City Council

01:15:25 ◼   ► and whatever, if they could go back

01:15:27 ◼   ► and just maybe like make some changes to the blueprints,

01:15:30 ◼   ► they'd add a lot of space because I probably double the size to be honest.

01:15:35 ◼   ► My basic, I, I, what I've heard and I,

01:15:40 ◼   ► I wouldn't be surprised if it's changed even since I've last talked to somebody

01:15:44 ◼   ► about it, but basically they're not closing anything. You know,

01:15:47 ◼   ► they're opening this new campus and they plan to fill the whole thing up and all

01:15:52 ◼   ► of the existing campus space that they have is going to continue being used.

01:15:57 ◼   ► and just imagine how quick they'll imagine how crowded they must be at that

01:16:01 ◼   ► point at this point.

01:16:02 ◼   ► Yeah. Yeah. Cause all every, and they bought a bunch of real estate. I mean,

01:16:05 ◼   ► almost all of, you know, Cupertino, it's like Apple now, but they,

01:16:10 ◼   ► they bought so much space and if all of that is being used and all of the new

01:16:14 ◼   ► capacity is being used, that's just, you know, that's just steady.

01:16:19 ◼   ► Right. And obviously they're a growing company that has to hire. So yeah,

01:16:23 ◼   ► they're going to be, they're going to be hurting for space pretty quick.

01:16:25 ◼   ► Yeah. Um, all right, let me take another break here.

01:16:28 ◼   ► I think our next sponsor and then we come back,

01:16:30 ◼   ► I want to talk about another company that had a probably the worst week than

01:16:33 ◼   ► Apple in terms of what the earnings did to the stock and that's Amazon. Um,

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01:19:28 ◼   ► All right Amazon so Amazon I don't understand what happened to Amazon

01:19:35 ◼   ► Because Amazon announced record-breaking revenue

01:19:40 ◼   ► And I forget, you know, there are a couple places that track online stuff that estimated that over the holiday quarter Amazon did

01:19:46 ◼   ► 51% of all the online shopping at least in in America

01:19:51 ◼   ► so they've actually reached the point where they've they've they take up a majority of online shopping and

01:19:59 ◼   ► Everybody I know

01:20:01 ◼   ► Uses Amazon more than they've ever used it before

01:20:04 ◼   ► We just buy ridiculous stuff from Amazon now, right? Like we've we've got we you know, everybody laughed

01:20:10 ◼   ► But we got those clickers here in that the Gruber house. We've got one now for the detergent

01:20:16 ◼   ► so like when when we're doing laundry if you run low on detergent, you just click your little button and

01:20:21 ◼   ► And a couple days later some tide shows up

01:20:24 ◼   ► And

01:20:27 ◼   ► But because their profits were lower than I guess they guess the gist is okay their revenues up

01:20:33 ◼   ► But their profits were lower than expected their stock took

01:20:36 ◼   ► I mean like a bath like like a 10% just cut right off the top

01:20:41 ◼   ► Mm-hmm. I'm looking as we record we're recording after the close of markets on Friday here

01:20:46 ◼   ► Amazon for the day was down

01:20:48 ◼   ► 7.5% on a day when the market as a whole was up

01:20:53 ◼   ► about 2.5%

01:20:56 ◼   ► So, you know compared to the market they more or less lost 10% today, which is crazy because to me

01:21:04 ◼   ► revenue going way, way up and profit missing the mark. That's the Amazon way. Like, who are these

01:21:10 ◼   ► people who are invested in Amazon who haven't noticed that that's the way Amazon rolls?

01:21:16 ◼   ► Yeah. So here's my question to you. I wonder if we've reached the point where maybe,

01:21:23 ◼   ► you know, and I realize that arguments that the market is sensible, you know, and has some kind

01:21:29 ◼   ► of collective logic to it, you know, the Mr. Market argument. But I just wonder if maybe we

01:21:33 ◼   ► we reach the point where Mr Market is sick of waiting for Amazon to have consistent profits and that the

01:21:38 ◼   ► Amazon doesn't need to be profitable part of Amazon its history is coming to a close

01:21:43 ◼   ► Yeah

01:21:47 ◼   ► Interesting one. I mean, that's a that's been a major question for a while

01:21:50 ◼   ► It's like it a is Amazon even capable of doing it like flipping some magical switch and becoming profitable and then B

01:21:56 ◼   ► When is the when do investors get tired of waiting, right?

01:22:01 ◼   ► And the you know, Jeff Bezos has always been very upfront about what they're doing

01:22:06 ◼   ► Which is investing almost every penny back in the company and into growth and that is their plan

01:22:11 ◼   ► They want to become the biggest at everything they do

01:22:13 ◼   ► And investors have bought in right because he's he's charismatic and the company has done well and growth

01:22:19 ◼   ► It hasn't missed those targets like it tends to grow the way it grows

01:22:24 ◼   ► And what on a very predictable?

01:22:27 ◼   ► Level for many many years, but every not like if you look at like every quarter since

01:22:32 ◼   ► like late 2014 the the

01:22:35 ◼   ► Estimated earnings has been incorrect like the EPS earnings per share has been wrong

01:22:41 ◼   ► slightly low actually every year whether it was a loss or a gain because Amazon is actually a marked a loss in like q1 of

01:22:50 ◼   ► 2015 but

01:22:53 ◼   ► EPS wise but they a negative EPS

01:22:56 ◼   ► But investors have always sort of like underestimated and then like the holiday quarter they wildly

01:23:02 ◼   ► wildly overestimated like by like 50% how much they thought Amazon was gonna make and it's I

01:23:10 ◼   ► Don't know why maybe it's just like everybody got like hopped up on holiday juice and decided

01:23:15 ◼   ► Oh Amazon is gonna just make so much money because it's Christmas and blah blah blah

01:23:21 ◼   ► but that mean this, you know, I don't know they seem pretty upfront about their

01:23:25 ◼   ► their plans. So whether people are tired of it or not tired of it, I don't know if Amazon's

01:23:32 ◼   ► going to change that strategy a whole lot. I mean, I guess people could force them to

01:23:37 ◼   ► by severely undervaluing their stock, but I don't know. I don't foresee that going anywhere.

01:23:43 ◼   ► It really seemed to me like an Apple-like stock adjustment, where in terms of it being

01:23:49 ◼   ► what ought to be a very stable stock because they're either huge or big company, they've

01:23:54 ◼   ► been around for a while. But B, they're to me pretty easily understood. This is Amazon

01:24:01 ◼   ► and Apple. And what they announced, it maybe not be the best news you've ever heard, but

01:24:07 ◼   ► it shouldn't affect the stock at like 10% of the market cap and that type of volatility.

01:24:14 ◼   ► This is not a volatile surprise that they've announced. This should be maybe a little bit

01:24:21 ◼   ► down. It just seems like it's almost shocking how volatile a stock can be, even when the news that

01:24:27 ◼   ► they're announcing to me isn't surprising in the least bit. Yeah, and I think some of it could be

01:24:36 ◼   ► that there is a way that people are looking, that analysts or the people whose job it is to watch

01:24:47 ◼   ► the market are looking at Amazon that's different now, but I don't think that Amazon looks at itself

01:24:52 ◼   ► differently. I don't think so. I think they're just, as far as they're concerned, they're staying

01:24:58 ◼   ► the course. There's some interesting math. I think Jason Del Rey at Recode did this math,

01:25:03 ◼   ► and I thought it was a clever way of looking at it, but he was saying that Amazon has at least 46

01:25:07 ◼   ► million Prime members worldwide at this point. And I thought that he did a little bit of

01:25:12 ◼   ► Prestidigitation with Amazon's very very nebulous

01:25:16 ◼   ► Numbers because he was hunts famous for never getting exact numbers anything

01:25:20 ◼   ► They don't absolutely have to by law

01:25:22 ◼   ► But he'd be kind of back of the napkin about 46 million at least 46 million prime members, but it could be more

01:25:28 ◼   ► And I think that that number is a really key indicator. It's a really really interesting indicator of Amazon's

01:25:35 ◼   ► Philosophy which is if you are a member of Amazon your life is easier

01:25:41 ◼   ► Right, like that's what they want people to buy into that's what they're selling. They're not selling individual products or or services

01:25:49 ◼   ► They're selling this idea that oh if you're a prime member

01:25:52 ◼   ► The benefits that you get are so wide and varied that you'd be dumb not to you know, you'd just be stupid not to

01:26:00 ◼   ► Right, and it's just one membership and you don't have to sign up for Amazon video and you don't have to sign up for Amazon

01:26:08 ◼   ► books and

01:26:10 ◼   ► Amazon groceries, you just sign up for Amazon Prime, and you get all of this stuff. And maybe

01:26:15 ◼   ► you signed up for Amazon Prime primarily just to get as much free shipping as you can on

01:26:21 ◼   ► books and miscellaneous physical things that you buy from Amazon and have shipped to your house,

01:26:28 ◼   ► so you don't have to go out to a store and buy it. But that the ancillary benefit of hey,

01:26:32 ◼   ► all these different devices you've got, like whatever brand phone it is in your pocket,

01:26:37 ◼   ► and most set top boxes like your TV or whatever, just go over and just click on the Amazon thing

01:26:44 ◼   ► now and sign in with the same ID and you're going to have all of this stuff that you can just watch.

01:26:47 ◼   ► You just watch it from, you know, just it's just there, you know, and including original,

01:26:54 ◼   ► you know, programming. I think it's a very compelling story and I really think that it's

01:27:00 ◼   ► It's a remarkably self-aware company.

01:27:04 ◼   ► I feel like Amazon, starting from Jeff Bezos on down, they know exactly who they are, what

01:27:10 ◼   ► they want to be doing.

01:27:11 ◼   ► Even their missteps, even the things they made that didn't really take off, to me, they

01:27:16 ◼   ► were very reasonable tries, like the phone, the Fire Phone.

01:27:21 ◼   ► It's a totally reasonable thing for them to have tried.

01:27:25 ◼   ► I would almost say sort of like with Facebook and some of the individual sub-apps, you know,

01:27:30 ◼   ► little mini-apps that they've made that didn't really take off, but they were worthwhile

01:27:33 ◼   ► experiments and that maybe there were things that they could learn that, you know, go into

01:27:38 ◼   ► the Facebook dot app itself.

01:27:40 ◼   ► Same way with Amazon and the Fire Phone, like the fact that that was a real disaster in

01:27:46 ◼   ► terms of how successful it was.

01:27:48 ◼   ► It's not like they put any kind of effort into that that hurt them anywhere else.

01:27:52 ◼   ► And if it had taken off, if they'd figured out a way to make it click, that could have

01:27:57 ◼   ► been a great idea.

01:27:59 ◼   ► Yeah, I remember I was at the first Kindle Fire tablet announcement, and it was like

01:28:09 ◼   ► an airplane hangar in LA or something, or some event space near an airport.

01:28:14 ◼   ► And I was sitting there, and they were showing all these charts with no numbers on them.

01:28:19 ◼   ► Bezos charts, right.

01:28:20 ◼   ► Bezos charts, yeah, exactly.

01:28:21 ◼   ► charts. Yeah, exactly. And like, you know, oh, this is Amazon was here and now it's here

01:28:26 ◼   ► and you know, a lot of really context free stuff and I was kind of zoning out, but I,

01:28:31 ◼   ► we kind of had an inkling of what they were going to announce and kind of the basic thing

01:28:35 ◼   ► and I was, and I was thinking to myself, like if, if they do this right, it's just like

01:28:42 ◼   ► a single, a single account with access to just everything, like everything you could

01:28:50 ◼   ► possibly want in your life. I mean that's really, really powerful. This is what Apple's

01:28:55 ◼   ► been trying to build piece by piece with iCloud. Amazon had a lot of the other stuff that Apple

01:29:01 ◼   ► didn't. They were just coming to the same place from opposite ends of the spectrum.

01:29:05 ◼   ► I thought that was a really valid thought to have. A really valid effort to make, as

01:29:10 ◼   ► you mentioned, to get there from their position. Whereas Apple's coming from a hardware maker

01:29:16 ◼   ► and getting into the middle where it's hardware and cloud working together.

01:29:22 ◼   ► And Amazon's coming from the cloud side and doing the same thing.

01:29:25 ◼   ► Because both companies saw very well that that is the future of everything.

01:29:29 ◼   ► Is that if you have a device that does not provide you access to everything that you

01:29:34 ◼   ► need in your digital, you know, life on a server in the Midwest somewhere, then it's

01:29:41 ◼   ► just an empty shell.

01:29:43 ◼   ► It's a husk.

01:29:44 ◼   ► And as far as Amazon is concerned, the jelly filling is the important part.

01:29:50 ◼   ► And Apple, as far as Apple is concerned, the donut is the important part, right?

01:29:54 ◼   ► And so they just have differing philosophies as to what the major minor is, but they're

01:30:01 ◼   ► going to the same place, a jelly filled donut, you know?

01:30:04 ◼   ► And I think that there's plenty to still explore there.

01:30:07 ◼   ► And I really like even I know like, um, Amazon has scaled back their, um, their labs a lot,

01:30:16 ◼   ► their hardware labs and, and kind of rejiggered and move things around.

01:30:19 ◼   ► And there's been a lot of, I've talked to a lot of people who have come out of there

01:30:22 ◼   ► and said, it was like, they were trying to run like an amazing innovation lab, like a

01:30:27 ◼   ► Johnny Ive design studio, but they were trying to run it with Amazon efficiencies.

01:30:31 ◼   ► Like you pay for your own parking and like, you know, stuff like that, like crappy desks

01:30:35 ◼   ► and whatnot.

01:30:36 ◼   ► Because you know, your desk is made out of a door.

01:30:39 ◼   ► Right, exactly.

01:30:40 ◼   ► Exactly.

01:30:41 ◼   ► And like, I, you know, okay, whatever.

01:30:43 ◼   ► You're gonna, everybody's got their own style, but I just don't think that worked really

01:30:46 ◼   ► well for that type of environment.

01:30:48 ◼   ► You know, sometimes it matters, you know, how you feel about where you work, not just

01:30:51 ◼   ► what you're doing.

01:30:54 ◼   ► But regardless, I think that I would not be surprised for them to take another stab at

01:30:57 ◼   ► that, you know, to kind of come at it again from a slightly different angle to say, look,

01:31:05 ◼   ► thing is just a portal into Amazon. The specs don't even matter because they were like really

01:31:10 ◼   ► were talking all, you know, look at this, you know, you're getting this for this. They

01:31:14 ◼   ► were high on the value, right? Which is a very Amazon thing. You're getting this processor

01:31:18 ◼   ► and this RAM for this much money. It's just, it's half the price of our competitors or

01:31:22 ◼   ► whatever. Right. And I just don't think that people care that much. And I don't think it

01:31:27 ◼   ► matters. You know, it's just, this is a thing that gets you all of your stuff. That's it.

01:31:32 ◼   ► That's all that matters.

01:31:33 ◼   ► I think that Amazon's an interesting comparison to Apple too in terms of the Bezos charts.

01:31:41 ◼   ► And that for as secretive as Apple is about its future products, and they are famously

01:31:46 ◼   ► the most secretive company in the industry when it comes to what they're working on,

01:31:49 ◼   ► or at least they try to be.

01:31:52 ◼   ► Historically, what they've released and what they continue to release in their quarterly

01:31:58 ◼   ► financial statements is actually pretty open.

01:32:00 ◼   ► But that's what makes the fact that they set it in advance so that it wouldn't come as a surprise,

01:32:06 ◼   ► but that they're not going to release sales figures for Apple Watch different.

01:32:11 ◼   ► And I can't help but think that part of it is that they look at Amazon and the fact that Amazon doesn't break anything down.

01:32:18 ◼   ► They just say, "Here's our revenue, here's our profit."

01:32:20 ◼   ► And they'll say where some things are up or whatever, but they don't announce actual numbers on the charts.

01:32:27 ◼   ► I can't help but think that Apple's

01:32:31 ◼   ► executive team looks at that and says, "Boy, that would be nice."

01:32:35 ◼   ► Yeah. I think it would be an amazing scenario for them to be like,

01:32:39 ◼   ► "I don't know. We sold the most ever."

01:32:43 ◼   ► Yeah. That's exactly what they did. The most ever. No, they did with the watch.

01:32:46 ◼   ► That's exactly what they did with the watch. They sold the most watches ever.

01:32:49 ◼   ► How many the most ever?

01:32:53 ◼   ► Oh, good. Great. Excellent. They did a good job. Keep it up.

01:32:57 ◼   ► Yeah, I mean, I think that they do get a hold of different standards.

01:33:02 ◼   ► I think that Amazon sort of set themselves up for that by never, ever, ever entertaining

01:33:08 ◼   ► the numbers thing.

01:33:09 ◼   ► But I also think that because of the expectations people have for Amazon growth, aka huge revenue

01:33:17 ◼   ► growth but flatline profits, you know.

01:33:19 ◼   ► I think somebody tweeted like, I can't remember who it was, maybe Matthew Iglesias tweeted

01:33:24 ◼   ► a chart from the Financial Times.

01:33:26 ◼   ► I think I saw it because Jean-Luc Gasset retweeted it, but he's like, Matthew Gasset is saying,

01:33:33 ◼   ► "I love this chart."

01:33:34 ◼   ► And it was just the profits is a pink line that just dribbles along the bottom near zero,

01:33:39 ◼   ► like just by zero, and then the revenue is just like whoops, straight up to 100, you

01:33:44 ◼   ► know, on the millions, I guess.

01:33:46 ◼   ► But it's pretty crazy that they are able to get away with that, but it is about positioning,

01:33:52 ◼   ► right?

01:33:53 ◼   ► setting yourself up in this long-term story that Amazon feels and thinks of itself as a young

01:34:00 ◼   ► company. As a, like, we're just getting started. We're like, we're just starting to get into like

01:34:06 ◼   ► our teen years. You know what I mean? Like they're, they're raring to go, and this is just beginning.

01:34:11 ◼   ► And like all of that is, is messaged externally and internally. And, you know, it's sort of like

01:34:17 ◼   ► the stay hungry thing, right? You know, we, we don't want to feel complacent or whatever,

01:34:22 ◼   ► but it also allows them to, maybe excuse is the wrong word, but I'm going to use it,

01:34:27 ◼   ► allows them to excuse that particular differential between their growth and profits by saying,

01:34:31 ◼   ► "Look, we're in our growth phase. We don't yet serve every person on earth. We're in our growth

01:34:37 ◼   ► phase." I think that that's a very, very interesting thing for them to be able to get away

01:34:43 ◼   ► with, and it's 100% unique in the lexicon of tech companies out there.

01:34:48 ◼   ► Well said. Let me take this break and thank our third and final sponsor of the show. It's

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01:39:23 ◼   ► Anything else you wanna talk about

01:39:27 ◼   ► before we talk about our bourbon collections?

01:39:30 ◼   ► (laughs)

01:39:31 ◼   ► - You know, one thing we didn't talk about with Amazon

01:39:33 ◼   ► is the Echo, which I think is actually

01:39:35 ◼   ► super important to them.

01:39:38 ◼   ► Maybe not, you know, like monetarily yet,

01:39:40 ◼   ► but I think it's actually very, very Amazon-y.

01:39:43 ◼   ► Have you played with that thing at all?

01:39:45 ◼   ► - No, I haven't.

01:39:47 ◼   ► 'Cause you had to sign up for it and get on a list,

01:39:49 ◼   ► and I didn't feel like doing that,

01:39:50 ◼   ► and now I wish I had, 'cause I wish I had one.

01:39:54 ◼   ► Yeah, I mean, the integrations are starting to really kick into gear now.

01:39:58 ◼   ► Like, you know, IFTTT works with it.

01:40:00 ◼   ► So you can tell Alexa, which is the assistant name that they've chosen.

01:40:06 ◼   ► These are all women.

01:40:06 ◼   ► Why are they all women?

01:40:07 ◼   ► They're all women in America.

01:40:09 ◼   ► It's actually different.

01:40:10 ◼   ► It's actually, I'll have to find the link, but it's actually interesting.

01:40:13 ◼   ► Is it a cultural thing?

01:40:14 ◼   ► It's a cultural thing around the world.

01:40:15 ◼   ► Hmm.

01:40:16 ◼   ► Hmm.

01:40:17 ◼   ► Yeah, interesting.

01:40:18 ◼   ► Yeah, I'll have to look at that.

01:40:19 ◼   ► That sounds interesting.

01:40:20 ◼   ► Um, yeah.

01:40:21 ◼   ► Sonia, you tell her, "Hey, turn off my lights. Read me the news," whatever.

01:40:26 ◼   ► The news thing, I think, is even built into Amazon's thing.

01:40:29 ◼   ► But the external integrations are growing.

01:40:33 ◼   ► You're seeing a larger number of external apps or hardware supporting it.

01:40:38 ◼   ► So you can just basically computer, "Read me the news," or "Computer, what temperature is it?"

01:40:45 ◼   ► You know, things like that.

01:40:47 ◼   ► And I think that that's a pretty compelling use case.

01:40:50 ◼   ► And the Hey Siri thing, obviously, in the iPhone is Apple's approach to that.

01:40:54 ◼   ► And then Amazon doesn't have, obviously they don't have a

01:40:58 ◼   ► Fire Phone in every home.

01:40:59 ◼   ► So they can't do that.

01:41:01 ◼   ► Um, so they had to go this route and it's, it's sort of like an ordering thing.

01:41:06 ◼   ► You can order of course, stuff from Amazon with it.

01:41:08 ◼   ► Um, and then you can ask it things.

01:41:10 ◼   ► Just seems like a really, really cool thing.

01:41:13 ◼   ► Obviously there's tons of creep factor too, but it seems like a really cool thing.

01:41:17 ◼   ► Yeah, and I wonder in a broad perspective whether or not, you

01:41:22 ◼   ► know, and clearly that's the sort of AI based interface, you

01:41:26 ◼   ► know, conversational AI, you know, it's, it's, you know, it's

01:41:30 ◼   ► the how from 2001 really is that the end goal where you have a

01:41:33 ◼   ► computer that is a fully functioning or seems like a

01:41:36 ◼   ► fully functioning, sentient, sentient person that you can

01:41:40 ◼   ► communicate with, and that you don't have to think about

01:41:43 ◼   ► structuring your commands in a certain syntax, or knowing that

01:41:46 ◼   ► You can ask about sports and weather and news,

01:41:51 ◼   ► but you can't really just talk to it

01:41:54 ◼   ► in a conversational way to where you can,

01:41:57 ◼   ► where you can just talk to it

01:41:57 ◼   ► the way you would talk to a person.

01:41:59 ◼   ► Clearly, that's the way a lot of this stuff is going.

01:42:04 ◼   ► Apple's doing it, Google's doing it, Amazon's doing it.

01:42:07 ◼   ► I wonder, at a basic level,

01:42:10 ◼   ► if it's better to just have a device like Alexa

01:42:14 ◼   ► where that's the only interface,

01:42:16 ◼   ► as opposed to the way that Android phones are gaining these

01:42:21 ◼   ► okay Google commands in a way that Hey Siri is being added to.

01:42:25 ◼   ► I'm sorry if I said that off for anybody every time we talk about this.

01:42:29 ◼   ► I'm surprised it didn't make my phone go off. My phone is right here next to me and it did not go off.

01:42:33 ◼   ► Just make a policy to say it in a weird voice.

01:42:36 ◼   ► And so when you activate your "Hey Siri!"

01:42:39 ◼   ► When you say that,

01:42:40 ◼   ► say those magic words,

01:42:42 ◼   ► whether there's a limit to for a device that's fundamentally about

01:42:46 ◼   ► a home screen full of apps and you go and launch an app and go back to the

01:42:50 ◼   ► home screen go to another app which is a great

01:42:53 ◼   ► it's you know obviously been great for the last ten years for the iPhone

01:42:56 ◼   ► whether or not there's a limit to how how good

01:43:00 ◼   ► the Siri functions can be for a conversational interface for the phone

01:43:03 ◼   ► on a device that's fundamentally

01:43:05 ◼   ► app-based

01:43:08 ◼   ► mmm you are you talking about the silos of data

01:43:11 ◼   ► Well, yeah, silos of data and just whether or not it's never going to be as good as it could be,

01:43:16 ◼   ► just because it just never works out to glom and entirely new.

01:43:22 ◼   ► Oh, I see. So constraints, because of the constraints, it's going to be better,

01:43:26 ◼   ► because it has to be.

01:43:27 ◼   ► Right. That's what I think. Maybe.

01:43:29 ◼   ► Yeah, yeah. Maybe. I mean, I think that the Alexa thing is just the tip of the iceberg.

01:43:34 ◼   ► And, you know, of course, Hey, Siri and OK Google do play into that too. But

01:43:39 ◼   ► a lot of these functions are going to be massively improved by the introduction

01:43:46 ◼   ► and application of AI. And I think AI is very, you know, it's kicking into high gear right now.

01:43:51 ◼   ► There's tons and tons of heat in the startup world about AI. I'd like to refer to AI and I'm,

01:43:59 ◼   ► you know, forgive me, somebody else has probably said this more eloquently in the past,

01:44:03 ◼   ► I just haven't come across it. But I'd like to view it as a technology that is additive.

01:44:08 ◼   ► Like you pour AI into things and it makes those things better, right?

01:44:12 ◼   ► Whereas opposed to some other technologies are displacing technologies.

01:44:15 ◼   ► They supplant or replace older things, right?

01:44:18 ◼   ► You don't still keep a calculator around and put AI in it.

01:44:22 ◼   ► You just use your phone.

01:44:23 ◼   ► Your phone has a calculator in it.

01:44:24 ◼   ► But that replaced your calculator, replaced your camera, replaced your whatever.

01:44:30 ◼   ► But AI, when you, it's a technology and when you do put it or and a discipline,

01:44:35 ◼   ► I guess you could call it, but when you put it into things,

01:44:37 ◼   ► it makes those things better and better able to understand,

01:44:40 ◼   ► better able to contextualize your wishes and desires,

01:44:44 ◼   ► so it improves their functionality.

01:44:46 ◼   ► So something like, hey Siri, with a fully functioning AI component,

01:44:50 ◼   ► not just like bits and bobs of AI theory applied to a chatbot

01:44:53 ◼   ► or applied to finding information, but like a real AI system.

01:44:59 ◼   ► I mean, I think that's pretty exciting.

01:45:00 ◼   ► And something like Alexa allows you to take full advantage of that

01:45:04 ◼   ► because it does say like, look, this is the only way

01:45:07 ◼   ► way you can use me, man. Just talk to me because I can handle it. I can get you there from

01:45:12 ◼   ► here." That feature seems very, very compelling. If Amazon wants to be in control of your home

01:45:19 ◼   ► and in control of the goods and services that come in and out of your home, then I think

01:45:25 ◼   ► that that's a great place for them to be is right on your countertop.

01:45:29 ◼   ► Dave: Right. Do you have one? Do you have one at the house?

01:45:32 ◼   ► No, I don't I'm talking about it a whole lot, but I don't have one

01:45:35 ◼   ► I don't live literally it was just like I've seen other ones in use and you know kind of dinked around and it's just

01:45:39 ◼   ► Seems really cool. I just haven't gotten around ordering one because

01:45:42 ◼   ► We use it we have those Amazon - buttons like the ones you're talking about

01:45:46 ◼   ► I'm like I'm good with those like I walk by my cabinet

01:45:50 ◼   ► I'm like I need kitty litter and I just punch it, you know

01:45:52 ◼   ► Jonas loves the Amazon - buttons and so he likes it. Yeah, but it's and he's he's a really he's 12

01:46:00 ◼   ► so he's, you know, he's not super young. And he's a relatively disciplined kid.

01:46:04 ◼   ► We've never really had problems with him, you know, doing anything out of control or, you know, like,

01:46:10 ◼   ► you know, like trusting him, like, with something like that. But it's so appealing to him,

01:46:16 ◼   ► he really wants to press the button. And then he's like, "Can I press it again?" And it's like, "No,

01:46:21 ◼   ► no, you cannot." Like, like, we do not need more baby wipes. Right. It's like, we'll let you do it

01:46:28 ◼   ► once but like opening the door just a bit to let him click the button once it's not

01:46:33 ◼   ► good because he wants he just wants to go click click click click click it's a very

01:46:38 ◼   ► strange thing to watch right right and i kind of understand the appeal of it because i kind

01:46:42 ◼   ► of would like to too i would just like to see like 37 uh cases of paper towels show up at our house

01:46:48 ◼   ► right exactly be like well i guess we don't need to buy paper towels for

01:46:54 ◼   ► like it would be if it would be a fun thing to have delivered

01:46:56 ◼   ► Well, you got to have that and a 50-gallon tub of lube so you have something to clean

01:47:03 ◼   ► it up with. Sorry. Anyway, I digressed on that, but I just thought that—I think that's

01:47:10 ◼   ► an interesting bit of their business.

01:47:11 ◼   ► Oh, I definitely agree. The other thing that it has is—okay, so they tried—we talked

01:47:18 ◼   ► about that they tried to make a phone and they didn't make a phone. Well, maybe the

01:47:22 ◼   ► The phone business is over in terms of these little four to five inch pieces of touchscreen

01:47:29 ◼   ► glass that go in our pocket.

01:47:30 ◼   ► The answer is it's the iPhone and Android.

01:47:35 ◼   ► Those are the two that won out.

01:47:39 ◼   ► What's the next thing?

01:47:40 ◼   ► The next thing in terms of, "Hey, what about like ubiquitous computer that you just speak

01:47:44 ◼   ► to?"

01:47:45 ◼   ► There is no winner in that yet.

01:47:48 ◼   ► open territory where they still have a chance to win whereas the touchscreen

01:47:53 ◼   ► interface that you know is on the piece of glass that you carry in your pocket

01:47:56 ◼   ► it's too late yep I think you might be right I had it's hard at this point to

01:48:04 ◼   ► foresee anybody really chipping a major chunk out of that particular business

01:48:08 ◼   ► but there are plenty of other businesses and plenty of other ways for people to

01:48:12 ◼   ► interact with you know like I said a data a data farm somewhere and in Idaho

01:48:18 ◼   ► So there's no guarantee that the pocket computer is the only interface that we're ever going to have that

01:48:24 ◼   ► That really has a enormous effect on the market. So I think the people's best efforts are placed elsewhere

01:48:30 ◼   ► I linked to a couple pieces in the last few days one from Tom Warren at the verge and then

01:48:34 ◼   ► Paul throughout piece just done. Hey, I think Windows Phone might it might be time to just call it it, you know

01:48:41 ◼   ► Call it it. I you know, it's funny. I I feel like the piece I linked to it at the verge

01:48:47 ◼   ► maybe I was too flippant. I didn't want to come across as gloating or happy about it.

01:48:53 ◼   ► If anything, I'm a little sad. I kind of feel the same way about Windows Phone that I felt

01:48:57 ◼   ► about WebOS, the Palm touchscreen thing, which was that this is clearly nicely enough designed

01:49:04 ◼   ► that if market share were distributed fairly on the basis of design quality, I don't know

01:49:14 ◼   ► number Windows Phone would have wound up with, but it would have been a big enough number

01:49:17 ◼   ► that it was a healthy platform.

01:49:20 ◼   ► Maybe it still would have been third place, but it would have been third place with a

01:49:26 ◼   ► decent chunk of the pie.

01:49:29 ◼   ► That's just not how...

01:49:32 ◼   ► Famously, it led Wall Street collectively to say design doesn't matter because back

01:49:39 ◼   ► when Apple was doing very poorly in the late '90s, mid to late '90s, everybody would say,

01:49:44 ◼   ► Apple stuff is way better designed than PCs and Microsoft software.

01:49:48 ◼   ► And the market would say, well, there's proof that design doesn't matter.

01:49:52 ◼   ► I would say what was actually proved is that design is not enough.

01:49:55 ◼   ► It needs to be part of a compelling story.

01:49:58 ◼   ► And that it certainly doesn't hurt, and it can help.

01:50:01 ◼   ► And it's allowed Apple to sort of build this sustainable success story.

01:50:09 ◼   ► But it's just not enough.

01:50:10 ◼   ► And that, to me, as somebody who cares so much about design,

01:50:12 ◼   ► And it's just sort of sad to see Windows Phone not really take off because it's certainly

01:50:17 ◼   ► a lot of original thinking.

01:50:18 ◼   ► And the times I've spent with the Windows Phone, I've enjoyed it way more than I have

01:50:23 ◼   ► when I've tried an Android phone, other than the fact that there aren't any apps for it.

01:50:28 ◼   ► Right, right.

01:50:29 ◼   ► The first-party stuff is pretty much all you enjoy because the third-party stuff is, if

01:50:34 ◼   ► it's there, it's usually not built extremely well or never got the chance to be.

01:50:39 ◼   ► I always liked the hardware.

01:50:40 ◼   ► I mean, like I said, the original Lumiya I reviewed that thing the the original rounded corner model. What was that?

01:50:47 ◼   ► 850 I can't I believe you're right. I'm gonna get the number wrong or probably but I just loved I mean

01:50:53 ◼   ► It's just so like feels like a lozenge and the material that they use. There's just warm in your hands

01:50:57 ◼   ► It looks really good. It was a luxurious polycarbonate and I know

01:51:01 ◼   ► You can say that you're just looking for a fancy word for plastic

01:51:05 ◼   ► but it just felt like because of the word plastic-y as an adjective, as a negative connotation,

01:51:12 ◼   ► it just isn't fair to call it plastic because it really felt like a high-quality material.

01:51:15 ◼   ► Yeah, and at the time, all the iPhones were hard-edged and that it provided a nice contrast.

01:51:22 ◼   ► Of course, now the iPhones are back to feeling more organic, which I appreciate, but I think

01:51:27 ◼   ► it definitely stood out and it was well-designed and it was a beautiful piece of kit. I thought

01:51:32 ◼   ► that their OS did complement the slightly bullnosed touchscreen and everything that

01:51:38 ◼   ► they did about it, I thought it would complement itself very well. But it goes to show, as

01:51:42 ◼   ► you mentioned, execution at scale is not just about design. You can't just be like, "This

01:51:47 ◼   ► is a beautiful piece of thing," because that doesn't always work. I mean, look at The DeLorean.

01:51:54 ◼   ► I think, and I really do think, it's existed a lot longer than WebOS did. This is Windows

01:51:59 ◼   ► phone simply by the graces of Microsoft's willingness to absorb losses quarter after

01:52:06 ◼   ► quarter after quarter to try to get this thing off the ground.

01:52:09 ◼   ► But it's getting to the point, like the year over year sales of the Windows phone for the

01:52:14 ◼   ► holiday quarter, the drop was terrible.

01:52:16 ◼   ► I mean it was like a 40% drop, which is for a platform that was already really struggling

01:52:22 ◼   ► in terms of market share.

01:52:23 ◼   ► Yeah, 1.1% of the market is not going to cut it.

01:52:27 ◼   ► Yeah, and even if you want to, I don't even know what you compare it to. I mean, I guess the best thing you compare it to would be maybe the max market share at the at its nadir. You know, circa, I don't know, 1999 2000 or so. You know, which was maybe worldwide, something like 2%, 2 or 3% of the PC market. But it was a different it wasn't just like that Apple had any any two to 3% of the market. It wasn't like a random two to 3%, which I think would have been

01:52:57 ◼   ► completely unsustainable. It was the fact that they had very specific 2 to 3%,

01:53:00 ◼   ► like largely in North America, so that it wasn't spread out across the world.

01:53:06 ◼   ► They had certain industries like the design industry where their market share

01:53:10 ◼   ► was, you know, way into the double digits. And so it could sustain things like

01:53:17 ◼   ► graphic design apps and, you know, and there's certain types of, you know,

01:53:22 ◼   ► third-party apps that Apple and the Mac always had an advantage over

01:53:26 ◼   ► Windows for because all the people who cared about having really good quality indie apps

01:53:32 ◼   ► were all, by self-definition, they were Mac users. Whereas Windows phones, one to two

01:53:38 ◼   ► percent of the market, doesn't really have any kind of cohesion like that. It's not a

01:53:41 ◼   ► compelling target for anything in terms of software development.

01:53:45 ◼   ► Mm-hmm. Yep. Yep. Exactly. You can't build it and they will come. It's got to go together.

01:53:52 ◼   ► Last but not least, the only thing I ever talked about was to talk about bourbon.

01:53:57 ◼   ► You do this thing...

01:53:59 ◼   ► Excuse for this whole thing, right?

01:54:01 ◼   ► Yeah, you're starting to annoy me though, because you'll do this thing where you'll get...

01:54:04 ◼   ► You'll like make a run and find some kind of amazing find to add to your liquor cabinet at home.

01:54:13 ◼   ► And it's gotten to the point where like you've got so much good stuff there that I'm sort of annoyed.

01:54:21 ◼   ► Well, I mean, you're welcome to come over and drink it.

01:54:25 ◼   ► I mean, you got to come to Fresno, but…

01:54:27 ◼   ► People often…

01:54:28 ◼   ► But I bring it up because I get it on…

01:54:31 ◼   ► People know that I like to drink, and people know that, you know, the brown liquors, your

01:54:37 ◼   ► bourbons, your ryes, are the ones that are sort of up my alley and the ones I'm more

01:54:42 ◼   ► interested in.

01:54:43 ◼   ► And I get…

01:54:44 ◼   ► So I get people asking for my advice, and I often don't know how to answer.

01:54:47 ◼   ► I feel like I know more than most people and I have very strong opinions on it, but to

01:54:53 ◼   ► me it's a very hard question to answer.

01:54:56 ◼   ► Yeah, it is.

01:54:58 ◼   ► I get this thing when people come over to the house and be like, "Hey, would you like

01:55:04 ◼   ► a drink or something?

01:55:05 ◼   ► Do you want soda or water?

01:55:06 ◼   ► Do you want a drink?"

01:55:08 ◼   ► Because I like to force people to drink if they don't want to, but when they come over

01:55:13 ◼   ► and go, "Oh, no.

01:55:15 ◼   ► Yeah, sure.

01:55:16 ◼   ► I'll have anything.

01:55:17 ◼   ► I don't care. That's like the hardest for me. When they don't, I'm like, "Well, crap. What do I give

01:55:21 ◼   ► them?" We've spoken about this before, but there's some... I'm a big bourbon fan. I like bourbon. I

01:55:28 ◼   ► like whiskey too, but I like bourbon a lot. There's some kinds of bourbon and whiskey that are

01:55:34 ◼   ► extremely challenging to the palate. They're very aggressive, or they're very high alcohol content,

01:55:40 ◼   ► and they can be appreciated for what they are, but you can't just drop that on someone. It's

01:55:44 ◼   ► It's like hitting them in the face with a hammer when they ask you for a kiss.

01:55:48 ◼   ► It's like they're not going to have a good time and they're going to be like, "Why'd

01:55:51 ◼   ► you do this to me?

01:55:52 ◼   ► This is not very nice."

01:55:53 ◼   ► So you have to start them off with something that's simpler, that's less complex and has

01:56:00 ◼   ► just a couple of really simple notes that they can pallet.

01:56:04 ◼   ► But then the instinct is to want to give them the good stuff because you're like, "You're

01:56:07 ◼   ► my guest.

01:56:08 ◼   ► I want you to taste this amazing thing."

01:56:10 ◼   ► But usually the "good stuff" especially when it comes to bourbon and that kind of

01:56:16 ◼   ► hooch is it's really aggressive, really challenging.

01:56:20 ◼   ► And so you just got to go like, "Eh, I'll start off with this."

01:56:25 ◼   ► So I typically start them off with Elijah Craig, which is a really solid—I know you

01:56:30 ◼   ► like that stuff too.

01:56:31 ◼   ► It's really solid bourbon and it tastes good.

01:56:34 ◼   ► It's easy to drink and it feels good in the belly and it's nice little warming up

01:56:40 ◼   ► for the throat and everything.

01:56:42 ◼   ► - Yeah, I know exactly what you're talking about.

01:56:43 ◼   ► I have, I don't even, I looked before we started recording

01:56:46 ◼   ► and I have two like special bottles of,

01:56:50 ◼   ► they're both actually ryes, neither of them are bourbons,

01:56:53 ◼   ► but I have two special, like really hard to find bottles

01:56:56 ◼   ► in my collection right now.

01:56:57 ◼   ► And actually I've never opened either of them.

01:57:00 ◼   ► I have a Thomas H. Handy Sazerac straight rye whiskey.

01:57:04 ◼   ► Now that's 64 and this is, I love it.

01:57:07 ◼   ► You can tell it's literally like really, really small batch because it's just written on the

01:57:11 ◼   ► label with a Sharpie.

01:57:12 ◼   ► It says 64.2% alcohol by volume, which is what is that in proof.

01:57:20 ◼   ► So it's like 128 proof.

01:57:24 ◼   ► Most bourbons and riser somewhere between 45 percent, somewhere a little north or south

01:57:30 ◼   ► of 45 percent alcohol by volume, which is 90 proof.

01:57:36 ◼   ► And that's what most people would consider to be a very drinkable alcohol by volume.

01:57:42 ◼   ► And then I have from Will It, I have this Will It XCF.

01:57:46 ◼   ► Have you ever heard of this?

01:57:49 ◼   ► It's exploratory.

01:57:50 ◼   ► XCF.

01:57:51 ◼   ► Yes, that's the ones that do like experimental one, right?

01:57:53 ◼   ► Yeah, exploratory cask flavor.

01:57:55 ◼   ► And they even put like a version number on it, 1.0.

01:57:59 ◼   ► A friend of mine, I don't even know how the hell I ended up with this.

01:58:02 ◼   ► My friend of mine was able to get it.

01:58:05 ◼   ► He was like, "Do you want some?"

01:58:06 ◼   ► I was like, "Of course.

01:58:08 ◼   ► Get me a bottle."

01:58:09 ◼   ► I don't even remember what I paid for it, but it was enough that I blacked it out of

01:58:13 ◼   ► my memory.

01:58:14 ◼   ► Because it's—

01:58:15 ◼   ► Yeah.

01:58:16 ◼   ► That's the key, really, when you're buying good booze.

01:58:18 ◼   ► Don't look at how much you paid.

01:58:21 ◼   ► But I haven't opened either of them, but I'm saving them in back of my mind for when

01:58:26 ◼   ► good friends come over.

01:58:27 ◼   ► That's the sort of booze that you save for a special occasion.

01:58:32 ◼   ► But then you run into exactly the problem that you're talking about, which is that most

01:58:36 ◼   ► people, you can't just pour them like 130 proof thing, and that they're going to enjoy

01:58:43 ◼   ► it or appreciate it at all.

01:58:45 ◼   ► Right.

01:58:46 ◼   ► They're going to have a bad time, for sure.

01:58:47 ◼   ► I mean, I think one of the ones that I like to give people when they're like, "Yeah, let

01:58:52 ◼   ► me try something more interesting that I may not have tried."

01:58:56 ◼   ► You know, that's maybe they have had bourbon there. They're whiskey drinker like they've had, you know

01:59:00 ◼   ► The standard stuff or whatever and they're interested in something a little bit more out. There is normally I'll pour them some

01:59:07 ◼   ► some Noah's Mill

01:59:09 ◼   ► Which is a really respectable and kind of out of the way

01:59:13 ◼   ► Bourbon that most people won't have had

01:59:16 ◼   ► It's getting a little bit more popular these days. I think in the last couple of years they have they're you're able to find it more places

01:59:25 ◼   ► I think it's a blend, I can't remember, but it's like a bunch of different years, ages

01:59:32 ◼   ► between like four years and 20 years or something like that.

01:59:35 ◼   ► But it's pretty decent.

01:59:37 ◼   ► And I think that's like 114 proof or something like that.

01:59:41 ◼   ► I can't remember exactly, but it's up there.

01:59:44 ◼   ► But it has like this little bit of maple and I taste a little bit of vanilla in it.

01:59:48 ◼   ► So it's like very, it has a little bit of sweetness to counteract that real spicy back

01:59:54 ◼   ► of your throat, you know, thing. But that it's like an introduction to them, like opens their

01:59:59 ◼   ► mind because there is flavor there. But there's also that spice, that real like raspy spice that

02:00:05 ◼   ► gets them wakes them up, you know, opens up their nasal passages and, you know, constricts the

02:00:10 ◼   ► throat for just a second as it goes down, and you breathe out and all everything opens up, you know,

02:00:16 ◼   ► and you got to kind of prime the pump with something like that before you can move them

02:00:19 ◼   ► them into something like a Yamazaki or something really high alcohol that also has a great

02:00:26 ◼   ► amount of taste to it like a Willits pot still or something like that.

02:00:30 ◼   ► The Willits, I looked it up, the XCF is only 103 proof.

02:00:35 ◼   ► It probably would be the one that would be better if I were to have somebody over and

02:00:39 ◼   ► let's open a bottle of some special stuff that people could drink that.

02:00:43 ◼   ► According to this, the MSRP was 140 a bottle.

02:00:47 ◼   ► That's probably about what I paid for it.

02:00:50 ◼   ► Which is way more than I usually pay.

02:00:53 ◼   ► My advice to the people who are sort of just wanting

02:00:56 ◼   ► to get into it is I go back to,

02:00:59 ◼   ► I think I've mentioned this on the show before,

02:01:02 ◼   ► but that there's a golf book.

02:01:04 ◼   ► I haven't played golf regularly in years,

02:01:05 ◼   ► but a guy named Harvey Penick, P-E-N-I-C-K,

02:01:08 ◼   ► his little red book, and he was like this old, really old,

02:01:11 ◼   ► like he coached golf until he was like 100 years old

02:01:14 ◼   ► Texas and he had this little notebook of advice and they turned it into a book

02:01:19 ◼   ► and it's just it's just gold it is just such a great book and it's but one of

02:01:23 ◼   ► his things was one of his piece of advice if you're learning to play golf

02:01:26 ◼   ► is master one club and it ought to be it ought to be like a seven iron because

02:01:32 ◼   ► seven iron exactly right in the middle and that if you were going to let's just

02:01:36 ◼   ► say on a dare if you were going to play an entire round of golf with just one

02:01:39 ◼   ► club in a putter a seven iron would be a pretty reasonable choice and that just

02:01:44 ◼   ► Just go out there and just master that one club.

02:01:46 ◼   ► And when you go to the driving range, at least half the time, don't even take the other clubs

02:01:50 ◼   ► out of your trunk.

02:01:51 ◼   ► Just take your 7 iron and hit the whole bucket of balls with the 7 iron.

02:01:55 ◼   ► And get to know that one club in the middle of the range better than all your other clubs

02:02:00 ◼   ► combined.

02:02:01 ◼   ► And that fundamentally, it's a great advice because you shouldn't have a different swing

02:02:04 ◼   ► for a driver than you do with a wedge.

02:02:06 ◼   ► You should have like one swing that you adjust to the different lengths of clubs.

02:02:11 ◼   ► And then you go from there.

02:02:12 ◼   ► And then if you're even having a bad day, you know that you can at least hit a 7 iron.

02:02:18 ◼   ► And then you judge all these other clubs from there.

02:02:20 ◼   ► That's my advice for a lot of things in life.

02:02:21 ◼   ► And it's the same thing for like if you wanted to get into whiskey and bourbon.

02:02:25 ◼   ► Find one that you really like.

02:02:28 ◼   ► And then just buy that one a couple times in a row and really get to know it.

02:02:32 ◼   ► And then base your opinions on other things as you start to experiment from there.

02:02:37 ◼   ► Right.

02:02:38 ◼   ► Yeah, if you find something that you really enjoy, you're like, "Oh man, I like drinking

02:02:42 ◼   ► this," that's probably a good indicator of what your palate is.

02:02:47 ◼   ► And bourbon is one of those things, whiskey or even alcohol in general, but bourbon and

02:02:53 ◼   ► whiskey especially are one of those things that are very much like wine in that somebody

02:02:57 ◼   ► can tell you all day that something is the best thing that you've ever tasted or that

02:03:02 ◼   ► you're going to taste or whatever.

02:03:04 ◼   ► But the moment you find something you like, that's your palate.

02:03:07 ◼   ► That's just you, that's what you like.

02:03:10 ◼   ► And you can of course increase your appreciation of things over time by reading about them

02:03:14 ◼   ► and understanding the flavors of it or understanding the history of it.

02:03:18 ◼   ► Even if you don't necessarily want to drink it every day, you can appreciate something.

02:03:22 ◼   ► But if you are able to find something that you generally enjoy that tickles your pleasure

02:03:27 ◼   ► centers, that's your taste and that's okay.

02:03:31 ◼   ► Don't let anybody tell you that what you're drinking is not enjoyable to you because if

02:03:36 ◼   ► If it's enjoyable, it's enjoyable.

02:03:39 ◼   ► That's why I love this whole resurgence in recent years of these craft bourbon makers.

02:03:45 ◼   ► There's lots of bourbons under four years old now that are pretty drinkable, and there's

02:03:51 ◼   ► plenty under 10 or 15 that are amazing for not a whole lot of money.

02:03:57 ◼   ► They're very, very affordable bourbons.

02:04:00 ◼   ► Old Weller, for instance, which is getting a little harder to find because it's made

02:04:03 ◼   ► from the same mash as Pappy's but Old Weller either their 12 year or their Select or their

02:04:11 ◼   ► Antique.

02:04:12 ◼   ► The Antique is a little spicier but the Old Weller 12 year I think is really really delicious

02:04:17 ◼   ► and it's just unassuming, small unassuming bottle with a plastic cap and it runs $35

02:04:23 ◼   ► I think, something like that and it's just so so smooth and tasty and drinkable and like

02:04:30 ◼   ► you know it's enjoyable to drink.

02:04:32 ◼   ► It doesn't, it has a little, it'll open you up a little bit like any whiskey

02:04:35 ◼   ► would, but it doesn't just like, you know, hit you in the face and it just.

02:04:39 ◼   ► Really, really enjoyable.

02:04:42 ◼   ► And yes, it's not like a top shelf whiskey, but that's not the point.

02:04:48 ◼   ► You know, the point is, does it make you feel amazing?

02:04:52 ◼   ► Does it make you feel, um, those, those sensations of like warmth and sentimentality

02:04:57 ◼   ► and all this stuff that, you know, a nice little glass will, will bring you.

02:05:00 ◼   ► And I think that that's important.

02:05:01 ◼   ► Yeah, I tell you, am I the go-to? The one that really was is like the 7 iron of my

02:05:07 ◼   ► palette is just bullet bourbon. And it makes a lot of sense. I didn't even know

02:05:14 ◼   ► that I like when I first, I was like this this one and it you could drink it any

02:05:18 ◼   ► way I would want to drink it. If I want to drink it in an old-fashioned, I'd want to

02:05:21 ◼   ► drink it just you know neat. I want to just drink it in a glass with ice. I like

02:05:26 ◼   ► it every, I like it every way. But I like, I know it. And in hindsight what I've

02:05:31 ◼   ► known what I found out about bullet since then is that bullet is considered

02:05:35 ◼   ► by many people to be a very rye heavy bourbon and in fact non-rai right a

02:05:40 ◼   ► regular their orange label bourbon is is rye heavy and then now they make they

02:05:46 ◼   ► have a green label rye but it explains why I like rye so much in general is

02:05:54 ◼   ► that my favorite bourbon is a sort of rye heavy one yeah but that's my advice

02:06:00 ◼   ► to people. There's more than any specific list of bourbons that we could give you to

02:06:05 ◼   ► start with. Just try some of the bigger label ones and find one that you're like there.

02:06:09 ◼   ► I like that one better than the other ones that I've had. Then just drink that one for

02:06:12 ◼   ► a while.

02:06:13 ◼   ► Yeah. Yeah, exactly. Because if you don't have a baseline, you'll never know. If you're

02:06:18 ◼   ► all over the map, you'd be like, "Oh, this tastes good. I guess this tastes good. I have

02:06:22 ◼   ► no idea." But if you find something that you like and you lay those tracks, then you can

02:06:27 ◼   ► take detours, left or right, and find other things you like.

02:06:31 ◼   ► One of my favorites, too, another one of my favorites is – have we talked about this

02:06:34 ◼   ► Eagle Rare?

02:06:35 ◼   ► Yeah, I think so.

02:06:37 ◼   ► Merlin Mann turned me onto this a while ago.

02:06:42 ◼   ► It's another one where it's super affordable.

02:06:43 ◼   ► I think in Pennsylvania, it's usually like $24.

02:06:47 ◼   ► It comes in that big, tall, wine-shaped glass that's just like the most generic-shaped

02:06:54 ◼   ► booze glass, you know, or a bottle of the booze could ever be shipped in. It's just

02:06:59 ◼   ► like a cylindrical round tall glass. Like there's nothing special or, you know, it's

02:07:06 ◼   ► so generically shaped like the silhouette of the glass.

02:07:10 ◼   ► $24, super reasonable price. And it's, you know, if you were stranded on a desert island

02:07:17 ◼   ► and all you had was a case of Eagle Rare, you'd be like, "Oh, I got lucky."

02:07:21 ◼   ► Yeah, I do have a bottle of it and I do like it a lot. It's a little hotter than an Elijah

02:07:28 ◼   ► Craig 12-year, which I like the Elijah Craig 12-years, my well whiskey. That's what I pour

02:07:34 ◼   ► in my decanter and keep there to make it old-fashioned during the week if it's not a special occasion

02:07:39 ◼   ► or whatever. It's just a little bit spicier than that, but it's still extremely tasty.

02:07:44 ◼   ► I agree with you on that.

02:07:46 ◼   ► I think that there – go ahead.

02:07:49 ◼   ► Well, people keep asking me if I've had the Elijah Craig 18 and I can't find it.

02:07:52 ◼   ► Oh, right.

02:07:53 ◼   ► Have you?

02:07:54 ◼   ► Yes, I have a bottle.

02:07:55 ◼   ► It's delicious.

02:07:56 ◼   ► See, that's what I mean.

02:07:57 ◼   ► You make me angry.

02:07:57 ◼   ► You make me angry.

02:07:59 ◼   ► Look, the advantage of living where I live

02:08:02 ◼   ► is that I've got this local liquor guy who runs a liquor store.

02:08:06 ◼   ► And he just finds me everything that I ask for.

02:08:08 ◼   ► Like, I'll be like, hey, I've been really thinking about this.

02:08:12 ◼   ► I tried this once and I really like it.

02:08:14 ◼   ► And if you could find me a bottle, I'd really appreciate it.

02:08:16 ◼   ► And he just, like, I don't know what back of what truck these things fall off of, but

02:08:20 ◼   ► he just, he just show up on his shelf.

02:08:22 ◼   ► And it's just a little liquor store in, you know, I mean, Fresno is not exactly a TV

02:08:27 ◼   ► town, but it's like 500,000 people.

02:08:29 ◼   ► But most folks here, I'm going to be honest, they don't drink super high end

02:08:33 ◼   ► bourbon, you know?

02:08:33 ◼   ► I mean, there's probably, you know, a few hundred of us in town that maybe like this

02:08:38 ◼   ► stuff or even care or know what it is.

02:08:40 ◼   ► So if you can convince somebody to stock it, then you're pretty much got free

02:08:45 ◼   ► rain, you know, whereas in a bigger city like San Francisco or somebody, someplace like

02:08:49 ◼   ► that, I mean, good luck, right? It's all raffled and all that stuff. So that's how I find some

02:08:54 ◼   ► of this stuff. But yeah, so the 18 is, it's good. It's really solid because it's just

02:08:59 ◼   ► like, it's just like a, like a stuffy couch version of the Elijah Craig comfy chair, you

02:09:06 ◼   ► know, like where you just fall into a little bit more, it's a little bit more aromatic,

02:09:10 ◼   ► Like there's more scent to it, it opens up a little bit.

02:09:14 ◼   ► And it also is a little teeny bit mellower and smoother, which is almost impossible from

02:09:19 ◼   ► the 12 year, which is really good.

02:09:21 ◼   ► And that 12 year too, very affordable.

02:09:24 ◼   ► Very affordable bourbon that's anywhere, you can find it anywhere, you can find it at Bevmo

02:09:27 ◼   ► or whatever your local chain place is.

02:09:30 ◼   ► And it's probably about 25 bucks, right?

02:09:32 ◼   ► Yeah, yeah, exactly.

02:09:34 ◼   ► Like at Christmas time you can find them on special for 20 bucks sometimes.

02:09:38 ◼   ► It's great.

02:09:39 ◼   ► really, really good buy. I like that a lot.

02:09:42 ◼   ► Yeah, very much comparable to beer, where you don't have to pay much at all for really,

02:09:49 ◼   ► really good stuff. That's another thing that I personally enjoy greatly about drinking

02:09:57 ◼   ► bourbon and rye is that you really don't have to spend much at all to get seriously, seriously

02:10:02 ◼   ► good stuff. That would be my last bit of advice is really don't get fooled by the fact that

02:10:07 ◼   ► for things like, well, just to compare it to another whiskey, compared to like scotch.

02:10:12 ◼   ► Like good scotch is necessarily expensive.

02:10:15 ◼   ► And I don't know how much of that is just the shipping from Scotland and how much of

02:10:21 ◼   ► it is taxes and how much of it is just the way that the industry is set up to keep the

02:10:25 ◼   ► prices high.

02:10:26 ◼   ► I don't know.

02:10:27 ◼   ► But you can easily get three top-notch bottles of bourbon for the same price as one top-notch

02:10:33 ◼   ► bottle of scotch.

02:10:34 ◼   ► Yeah, easily, easily. And obviously you have to sort of like

02:10:39 ◼   ► the taste of rye and the kind of mash that whiskey is made out of,

02:10:42 ◼   ► or bourbon is made out of. But I just, if you are interested in that kind of thing,

02:10:47 ◼   ► you can... It's so affordable compared to

02:10:51 ◼   ► anything in the middle to high end or rare whiskeys. They're just, they get

02:10:55 ◼   ► so crazy so quick because they're just very limited capacity.

02:11:00 ◼   ► Most of the places don't make any more than X number of cases and

02:11:04 ◼   ► haven't for decades, you know, so there's just it's just a limitations thing. It's like they only make so many cases

02:11:09 ◼   ► That's all they're ever gonna make good luck, you know, and that like a lot of these bourbon distilleries, especially any of the Buffalo Trace

02:11:17 ◼   ► Bourbons that they could distribute it through Buffalo Trace. They're

02:11:21 ◼   ► Fairly high capacity but still pretty good quality

02:11:25 ◼   ► Bourbons, you do not have to spend a ton of money

02:11:28 ◼   ► So I mean if and there's one too like if you they've been marketing really really heavily lately

02:11:33 ◼   ► But I actually I tried it recently just on a whim and I have to admit it was not bad at all

02:11:39 ◼   ► Was is the larceny and if you've had larceny, I've seen I actually I can see the label in my head

02:11:45 ◼   ► But I have not it that that's a Buffalo Trace

02:11:47 ◼   ► Uh, I don't know who distributes it. That's a good question. Maybe I can find out but the larceny is it's like

02:11:54 ◼   ► 22 bucks at most places at the most and it is it's a Kentucky style bourbon

02:12:01 ◼   ► It's not bad at all. John Fitzgerald is is the distributor, but it's um

02:12:07 ◼   ► It's pretty good

02:12:10 ◼   ► I I mean

02:12:11 ◼   ► You know like in I have to preface all of this talk that we've been having about bourbon like I don't know anything

02:12:16 ◼   ► You know, this is just all I know is what I taste, you know

02:12:19 ◼   ► and and a little bit that I try to absorb and talk to people about but I

02:12:23 ◼   ► You know, it may be a mass-market thing, but it's pretty solid

02:12:28 ◼   ► It's like one of those things like a two-buck Chuck where you're like, "Hey, this isn't

02:12:32 ◼   ► that bad."

02:12:33 ◼   ► But it's like 92 proof.

02:12:35 ◼   ► It's wheat bourbon.

02:12:37 ◼   ► Wheat bourbons are generally smoother – or wheated, excuse me, bourbons are generally

02:12:41 ◼   ► smoother and more forgiving and easier to drink because it's like wheat instead of

02:12:47 ◼   ► rye after corn because the majority is corn and then wheat instead of corn and then rye.

02:12:55 ◼   ► But Old Weller, that's also a weeded bourbon.

02:12:59 ◼   ► But it's pretty damn drinkable.

02:13:00 ◼   ► And most famously, Pappy Van Winkle is a weeded bourbon.

02:13:04 ◼   ► Correct.

02:13:05 ◼   ► Yeah, yeah.

02:13:06 ◼   ► Pappy's...

02:13:07 ◼   ► A lot of the legend around Pappy is that it was one of the first really highly rated weeded

02:13:14 ◼   ► bourbons.

02:13:15 ◼   ► Right.

02:13:16 ◼   ► So you're saying L'Arcyney is weeded?

02:13:17 ◼   ► Yes, it is a weeded bourbon.

02:13:19 ◼   ► It's like 18 to 20 bucks, I think.

02:13:24 ◼   ► And it's called Johnny Fitzgerald Larceny.

02:13:27 ◼   ► And it's very affordable, it's everywhere, it's a mass market bourbon for sure.

02:13:33 ◼   ► So if that turns you off, it turns you off.

02:13:36 ◼   ► But as far as the taste, I thought it was pretty solid.

02:13:40 ◼   ► Yeah.

02:13:41 ◼   ► Well, it's good to know.

02:13:43 ◼   ► You make me angry.

02:13:47 ◼   ► Anything else before we cut it off?

02:13:49 ◼   ► No, I think I'm good.

02:13:50 ◼   ► Yeah, I think it's time for an old-fashioned, actually, now that I think about it.

02:13:53 ◼   ► Yeah, it is.

02:13:54 ◼   ► Matthew Panzareno, thank you so much for coming back on the show.

02:13:58 ◼   ► People can read your work on a daily basis at TechCrunch, of course.

02:14:02 ◼   ► And on the Twitter, you are @Panzer.

02:14:08 ◼   ► Is that correct? P-A-N-Z-E-R.

02:14:12 ◼   ► Yes, sir.

02:14:13 ◼   ► Anything else you want to promote? Anything else? Anything coming up?

02:14:16 ◼   ► No. No. I get enough of that.

02:14:19 ◼   ► You're not a self-promotional type of guy.

02:14:21 ◼   ► Not so much.

02:14:23 ◼   ► Well, I appreciate the time. Excellent episode. Thank you very much, Matthew.