TBPN - Earnings Season, Palantir Rips, Has Apple Topped, Google Misses, Penny Joins a16z

Episode Date: February 6, 2025

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Imagine you're a founder and you get an email from Daniel Penny. Welcome to Technology Brothers, the number one live show in tech. It is Wednesday, February 5th, 2025. We are breaking down a whole bunch of earnings. It's earning season boys. Earning season on technology. You already know that. Is presented by public.com.

Install the app. It's the best way to trade all sorts of financial assets. It's the super app. And so we're proud to be partnered with public. And we're going to take you through three amazing earnings reports, really. Palantir, Google, and Apple will kick off with those. Then we'll take you on a deep dive of Timu since we mentioned them yesterday. And then we will move on to some segments in the timeline like we always do.

Jordy, anything else? Any breaking news we got to cover before we dive into Palantir? There's always breaking news, John. But we have three straight hours to just keep breaking. scooping until we're too tired to keep going, which usually doesn't have. Usually we get cut off. Oh, yeah, yeah. I was watching some of our clips, and it still gets me every time I'm like, oh, we got some breaking news here, and it's from like three days ago. We broke this on the show. Hey, it's not, we've always said it's not breaking news until the technology brothers, you know,

share it. So that is true. That is true. Well, let's start off with some memes, some posts on X, all about Palantir. They had a banger earnings and the stock soared more than 23% as AI powers strong earnings and guidance. Kramer keeps posting, Jim Kramer, known for famously calling the top at the wrong time all the time has become a bit of a meme. But he says, total heavyweight, exceptional call, awesome company. Kramer keeps posting about it and it won't go down. And so Mads Capital is quoting talking about me driving to work, knowing the Palantir is now at 100, and it's just a hilarious video of Mads McElson crying in the car because clearly he doesn't own enough Palantir, I guess.

So one thing people didn't really realize that unless you follow Kramer, if you actually scroll his feed, he's very, he's almost schizophrenic with his predictions. One day he's saying, oh, this, you know, this way over price has got to drop the next day. He's like, I'm super long. So he's just engagement farming constantly. And so that's the lens he needed to view Kramer. for, which just means almost any company on earth, you're going to be able to find him bull posting and bear posting.

And so go scroll his feed. It's quite entertaining. But for every one post of his that goes like really viral on sort of teapot and tech, tech, he's got, you know, 10 others about the same company. So anyways, excited to get into Palantir. They were dominating the timeline. And I wanted to kick it off with a great throwback. post. This is from praying for exits. One of my favorite super random things is that the Wu

Tang clan were some of the earliest Palantir supporters. And they, Rayquan de Chef posted in 2010, when basically no one knew about Ballantir. It was a private company. It hadn't even raised, I think, all that much money. And he says, just got to Palantir Technologies headquarters. If you don't know about them, Google them. And I love that. And, and, And somehow they linked up with Alex Karp, I guess, and the Palantir crew and came through and had a good time with the Palantir team. But it really speaks to just the bizarre culture at Palantir that they have, you know, rappers coming through. And then they are employing former senators and, you know, very important people in the military and just kind of doing it all. And so Dr. Karp was pictured in the Middle East.

Maktoum bin Mohammed said technology and innovation are key drivers of future economic growth. Today I met with Dr. Alexander C. Karp, co-founder and chief executive officer at Palantir Technology, to explore opportunities for accelerating the adoption of artificial intelligence. And, you know, he's just in a room of absolute killers out in the Middle East. And as a reminder, this is from Eliano over at Palantir, good friend of the show. We are less than two weeks away from the release of Dr. Carp's book. So if you haven't pre-ordered it already, go check it out. You got the copy on your desk there, John?

I got the copy. And I also have the audiobook pre-ordered. And so you can go on Audible right now and use one of the credits if you have that. Or you can order the hard copy. It should be out in a few weeks. And we're looking forward to reviewing that once it goes. live. Here's a little bit of a quote from the earnings call. CTO Shamsankar, good friend of the show, on DeepSeek and disagreeing with Open AI CEO Sam Altman. We are at war with China. We are in

an AI arms race, says Shamm. I got into a disagreement with Sam Altman about this at the Senate AI summit over a year ago. There is an opposing view that we can all get along and cooperate on these things. I'm sure the other side feels quite different. realizing their IP has been stolen. How many times are we going to believe that anchors dragged across the sea that cut undersea cables? Maybe it's espionage. China knows they're at war. We kind of equivocate on it as a peace-loving nation. The engineering on R1 is exquisite. The optimizations they've done are really impressive. We have to wake up with respect for our adversary and realize that we are competing. But they absolutely did steal a lot of that through distillation of the models

and perhaps they stole even more. We have to realize that the AI race is winner take all, and it's going to be a whole nation, a whole of nation effort that extends well beyond the DOD in order for us to win as a nation. And so I loved that quote, and I thought it was important to highlight that, I mean, these Palantier earnings calls

are like the Super Bowl for defense tech companies. Like, you need to be watching these because there's so much gold and so many good, good takes in there. And energy, carp's energy on the stream was in, insane. I mean, obviously they were putting up big numbers, but the entire, the entire vibe coming out of it. I mean, if your stock goes on that much of a rip, it's hard not to have everybody be be pretty excited about what's going on. But Eliana's been on a tear, carp's been on a tear. Yeah. And they're clearly having a lot of fun. And they have this

amazing dynamic with their with their shareholders, right? It doesn't feel like they're, lecturing, it does, they have made it feel like everybody's a part of this bigger, you know, broader, important movement. And in many ways, a part of the, you know, supporting the U.S.'s efforts to, you know, further its national interest. Yeah. A couple weeks ago, I was at the Palantir headquarters and they have all these memes that go out in Slack and then get printed and put on the walls. And my favorite one was the Grim Reaper meme. And it was like, Palantir will never be a $10 billion stock. Palantir will never be bigger than Lockheed. Palantir will never be worth $100 a share. And they've just blown through every, you know, it could never happen moment. And Carp just

loves it. He brings this amazing energy to the, to the office. He has all these crazy, I don't even know like what I can say or not, but he, he like just works out constantly in the office. He carries these kettlebells around. He believes that if you, if you can carry your body weight in a split between two kettlebells and walk around for 60 seconds, I think. That's like an extremely strong health metric. And so everyone should be able to do that. And he brings this just like. Farmer carries.

Yeah, farmer carries. Yeah. And so on the next. And small note. Yep. And relevant to our friends and partners over at Bezell, he has fantastic taste and watches. He wears a beautiful Aquanaut with the orange band.

We worked with the Bezile team to identify. it last time he was presenting with it and it's hard to miss. It's a beautiful it's a beautiful, beautiful piece. But anyways, on the report. Yeah, and so Eliano posted

Are You Not entertained Carp after earnings looking fantastic, you know, hilarious red beanie and ski gear. Somebody bought the seat, sent the CTO a beanie of sorts? Yeah, yeah, yeah, purple. Yeah. I'm not exactly sure why, but we'll see.

I'm into that joke. Well, let's move on to Palantir earnings. So just to give you the high level, this is for Q1 fiscal year 2025. So looking back the last three months, revenue surged 36% year over year with record operating margins. They achieved gap profitability and delivered bold guidance, 31% revenue growth forecast for 2025. The stock price spike 20% following the earnings announcement. announcement. And so they've been growing both on the government side and the commercial side. For people they don't, I mean, there's this meme like no one knows what Palantir does. It's really

not that complicated. You know, it is an enterprise software as a service company that does data aggregation and data analytics. They don't actually own data. You go to Palantir and you store your data with them. Snowflake is a competitor. And one thing to note, the fact that they're projecting this level of growth at a time when pretty much every government contractor is under attack due to Doge's activities just shows that they themselves as well as the market believe what they're doing is critical enough that it's not at risk of Doge and Elon's team coming in and saying, hey, why are we spending $10 million a year for this database? Like we could rebuild this, you know, in a few weeks. Yeah. And you see that on the commercial side. Boeing has been a public client of Palantir.

They put all of the parts data into Palantir and then, or maybe it's Airbus. There's a few different companies, but you can think about it like your, you're manufacturing airplanes. There's a whole bunch of pieces that you need to track. How many do we have an inventory? What's broken? What's not? How do we move that through the system? And that actually drives a lot of efficiency. So that's why Palantir's been like a valuable product for the government because it actually drives efficiency. And Elon posted just recently on X, like Dr. Carp is a hero. Like I love Alex Carp. Like he's great because he's very much aligned with the mission of Doge and what Luke Ferretor is doing over there,

understanding the data and making better decisions. Yeah, it's interesting to think there's a world where Elon would have been a co-founder of Palantir. It doesn't even sound that crazy given, you know, at the stage at which Palantir was started, but there was obviously a lot of different activity happening at that time. Yeah. And so you need to think about Palantir as two main revenue streams, government contracts and commercial deals. On the government side, they grew 45% year over year, driven by defense and intelligence projects, which they often can't talk about, but they can just give you the high level how they're doing financially.

and this has provided a stable recurring revenue base and strategic credibility. Everyone knows, oh, if it's good enough for the CIA or the government, it's probably good enough for my organization. And then on the commercial deals, U.S. commercial revenue jumped 64% year over year, even bigger than the government contracts. And they are focused on ultra high value, large clients across finance, health care, manufacturing, et cetera, which I mentioned. And they have a strategy of fewer, deeper relationships that enhances stickiness and upsell potential.

So Palantir is this famous example of forward-deployed engineers. They actually send Palantir employees into an organization, help them understand how to implement the software, how to get all the data into one Palantir installation, and then be able to drive all the analytics and mapping over it. One of the greatest examples just to concretize how Palantir works, since a lot of people think it's still pretty abstract, is you can think back during the Iraq War,

and when the troops were in Afghanistan, there were a lot of IEDs. improvised explosive devices. And so you want to find the bomb maker who's making all these bombs and blowing up cars and civilians and U.S. troops. And so what you do is every time a bomb goes off, they inventory what they found at the bomb site. So they look and they say, okay, we found dynamite at this one. And over there, we found C4. And over here we found some other plastic explosive. And then here we found nails. And here they used shrapnel from old grenades or here they used landmines. And so you put all of those on a map and pretty soon you can see that, hey, the ones that use C4 and nails, those are all clustered within a 20 mile drive of this one town.

So the bomb maker that's making that type of bomb must be in that town. And so it's a very easy way where you load it all up in the database, you slice it all up and then you can just see it visualized on a map and that helps the troops figure out where the bad guys are essentially. And then there's a million other examples, but that's a very concrete one where you can. imagine just dots on a map being valuable. And it doesn't sound revolutionary, but it was at the time, and it still is in many ways because there just aren't that many databases that were in-house and working very well. And so that drove a lot of early adoption. And now Palantir's used for all sorts of things. It's a big company. And part of the bull case is that Salesforce, you know, another enterprise software provider, they, you know, they have an incredible distribution engine.

very broad product that many large companies and S&Bs build on top of, but they have less of a moat in the sense that somebody else can say, hey, I'm going to build a really specialized CRM for this one opportunity and then just start selling into those customers. Whereas Palantir has almost two decades now of work in Washington, building these distribution channels, getting contracts, earning trust. And so when you think about the moat for the business, it's just much more meaningful than your typical SaaS,

provider that has to go through someone like Vanta and get, you know, approval. Sock 2 compliance is just like an entirely new level on this side. Yeah, totally. One of the reasons the stock jumped this year was because I believe Palantir received the highest credential approval from the government on FedRamp, I believe. So they're able to integrate at the deepest level with the government. And so in terms of geopolitical and where they're pulling their revenue from globally, the U.S. market continues to dominate with rapid adoption in both government and commercial segments,

but Europe is now 13% of revenue, but this revenue only grew 4% year over year due to regulatory and cultural challenges. Leadership warns that European institutions risk falling behind in the AI revolution. This is something we've talked a lot about. They're so privacy concerned and so sclerotic with how they move through things that they're not adopting the latest technologies, and that's something we certainly hope changes in Europe in the coming years. And then Palantir's also been expanding into other territories. They have an active initiative in Japan. It's a $50 million deal with a major insurer,

and they've made strategic moves in the Middle East and Asia Pacific, like that image that we saw earlier. And so they firmly avoid business with adversarial nations like China and Russia aligning with a pro-Western stance. And Karp has been beating the drum on being, a pro-Western company for a very, very long time way before it was cool. And he's built that upon, you know, all of his philosophical research in Germany and, you know, all the different philosophical thoughts that he's processed to understand what will create the ultimate amount

of peace in the world. And so he's built his business around that. And obviously forgone a lot of revenue that could have been, hey, yeah, let's sell the China. Why not? You know, and I'm sure a lot of competitors would say, yeah, sure, it's a global market. Let's just go for it. It's very hard to be American and hate Palantir. You've got to do some crazy, you know, crazy gymnast, mental gymnastics to get to that point. Yeah. And so they are really, like, like, the big question of Palantir is, I think at the beginning of the year, it was, maybe last year, it was around like 2023, 2024. It was at like $10 a share. and now it's at a hundred, something like that.

It's been a 10-bagger for a ton of people, and a lot of that's been around the AI narrative that it's more important than ever to aggregate data for AI analysis and then also work with proprietary data for AI systems that isn't just the open web. And so the model layer, as you've mentioned, is commoditizing in some ways,

but the models that are built on private repositories of company data or government data, those certainly aren't commoditizing, and that data is not being moved into large-scale, open-source, LLMs anytime soon. And so they've positioned strategically into advanced data and AI capabilities. They've had an emphasis on operationalizing AI by integrating it with proprietary data and workflows, and they launched the artificial intelligence platform, AIP, to enable rapid, customizable AI solutions. This has had a customer impact. Examples include reducing underwriting processing time from two weeks to three hours for insurance companies

and accelerating digital transformation across sectors with high switching costs. They have a unique full-stack approach that differentiates Palantir from cloud giants and pure play AI firms, but they must continue continuously innovate to fend off commoditization and growing competition. But they have done a great job of building a really insane team of engineers. and it's still, even, I mean, the company's over 20 years old at this point, and they're still recruiting top grads out of top colleges, and it's like still a hot place to work, which is very rare.

It's very, I mean, it's harder than ever to recruit talent out of Palantir, even though many of them are ambitious and would want to join other, you know, similar companies or start their own company, but many, you know, given the growth of the company just over the last year, some of their packages are pretty much impossible to compete with at, this point. Yeah. Just given, I looked on Pablo, like, and this, uh, uh, exactly a year ago, the stock was at $17 a share. It's sitting over a hundred right now. So if you got a, if you joined Palantir as like a new grad engineer and got, you know, some type of,

uh, relatively basic offer, uh, it's now, you know, nearly five X what, uh, what it, what it, what it initially was, was slated for. So, um, pretty, pretty incredible. So Palantir's competitive advantage in AI comes from that interplay of data, context, and action. The company spent nearly two decades building software to integrate, clean, and model vast troves of data for complex organizations. That groundwork now serves as the ideal conduit for AI. Many companies can train an AI model, but Palantir's ability to pipe the output of those models straight into decision-making systems on sensitive, critical data, all while handling

security, privacy, and regulatory compliance is key. Palantir essentially offers an out-of-the-box operating system for AI in the enterprise. This is not easily replicated because it requires trust and a track record of solving hairy data problems. As Carp bragged, Palantir had early insights years ago that AI would require this kind of infrastructure, and that foresight has now evolved from theory to fact. And this is true. You can go back and look at, even at interviews with Peter Thiel in like the mid-2000s

where he's talking about the vision for Palantir and the ability to look at a vast trove of data and ideally stop the next 9-11 before it even happens. And it's this weird thing where there's always been this question of like, what is Palantir's real impact? And it's like, well, we might not see it because if it doesn't happen, it's not going to be news. And it's probably not even going to be public.

We don't want to know every single daily threat against the United States, right? In a perfect world, it doesn't hit the news, right? That usually means something bad happened. But yeah, it's been interesting to see people go from nobody even knowing what people being aware of the company, Palantir, but not being, you know, having any idea what they did. But looking back at the growth of the company over the last year, Palantir being, a big data company supporting both the government and big corporates, it almost was a pureplay AI bet because they're able to actually leverage all of that data and help their customers and

clients start to understand it and then take action against it. So it seems all very obvious in hindsight. It's not not without risk. This show is for entertainment purposes only, as you all know, but currently they are sitting at a 552 PE ratio. So if you're building in defense deck and you're raising in your round and you've got a little bit of, you know, earnings, ask for the Pallantir multiple, you know. Sure. Yeah. It's bold, but you never know.

You might get a deal then. I agree with you. I mean, it is bold. and through like the Warren Buffett lens. But and I saw some, I saw some weird meme that I didn't, I didn't get a chance of screenshot, but it was somebody saying like,

oh, like, like somebody just called them the next Salesforce or like they're as important as a company of Salesforce. And they were like, this is ridiculous. Like Salesforce like prints so much more profit or whatever. But when I just think about like the vibe of the institution, like what Palantir is,

like it feels like as much of a force as certainly, as Salesforce. And so I wouldn't be surprised if over time they catch up. And Salesforce is, I think, an extra decade older, maybe. It is an older company. They've had more time to grow and scale. And I'm just super bullish on a founder-led company that's still able to attract talent. And Carps energy levels right now. He's just not going to stop. Yeah, he's just not going to stop. And so it feels like, like, yeah, there might be some meme stock dynamic, but that ultimately just lowers the cost of capital and allows him to keep building. And eventually, if things catch up, it's going to be really good.

And he's going into a pretty favorable administration for this stuff. Obviously, Elon's commented on it. Obviously, the DOD is investing more in technology. And all signs point to just more paleteer everywhere. Yeah, they enter the Japanese market and do one deal that's worth 50 million. Right. So it's like you can easily imagine Japan, a single country, becoming a multi-billion dollar revenue line for the company.

Yeah, yeah. And so a lot of it just depends on how much you believe the AI story. Obviously, there's a lot of takes on both sides there, but it is, it is an interesting one. And it's, it's, it's, there's certainly been crazier meme stock stories told in the past. Yeah, if you look at, you know, not that we're calling Pallenture meme stock, even though maybe it's getting priced similar to, to GameStop. But lowering GameStop's cost of capital by it being a meme stock does nothing for America, right?

They're now in the same position, which is that everybody's buying video games online. Yep. And, yeah, maybe they become an important distribution channel for mod retro, right? But that, you know, Mod Retro by itself is not necessarily going to sustain, you know, GameStop in the long run, right? It's just video games have been particularly cruel to the retail side of that industry. Yeah. I remember, I think it was last year, maybe even the year before. I was hanging out with Shamsankar, the CTO, and was asking him, like, kind of what's the next goal for Palantir?

And he was saying, like, well, we got to get into the S&P 500. And I was like, man, that's a tolerance. Like, you're already public company. Like, that's a big goal. I have never heard anyone operating a company. say that as the goal and he did it. And and and they and and and and and and that drives a ton of institutional investing, uh, uh, capital into the business. And a lot of those, uh, a lot of those, uh, a lot of those ETFs and funds that hold, uh, S&P 500 stay there for a long time as shareholders and are

very, they're very much in it for the long term. So, uh, yeah, the game, the game never, never ends, right. It's, we got to, you know, we got to go public. We got to get break into the S&P 500. Yep. We got to, we got to, you know, become a trillion dollar. Uh, uh, uh, you know, market cap company and then, you know, so anyways. And, and, yeah, the big story has been that, uh, this year Palantir became the, I think the highest value defense company of all, uh, bigger than Lockheed, Northrop Grumman and,

and by some measures bigger than many of them combined. Uh, and there's this question of like, and we're seeing, so crazy, there's so much smaller on a revenue scale, but it's a software company and so the margins eventually should be much higher than, okay, yeah, you have to make, yeah, yeah, you make an aircraft and, it's really expensive, but a ton of that got eaten up in cost and overhead, whereas once a SaaS system is actually installed, it can be very lucrative for a very long time.

We've seen this in every software company that's IPOed in the last 20 years, basically. And so let's move on to Apple's earnings. Apple reported $124 billion in total revenue up 4% year over year, and net income of $36 billion. up 7% year over year, shares rose in after hours trading despite mixed signals in key areas. And so Ben Thompson wrote a quick review of Apple's earnings. And then he asked Deep Research, Open AI's new research tool to do the same twice. And it was very interesting listening to the deep research result. It wasn't able to really create Ben's voice, but it did hit some of the analysis, but it was way more verbose. It was like pages and pages instead of like a nice

little summary. So let's go through the Stratory update and then give you some highlights on what's going on with Apple these days. So the Wall Street Journal reported Apple's iPhone sales fell in the all important December quarter, a sign that its artificial intelligence software has yet to kick off a new cycle of growth for its most valuable product. On Thursday, Apple reported that iPhone sales for the quarter were down nearly 1% from the year prior. to 69.1 billion, a miss from the 70.7 billion analysts were projecting, according to facts that. Apple's total revenue was $124.3 billion, rising almost 4% from the same quarter. Net income was $36 billion up more than 7%. And so Apple's shares rose. The company said

its earnings report, said in its earnings report that sales dropped in China by more than 11% missing the $20 billion. Analysts wanted them to do $20 billion. And they were, only did 185. Apple's newly appointed chief financial officer, Kevin Perrick, said that the company saw better iPhone 16 sales in markets where its new AI tools called Apple Intelligence have been launched. And so Apple intelligence is not available in Europe and it's not available in China. And so they're saying, hey, the only reason that we're not selling more iPhones is because our amazing Apple intelligence isn't there. And they might get put in the truth zone here. Which is, yeah, literally insane.

I don't know a single person who benefits from Apple intelligence other than a laugh or two here or there when it just badly summarizes something. So really seemingly a product that should have not been widely shipped and just needed quite a bit more testing. So to be coming in here and saying iPhone sales are declined. because we're not properly summarizing people's text is crazy. Yeah, I mean, to put on the steel helmet for a second and steel man this a little bit, there is something to be said for a lot of the advertising campaigns around the new phone have been driven and focused on Apple intelligence. And so if that feature is not available and you see that ad,

even if you've never tested it or you don't look at a review, you're just seeing the marketing, then you're like, well, I'm going to wait until the product that they're marketing. And this was the thing that happened in the States. Like in the U.S., Apple was running tons of ads around Apple intelligence, Apple intelligence, and it wasn't available for months after the phone started shipping. And so you could imagine in America a lot of people saying, well, yeah, I am excited. I do want to try that, but I'm going to wait until they, until it's actually available. The issue is the negative word of mouth is very real in the sense that people that do have access Apple Intelligence are posting screenshots of the, you know,

completely botched summaries of, you know, which is, I'm sure Apple Intelligence has, you know, other features that maybe are valuable, but. Yep. And so if we go to Unusual Wales, unusual Wales summarizes the Q125 earnings for Apple. Earnings per share were at 240. This was a beat. they were estimated to make 235 revenue was 124.3. This was also a beat and iPhone revenues were down at 69 instead of 71.

And most importantly, down year over year. So their golden goose, the iPhone is not selling as well as it was last year. It didn't fall off a cliff. If you look at US, it's just completely flat. Like it's a completely mature market. Everyone that has an iPhone has one, everyone that wants one has one. and they're just continuous to selling the same amount. And so if you look at what Ben says, he says, first, it's notable that iPhone sales could be down

year over year, even as Apple reports both record revenue and record profits. The story, of course, is services as it has been for a while now. It's striking, though, that services doesn't just mean record profits thanks to the higher margins, but also record revenues thanks to the absolute number. The long run increase as a share of Apple's revenue on a trailing 12-month basis. to smooth out seasonality has been relentless. And so Apple has been a tear with their services. Of course, this is like the app store. Second, Greater China's year-over-year revenue was down for the sixth straight quarter. Just as it has been for nine of the last 12, I graphed China's trailing 12-month

revenue to avoid seasonality with year-over-year quarterly growth. And so revenue has been declining in China for several quarters. The key takeaway here, is that the recent decline in revenue isn't a new issue, but actually a continuation of a trend that started nearly a decade ago. The iPhone 6 took China by storm, but Apple and Apple built up a large user base, but it never really penetrated beyond the Tier 1 cities. The one exception was the Huawei chip ban in 2020, which drove premium Android users to Apple. Apple has done pretty well to maintain its customers. One thing to note, China has a, is no longer adding people to its major cities. There's actually been an exodus from cities, which is a whole other issue in China

right now, leading to Peter Zaihan has a good bid on, you know, basically how much oversupply there is from a housing standpoint in Chinese cities. And so Apple's not going to get the benefit of people moving to, you know, tier one cities and telling themselves, oh, I should get an iPhone now. It's just not happening anymore. Yeah. And so there's a little bit of a, question here. What's missing is the long pins to China's middle class and Apple's massive opportunity in the country that used to characterize these earnings calls. So Apple used to say, oh, when we hit China's middle class with their iPhones, that's when we're going to be really ripping in China. And it just kind of never happened. Apple is hoping for a bit of a bump from government stimulus, but that's a pretty

weak sauce. I love it, Ben. Get them. The reality is that China has a growth opportunity for Apple seems truly finished. The best hope for now is that revenue doesn't decline too precipitously. And then lastly, Apple's executives, including Tim Cook, mentioned a couple times that Apple had better growth where Apple intelligence had launched and Ben is putting him in the truth zone. I'm not buying it as a real driver. Cook's framing suggests that China's growth will return when Apple intelligence arrives. I think it's more likely that China's decline was independent of Apple intelligence being there or not, but that at least it gives the company a chance to point out that non-Apple intelligence countries grew less on average because they include China. In fact, Europe

outgrew the U.S. in iPhone sales and they don't have Apple intelligence at all, with the exception of the UK for a couple weeks in December. And so why would iPhone sales grow in Europe where they don't have Apple intelligence if Apple intelligence was that important? And so it's a very, very good, it's a very good question. And I like that. And then, and then he drops these massive research reports from, from open AI deep research. And it is a remarkable report. It's great. It pulls in, you know, product segments and deep dives and it can create not just bullet points, but also tables. And it really does a good job of analyzing it. But what he, what his conclusion from all of this was, was that while it was impressive, there's nothing novel in the analysis, and it only really worked.

He says the case, it's also the case that the reason why the second answer is so good and insightful is precisely because I gave the model specific talking points instead of asking it to come up with its own insight. In other words, the model does a much better job of filling out a thesis than coming up with one. And so it seems like it's great. A deep research is super great for, hey, I already read the report. I understand this. I have a thesis. I just need you to go and pull together all the different quotes and data that support and substantiate that thesis as opposed to really just saying, hey, Apple research report, go.

You're not going to get something as not. Yeah. And to be clear, that's the way we use it too. We use it to speed up the process of researching the show. but then ultimately the takes are artisanal. Exactly, exactly. And so, yeah, I mean, Ben actually talks about that where he says in 2022, before ChatGPT, Ben was talking about how AI will affect publishing and just communication

and the information economy. And so he's broken down the value chain into five steps, creation, substantiation, duplication, distribution, and consumption. And so there's this evolution of the value chain where the, it all started with when writing, though, unbundled consumption, increasing the number of people who could consume an idea. Then the new bottleneck was duplication. And so the printing press removed the bottleneck for distribution, dramatically increasing the number of ideas that could be economically distributed. Then the new bottleneck was distribution, which is to say that that was the new place to make money. thus the aforementioned profitability of newspapers because the printing press could copy but then you needed to actually get it to someone so owning a distribution line was very important then that was removed by the internet because which made this made distribution free and available to anyone and there was one final bundle creation and substantiation of an idea and so you have an idea how do you actually create it and then the internet makes it free to distribute it can be duplicated obviously through the printing press and through the internet

and it can be consumed anywhere. And that is exactly what AI does. It takes the human's ideas, the creation, and substantiates them. And obviously, this is most prominently viewed in the AI generative image models because it would take me forever to paint a painting of a sci-fi thing. But if I come up with a good prompt, I can just get it instantiated immediately. I can post it on Twitter. It's distributed.

And if it's a good idea, everything else downstream, mistaken is completely egalitarian and taken care of. And so it's interesting that now he has the ability to have a good take about Apple and substantiate it more quickly with AI in some ways. I don't think he will be using this point. One of the issues with deep research right now that was pointed out by some poster, I don't recall their name, but they were saying that what deep research is doing, it doesn't necessarily have access to all the things that it's sourcing from. and so it will summarize the abstract of a source, which is not, or a specific study, something like that,

which isn't necessarily the actual material that you want to pull from, right? I ran into this. It's just kind of like a teaser for the actual piece, maybe has some light data. Yeah. And so, yeah, bringing your own sources, bringing your own facts. I mean, a lot of these, like the best research reports on Apple are often by analysts that talk to the same.

CEO on background or have phone calls. I mean, at Citadel, their global macro team or was their global macro team, one of their public markets teams conducted thousands of CEO interviews to understand how they were thinking about the business while they were trading the stock. And this happens all the time. Yeah. You know, some big hedge fund calls up the CFO and says, hey, tell me how things are going off the earnings call. You can't share material non-public information, but you can get a vibe check from this person and get a ton of more context and more information that could inform your decision. And so if that's not on the internet and it's not baked into the LLM and it's not available for the LLM to pull, you're never going to get that

analysis. So there will still be a huge alpha and huge premium, not just on the interesting thinking and being able to puzzle things together, which I think humans are still uniquely good at, but also just bringing new facts to the system, bringing new. Yeah. be new tokens. You can't imagine a future though that the time it takes for Ben Thompson to write a essay, totally dropped by 90% because he gets, he says, hey, you know, basically look at my writing style and like look at my reporting and have access to my entire database of content. Yep. Which, because he does a lot of this, right, referencing back old material, old writing. David Senator does the same thing with Founders podcast where he says, hey, you know what, this, you know,

the McDonald's founder does something very similar to Brad Jacobs, you know? And so it's like models can do that pretty well in terms of helping draw comparisons. But ultimately, yeah, the delivery and the stamp, I think matters a lot, especially with Ben's work. Yep. And so I think we should close out with a post that you ripped yesterday. They got over a million views. Jordy says on X, Apple is giving up on VR. Their current marketing is laughable,

and they're sitting on $162 billion of cash. At this point, they should just buy an F1 team, sign Verstappen, and win some championships. If we're entertained, maybe we'll forget about the company they used to be. Okay, let me break it down. So this, I think it resonated just because it's a funny idea, Apple getting into F1, and I would rather them spend their brand marketing dollars

on doing, you know, having an F1 team than doing these Gen Moji campaigns. Completely agree. Super cringe at this point. Oh, yeah. And so this struck a chord within the VR, AR, MR community because they were saying, you know, a lot of people are saying they're not giving up on VR.

A lot of people were saying, well, I didn't even do VR, it's AR, and, you know, no, it's actually MR. So a lot of sort of disagreement on just their product strategy in general. we had been referencing, I think, two days ago, Mark German's article about how they did, they did kill a project internally related to, that would have been competitive with meta, RayBans, which... No, no, no, not that. It's a, it was a, like a pro-level device for...

Oh, connected to your computer. Connected to your Mac to replace your six-screen, gigacad, finance bro, setup, basically. Which is, admittedly, like a very niche product, but Ben Thompson would talk about talked about it and he said, this is exactly what I wanted. This is the product that I wanted. And for me, I want that product too. I would have loved it. But, but, I mean, there's a lot of reasons they could have killed it. We don't even really know. And, you know, they got so many projects on the news. But I think the sentiment is correct. They didn't get across the finish line. Yeah. What, what seems obvious is that, and it appears that they don't have the conviction to continue

with the pace at which they had been spending on the development of future products that may not be hits, right? And so it's easy to, I think the winner out of this is certainly not consumers, but it's more so, you know, somebody like Zuck who said, I'm willing to spend tens of billions of dollars to own the next personal computing platform. So, and yeah, and then somebody took issue with Verstappen. I don't make F1 driver signing, so feel free to sound off on who you think would be a better fit. But yeah, and then the irony was that yesterday morning, they also launched this invites product, which is basically somewhat of a clone of Partifol. I do think it's a pretty different audience, and I don't see Apple just crushing on building a social media app,

which their invites product is in some ways. but anyways, I think they're, you know, I would like, you know, the timing of all of this, iPhone sales peaking and actually dropping. We don't know if they're actually peaking yet, but they hit some type of local top. And then simultaneously, like not having the conviction to really go founder mode and, you know, spend the necessary R&D dollars to develop, you know, and really own that next category. You know, only time will tell. but yeah this is a company that i just apple you know somebody in the comments also phrased it as

apple's like a new luxury brand now where they make the best phone but they're no longer the company the hardcore zero to one you know innovator and i think that's okay right like i'm not trying to argue here that apples you know um i don't even necessarily think they're in trouble they're just not the company that i was from that what that they were when i was a kid when every was inspiring. Every product was trying to push the boundaries of what was possible in terms of user joy and also performance and all these other things. So anyways, hopefully I do think that it will become more and more clear that Tim Cook seems to be able to generally manage this luxury brand type version of Apple, but it doesn't feel obvious that they have this sort

visionary product leadership that's going to have them have whatever comes post iPhone right whether it looks more like neuralink or it looks more like you know apple vision pro yeah i mean it feels like it feels like google they have erected a toll booth on the world and the internet and the digital economy everyone buys their phones and that has flatlined they have reached their market saturation on their phones and now they're taking a cut of all the transactions that happened. That's the service revenue. The service revenue is growing. That's why their stock went up, even though they've clearly reached saturation on the hardware side. And so it's kind of like they're enjoying the fruits of their labors and they're just going to sit back and enjoy, you know, the massive money that just comes in. And maybe they'll

still work on ambitious projects here and there, but that doesn't seem super big in the culture at this point. That's unfortunate because I think as tech people, we always look to Apple as like, oh, man, the next cool thing from Apple's the epitome of amazing hardware. Yeah. Always. Even like the first iPad, it was mind-blying. Yeah, the areas in which the iPhone is pretty perfect, right? So it's not meant to throw shade at the device, but the area for me as a consumer that I would actually want them to try to, you know, 10x improvement is battery, right? Like the camera is good enough. But the issue with them, if they, if they massively improve their battery, that's a huge reason that people, you know, actually end up, end up renewing their, you know, buying a new device. So it's they're sort of not the same incentive to be like, hey, let's spend $10 billion and try to build a 10x better battery, right?

I just don't see them doing that because it's not necessarily in the interest of growing sales. Yeah, yeah. There's a lot of places where they've clearly tugged in either direction. They've made the phones like a little bit bigger and they're too big and a little bit smaller and they're too small. And they've just found, they've kind of min-maxed everything to the point where everyone wants the same thing and they've just created like. And even my favorite is that by putting, by having, you know, this is not actually level unless you have a case. So how do you walk out of the, obviously I don't use a case, but how do you walk? You know, most people are like, well, if I put my phone on the ground and it's and it's going to not even sit.

on a flat surface, okay, I'll buy the Apple case on the way out. And that's just them squeezing an extra $45 of net revenue out of you. And it's a beautiful business. And that's why the stock's up. And it's a safe place, you know, it feels like a safe place to put your money because it's not going anywhere. It's just so Lindy. Yeah. And if you look at it from the lens of like LVMH being somewhere in the range of a $250 to $350 billion company. And Apple being a multi-trillion dollar like being worth an order magnitude more than that makes sense right yeah like the price is yeah I mean imagine yeah imagine if LVMH could take a cut of everything that you put in a burkin bag or whatever is that is that they own burkin no no they're they don't that that was the one that got away that was the one

that got away but I mean yeah if you buy some Louis Vuitton imagine every other piece of clothing that you put on when you're wearing an Armes belt or I guess I guess an LVMH piece of clothing, they take a cut of. That's the Apple model. And so it's so much more profitable. No, it's more than that. It's like, yeah, it's, hey, when you're, when you are wearing our shirt, we're going to, we're going to tax everything that you do throughout your day.

That's basically what the iPhone is. It's a beautiful thing. So, yeah, I'm not an Apple, a full Apple hater. I just, you know, I love them. I just want to see more. Yeah, I want to see more. And I want more ambitious VR headsets. I want more risks.

I want more F1 teams. Give us an F1 team, Apple. Yeah. Design the car. Design the car. Yeah. Build the motor. Build the engine.

Yeah, or the other people that critique was like, okay, you could have bought in Tesla in 2018, 2019, and owned the car, right? Like, it's... I don't know if that was an option. You remember that deal? They had the money, but Elon said, I'll only do it if I can be the CEO of the parent of the parent company. Yeah, yeah, yeah. No, I'm not saying it was a good deal,

but they also could have two X the price and still done, you know, very well from that, right? Totally, totally. Anyway, let's move on to Google. We mentioned them briefly. Google also released earnings. And it was a little bit rockier. Shares dropped 7% in response. There's a post here from consensus. Gurus bumps in the road. Revenue miss and they need an incremental $20 billion in CAPEX next year relative to estimates.

They plan to spend $75 billion versus $58 billion estimated. And so Stratory has another great breakdown. We'll dig into and we'll give you some high level overviews here. Alphabet reported 96.5

billion in revenue for the quarter, up 12% year over year. This is the slowest growth they've seen since 2023. Shares fell roughly 7% and after hours trading, erasing much of this year's modest 8% gain. The deceleration in revenue was primarily driven by a slowdown in cloud computing, which is obviously very important with the AI revolution. They have the TPU system.

They want to be training these massive models, but the demand just isn't quite there yet as to what the market wants to see. And so Google Cloud generated $12 billion in revenue, which is up 30% year over year, but it's down from a 35% growth rate seen in the previous quarter. So people want accelerating growth, not just linear growth. And this is decelerating growth. And that, you know, you start projecting that out.

And it stops and it's not very, it's not very good. And so despite any- Every seed stage founder has gotten through that where they're like, we're growing 2x month over month. And then they're like, wait, I have to do this again. Or I have to do more. I have to do 3x month over month. I have to accelerate.

my growth, not just maintain my growth. It is not enough to merely grow. You must also accelerate your growth. And so they have healthy margins rising from 17% to 18%. But the slowdown signals the demand for AI powered products is outpacing available infrastructure. And so there's a big question about is Google building enough data centers right now. So the CFO, Anat, Ashkenazi noted two factors behind the deceleration, lapping a very important. very strong Q4, 2023, and current capacity limits. Strong AI demand has created a supply side bottleneck, prompting a planned Cappex surge to $75 billion in 2025,

up from $52 billion last year. Google Cloud Platform continues to outperform overall cloud revenue, partly driven by higher demand for AI innovations and favorable pricing trends, i.e. workspace adjustments. And so this is something that, like, you could see as a bull case. Like there is a lot of demand for AI workloads, and they just increase their CAPEX spend because they're going to build against it and they're going to, you know, handle that. But obviously when the money's flowing out into CAPEX, it's not going into the shareholders pocket. And so people get a little worried.

Yeah. And to be clear, the market and analysts are not excited about what Google is doing on the AI side as a in terms of consumer products, right? They have way less pipe and sort of positive sentiment towards their AI products. Even though their products are good, they've really struggled from a positioning product marketing standpoint, even usability, right? Yep. And just kind of letting down consumer users. And so, you know, when OpenAI says it's going to spend, you know, $500 billion, people generally get, you know, it's a eye-catching number and people are generally excited about that. But when Google, a, you know,

infinitely larger company, much more profitable says the same thing, or sorry, says they're going to spend a fraction of that, everybody starts to freak out a little bit. Yeah. And so there's two main things going on here in this earnings report that you need to focus on. One is that massive increase in capital expenditures all the way to $75 billion, $20 billion more than people thought they were going to spend basically. And then the other side is the cloud miss that they didn't make enough money in Google Cloud. And so last quarter, Google had arguably its best cloud results yet 35% growth on 17% margins. This quarter saw only 30% growth on 18% margins. And so there's a, there's a chart here that we can pull up. It's the next slide showing Google Cloud's revenue growth

and then their margin. And it's pretty crazy to see how they've driven profits. From 2019 Q4, they were doing $2.6 billion in revenue with $1.2 billion loss, negative 46% margin. And they've 5x the revenue, and they're now profitable. So they went from $2.6 billion to $12 billion, essentially. And this just shows how brutal it is, one, being. a public company and one being any type of company that's that's that has shareholders is that

the expectations just continue to accelerate over time and it's worth noting the the you know going back to apple yeah this is the highest pressure pressure situation that that tim cook has uh ever been under i would say the exact same thing with sundar many people thought last year that that sundar's job was potentially on the line yeah people were talking about that after that that really brutal launch of their image generation product and just feeling like he didn't have the vision to lead the company into the next stage. And anyway, so both these companies have had,

the last decades have been very favorable. There's been a bunch of positive trends and it certainly hasn't been easy, but it does feel like we're hitting this sort of critical point where the pressure is certainly on and for the first, not for the first time, but you can't imagine that the job of CEO of Apple or Google is very fun in 2025.

Yeah. In the same way that Palantir is, right, where like the market loves it and they don't care that the Palantir is not making any money. You know, everybody's, you know, just focus on the stock price and the broader narrative. Yeah. And so Ben goes on to compare this to the last time Google Cloud disappointed. that was Q3, 20203. In that quarter, revenue growth disappointed and margin decreased, which suggested that Google had too much capacity for the revenue it earned, which is to say the

problem was a lack of demand. And so if you remember in Q3, 2023, this was kind of very early, early days of AI workloads. And so clearly, the margin decreasing means that they didn't have leverage over their customers to drive higher profits. And the revenue growth disappointing, meaning that there wasn't that much demand. But this time, what happened was revenue growth was a disappointment, but the margins still rose. This suggests the problem was a lack of supply in terms of infrastructure.

So they're getting good margins, 18% up from, I mean, 3%. They're the highest they've ever been, basically. And the reason for that is that they're able to have leverage over their customers, but they just aren't able to deliver enough services to people. And so that's a very good sign in general in terms of like, do companies want to do large AI workloads? And the answer seems to be yes, but there just isn't enough infrastructure.

And that's going to be very expensive to build out. All of this is a, you know, anytime you're introducing a new technology into the market, you're going to have this ultra-high volatility. And this is what Jeff Lewis was talking about yesterday, having a multi-trillion dollar company go down 7% in a day after take going from from negative 46% margins in 2019 all the way to 18% margins in 2024 and potentially having you know needing to spend on cap x in order to sort of catch up for the demand and then the mark and then it's still dropping by 7% just shows the market doesn't is trying to price in these sort of changing, you know, trends in the broader tech ecosystem, but it's not quite sure how things are going to pan out.

Yeah. And so digging into these, the cloud platform results in more detail, you kind of have to tease out. Google's names are not terrible, but also not amazing. So there's actually two different products that have, you know, substantial revenue lines. There's Google Cloud Platform. and then there's Google Cloud as a whole. And Google Cloud's revenue growth has been benefiting from workspace price increases. So that's just like, oh, you get a Google, you know, Gmail for your company,

and you get Google Sheets and stuff. And they raise the prices on those products because they integrated Gemini. And so Workspace, meanwhile, is getting another price increase, which Google is justifying by including Gemini without requiring a paid add-on. It will be interesting to see if the trend of GCP outgrowing Google Cloud, as a whole continues as this increase makes its way through the system. And needless to say, this does suggest that there wasn't a lot of uptake on the Gemini add-on. So they used to say, hey, you have Google Workspaces. You know, you got your startup.com. You got your startup.com

emails from Gmail and you get Google Docs and Google Drive and all that stuff. We're going to give you, if you want Gemini, it's an extra 20 bucks a month per per person, per seat. And for some organizations that did that and they pulled that trigger, that was really expensive. And that drove a lot of growth. But clearly that wasn't really happening. People were like, I just use chat GPT or I'll use different services as needed. Now Google's saying everyone's getting Gemini and you're going to pay for it. Yeah. And the issue with launching products before they're fully baked, we talked about this with Apple earlier. Apple intelligence doesn't feel fully baked. People got access to it. They started talking about how sort of hilariously underbaked it was. And now Google's

dealing with the same thing, right? Gemini's had a number of issues. Their image generation product was not quite ready for production. And so now when I'm in Google workspace and I see a pop-up that says, hey, do you want to add Gemini? I just don't even, I don't even think about it, right? I'm like, I already pay 200 bucks a month for Chad GPT. It performs great for my needs, like I'm not looking to spend more on a sort of language model. Yeah. And so there's a similar narrative here with Google where they're the, the thing that's moving the stock right now is the, just like with Apple, it's the services revenue that's kind of changing the business. And it's something that they can take advantage of because they've built this stable iPhone business.

With Google, it's Google search. And the search results have been very much to expectations and very predictable and nothing is really changing because it's such a huge and robust business. And so everyone's interested in like, oh, what's going to happen in AI and cloud workloads and GCP and Google Cloud? But Google search results were mostly in line with expectations. YouTube got a boost from election ads. Search is holding steady from a revenue perspective. And then there's some interesting quotes here from Sundar and the chief business officer, Philip Schindler.

So Sundar says, on search usage overall, our metrics are healthy. We are continuing to see growth in search on a year-on-year basis in terms of overall usage. Of course, within that, AI overviews has seen stronger growth, particularly across all segments of users, including younger users. So it's being well received. But overall, I think through this AI moment, I think search is continuing to perform well. And as I said earlier, we have a lot more innovations to come this year. I think the product will evolve even more. And I think as you make search, as you give, as you make it more easy for people to interact

and ask follow-up questions, I think we'll have an opportunity to further drive growth. When products, our products and platforms put AI in the hands of billions of people around the world, we have seven products and platforms with over two billion users and all are using Gemini now. That includes search where Gemini is powering our AI overviews. People use search more with AI overviews and usage growth increases over. time as people learn that they can ask new types of questions, this behavior is even more pronounced with younger users who really appreciate the speed and efficiency of this new format. Yeah.

And so, there's stuff in AI. They want to bake. They want to say that we have basically, all these two billion people are using Gemini, which is, you know, again, they look at themselves as I'm using Google and, okay, you summarize some results for me. So it's a little bit disingenuous to say that it's all Gemini usage. Overall, I look at it as a lack of exciting leadership, like the difference between how Alex Karp is coming into an earnings meeting and actually getting you that feels like the company is like on a mission, a very important one. And it's making massive forward progress doing very important work.

Totally different from how you hear Apple executives and Google executives talking about sort of managing the empire and saying like, oh, yeah, we're threatened. And, you know, basically if you look through it, it's like, okay, Apple is losing market share in China. Google is their search product, which is Apple's golden goose, or the iPhone is a golden goose. With Google, you have search threatened for the first time in a very long time, right? It's not like chat GPT has a million users. They have hundreds of millions of users, right? And there's new players like perplexity that are also. you know, threatening them. And so it feels to me that broadly, both Google and Apple are acting

from a more defensive lens. Yep. And it makes sense. Nobody wants to invest in a growth story for a company that's that's being defensive, right? It's just not, it doesn't get you inclined to say, you know, I think this business is going to be worth significantly more. You know, maybe you think Google is going to be worth significantly more years. from now. I can totally see that, but they're not driving that sort of excitement because it doesn't feel like there's real vision, right? It's management versus, you know, on carp side, it's pure, you know, vision and momentum. Yeah. And so, I mean, Google's mission for decades, I don't know if they've changed it, is to organize the world's information. And AI and LLMs are like the final boss of that. Like,

you literally compress down the entire internet to just a bunch of numbers in these model weights, and you can ask it any question, and it will just give you the answer or the fact. Yeah, so if you're sitting in the Google Exec Team's chair, you would want to position people around and be honest about the fact that the rollout of AI across Google's ecosystem has been rough. It hasn't gone nearly as well as it could, could have, right? And if you're saying there, hey, we have the narrative of, hey, we know AI is going to be transformative. It aligns to our mission already.

And we already have billions and billions of customers. And so our sole focus is helping them understand our products better, making our products better, et cetera. But the narrative seems to be more around, oh, they're already using Gemini or, oh, we're going to just bolt this on here versus we're going to get users really excited about these. products and actually make their lives better versus the work space sort of upsells, right, are very much, hey, please sign up for this so that you pay 20 bucks more a month. That's all I see when I see the pop up. I don't see, I'm not in a dock seeing something. Hey, you know, I can pull in this information from Gmail, right? You already type this out over here.

Let me pull it in. It's not like proactively making my life better as a user. they're just sort of asking for that incremental, you know, SaaS fee. Yeah, yeah. I mean, again, it's a defensive story at the same time. I mean, I agree with you that they haven't created any new products that have really surprised or delighted. Yeah.

The growth story really is on the cloud platform side. They say, hey, we have some of the biggest data centers, the best data centers, some of the best AI chips. We're going to make a ton of these and then we'll make a bunch of money. And we'll let everyone else figure out what products monetize on top of it. And that's fine. But most importantly, the golden goose of Google, they're arguing, sure, it's not like, you know, transformed and we're not dominating the new paradigm. But we are monetizing just as well as we always have.

And this is good news. And so revenue is steady. AI overviews are being used. And critically, they are monetizing without cannibalizing revenue, which is what everyone thought is. We talked about this yesterday. the way that one of the best sort of mechanism, like Google operating as a toll booth, right, I search tennis shoes and I get ads, I'm not doing that in chat GPT right now, right? And so I imagine chat GPT wants to eat into that and get better at product recommendations,

and that will be a threat to Google. But it is slightly that that behavior is sort of different. chat GPT is operating more of organizing information but again it's still you know somewhat of a of a threat yeah we got to probably jump into the timeline just being conscious of of time here unless you have anything more you want to cover uh no we can wrap that up did you want to do TEMU today or you want to move on to timeline I think we should do TEMU tomorrow okay I just want to give that proper attention we had a couple

comments that were good I'll read through Venturi says Waldgarden sells iPhones, Apple AI is copium for shareholders. And I don't think it's actually copium for shareholders. I don't think any of the shareholders are really smoke in the Apple AI. I think it's the Apple executives that are, I think it's Tim Cook is getting a little high on his own Apple intelligence supply. And then a more, even more aggressive comment from Vic, he says, iPhones really are mid at this point.

Billionaires and day labor shouldn't have the same. devices. And yeah, I mean, in many ways, it's awesome that that, that, that is the case right now. But it would be cool if Apple was like, we're coming out with a $50,000 iPhone. And I'm sure they would get a lot of people that would buy it. And anyways, so more to come there. Well, we have some breaking personnel news on the channel. Daniel Penny was hired by Andreessen Horowitz. And Barry Weiss reported it out in the free press. Ben, let's click through some of these slides.

In less than two months, Daniel Penny has gone from facing a potential 20 years in prison to landing a role at Andreessen Horowitz, the premier investment firm in the Valley. An internal statement seen by the free press, David Ulovich, a general partner at the firm, confirmed the hire. He will learn the business of investing and he will work to support our portfolio companies. on May 1st, 2023, Penny's case became a lightning rod for controversy when Jordan Neely, a black homeless man with more than 40 prior arrests and a prior history of mental illness, wandered onto his subway car and according to witnesses began threatening passengers.

Penny intervened, placing Neely in a chokehold. When Neely died shortly afterwards, much of America turned on Penny. And the city's progressive district attorney charged him with criminally negligent homicide and second-degree manslaughter. Penny faced a possible 20 years in prison. After a month's long trial, a New York jury acquitted Penny in December. Announcing the hire, Ulovich did not shy away from the May 20203 incident. In fact, he cited Penny's actions that day when explaining the hire. And so Daniel Penny is at Andrewson Horowitz.

It shook up the timeline. Lots of people were commenting on it. Jordy, you got any comments? It, one of the craziest headlines because it almost feels like a like a, like fever dream of just like combination of different you know different different different memes all all converging into one i think it's awesome for daniel it's you know andresen clearly wanted to make a statement with this um you know there's no reason that daniel should be discriminated against because he was in this you know total culture war crisis and went through this

very tragic incident um he's a veteran he seems like a good guy uh and I'm glad that he has this opportunity. There's a lot of ways that people could knock it, and people certainly did. It's funny because that news was coming out while Trump was saying that he was going to turn Gaza into a U.S. territory. So there was a lot of stuff going on yesterday. But overall, I think this is a cool opportunity for Andreessen portfolio companies. Imagine you're just sitting there minding your own business, and you get an email from Daniel at A16Z, and it's like,

hey have you seen this and it's like your competitor announcing like a fundraising announcement yes yes daniel yes i saw that yes mr penny i saw the announcement but uh but yeah you know overall um overall you know i think it's i think it's uh cool and i'm glad they're giving him you know i'm glad they're giving him the opportunity and i'm excited to see where his career goes there there's an alternative version of the story that's very dark where he goes to prison for for trying to you know stand up for his fellow citizens. And, you know, I experienced, I didn't personally experience this,

but I had a family member held up at Knife Point in New York and had their watch stolen. And that family member went to a police officer immediately afterwards, and the police officer just said, sounds like your problem, not mine, even though he was bleeding at the time. And so I think that New York basically made crime legal in many ways. In this case, the guy that Daniel O'Penney was in an altercation with,

had been arrested. 40-something times. And so, you know, we don't comment on politics or social issues here, but it seems like New York, in general, needs to get a hold on their entire judicial sort of system. And anyways, I'm excited to see Dan's first bet. First deal. Yeah. It's interesting to see how he fits in it, Andreessen. Ben, can we pull up the slides and kind of tab through these quickly? I want to see the keep going. That's the cultural leadership fund in Andreessen. Keep going. Okay, that's still a cultural leadership fund. Keep going. Okay. So yeah. So Ryan,

Ryan is a, is an investor there and he's listed as a partner and a friend of the show. And so Andreessen does their naming schemes a little bit differently. For a long time, everyone was a partner. If you're an investing partner, like you could be in a, most firms, you're like an associate principal partner, general partner. At Andreson, most people come in as partners. And then if you go to Catherine Boyle in the next slide, you'll see that she's a GP. She's a general partner. And then Daniel is listed as a deal partner.

If you go to the next slide, Ben. And so there is a question about like, is this more like a venture partner role where he gets carry in deals he brings in? Or will he be working from the office and fully staffed on, you know, deals all the time? there's a whole host of different structures that these firms can take with sometimes, I mean, there's this, they also have scout relationships where you don't even have an email address with Andreessen. I'm an Andreessen scout. I have been for years.

So look at this. There's two things going on here. One, this is a market, like, don't get it wrong. This is a marketing moment for Andreessen to say, we are going to stand behind an individual that we believe did the right thing and was proven, you know, to be innocent, right? And second is we want to give this individual who did the right thing in a tough moment that, you know, we want to give that person an opportunity. On the other side for Daniel, it's just an amazing, you know, opportunity to go from being a veteran

who I believe didn't have a lot going on prior to the incident to now getting to work at, you know, the biggest venture capital firm in the entire world and get to be involved with some cool companies. And I do think this will resonate with a lot of the founders that Andreessen has. backed and plans back in the future. Yeah, especially on the American Dynamism side. So it makes a lot of sense. Well, let's move on to our next story. Change of CEO, some more personnel news. Match Group has announced its new CEO, Spencer Raskoff. I've helped create category leaders in online real estate, Zillow and travel hotwire. Now I'm focused on the most important category, human connection. He says, match group's mission to spark meaningful connections

for everyone worldwide is inspiring, and I can't wait to help achieve it. Here's the email I sent to our 2,500 employees. In the next few minutes, we are releasing news that I have the great honor of stepping into the role as Match Group CEO and will join you in shaping the next chapter of this incredible organization. And so I want to acknowledge and thank them for everyone that has contributed to Match Group. I have enjoyed partnering with him and I know I will join all of you in wishing him every success and happiness. What do you think about this change of CEO at Match Group? The stock has been down for a while, I believe, and I think this might be part of the change. Lots of people asking about dating apps in the future.

Spencer is an absolute dog. I love it. A fixture of L.A.'s startup community, helping put L.A. on the map and going long L.A. I think he had a media company at one. point that was centered around LA Tech and has done a bunch of stuff in sort of real estate and real estate tech. So anyways, I think this is cool. I mean, it's a match group in general gets a lot of hate, right? It's a pretty controversial company. A lot of people don't, even if they were using a dating app that they make, they don't necessarily

have super positive feelings towards it. And so I think it's a huge challenge for Spencer, but everything I've, heard about Spencer. He's a great dude and a great, you know, a great leader. So I'm, I'm excited to see what he does. At a company like this, you want, you know, it actually can't be understated if they are facilitating the connection of millions and millions of people every single day. Yep. We want, you know, we want good visionary founder types leading these companies. And I think that done properly, you know, there's the sort of black mirror analysis of, dating apps. And then there's the sort of real potential that everybody like constantly wants to

see out of these, right? And dating apps have this, you know, dichotomy and that if their users want to find, you know, long-term love, maybe that's not so good for the dating app. But there's a lot more innovation that can happen here. And I'm excited to see where match group goes. Well, good luck to him. Let's move on to a big product launch announcement. from Kenan Davison. He's excited to introduce Icon, the first AI ad maker, backed by Founders Fund and execs at Frontier AI Labs like Open AI, PICA, and Cognition. Icon is like chat GPT plus cap cut, but for making winning ads with AI in minutes.

Icon looks at your video library and tags scenes, close up, unboxing. These scenes become reusable clips used as Lego blocks for making ads. prompt icons add GPT to generate scripts focused on specific angles and audiences. Icon finds perfectly matching clips for every script seen and generates an ad that is 80 to 99% complete. And then you make edits yourself with a Capcut like video editor until you're happy. Three person creative teams make 30 ads per month. With ICON, they make 10 times more. They can make 300.

We built, we co-built ICON with a hundred million dollar revenue brands like Ridge, Jones, Road, Emmy backbone, mudwater to solve big pain points. So you've worked with Ridge. What do you think about ICON? Yeah, so there's this interesting thing that happened probably five years ago, maybe six years ago at this point, where meta got so good at delivering your ads to the right people that the real challenge of performance marketing was having really good ad creative, like the videos and, images and gifts and things like that, that all performance marketers shifted from, okay, I have to perfectly optimize my audiences and targeting, which they still have to do to some degree, to I need to spend all of my time building this sort of treasure trove of ad creative that I can deploy across, you know, Facebook and Instagram and Snapchat and then

TikTok and things like that. And so you're a consumer brand founder. I've started Rora as well. So you've been through the process of understanding, like, it's this treadmill where ad creative, you can create a great ad and it'll perform amazing sometimes for like two weeks. And then the performance will drop off because it works so well. You were able to spend so much money against it that it started declining. And so it's literally, you know, these brands get on this infinite treadmill of needing to produce more and more and more and more ad creative. So the problem that they're solving is massive.

this founder previously started a company called Skio that's a pretty well-liked subscription management platform for e-commerce brands so clearly had had talk with enough people that were experiencing the pain point and then built a product that they loved already so I'm bullish on this I saw I saw one person respond like a thread boy was responding like many people are calling him the Sam Altman of ad creative and then somebody else I think I think it was like base baron or somebody like that like was like absolutely no one is calling him the same that makes but a very very cool product and and yeah already if you think about just how much a you know a brand like ridges is spending on ad creative they have a big team they're already spending you know probably hundreds

of thousands of dollars a month to make creative and so if you can help them generate 300 extra ads out of their existing library yep you can easily charge you know multiple multiple six figures of, you know, and potentially a seven-figure contract. So I see this company going and growing like very quickly if they can really deliver on what their demo does. Yeah. And what I love about this is that it, it realizes like what AI can do great, like script writing, tweaking, a little bit of AI avatars here. It's not trying to be end-to-end full AI add, just one prompt and that's it. It's like, hey, Give us the real 4K graded footage of your product.

Give us your interview with your CEO on a podcast. Give us everything. And then, yeah, if we need to throw some stock footage in there, we can. If we need to throw in some AI voiceover, we can. And a lot of these products that really succeed, they blend everything together and wind up just amplifying the distribution and creating more content out of what's already great. And in this demo, they're at $99 a year,

they're clearly just trying to completely undercut the market and make it really difficult to compete. So $999 a year, but still a steal for sure. Well, yeah, sorry, not $9.000. Yeah, basically $99 a month. $1,000 a year. For any, for any company that's doing D to C ads, this is a no-brainer. Absolutely.

And so congrats to the team on the launch. I hope it goes very well. It already went super viral. And you clearly know how to go direct and get a lot of attention, which is great. And yeah, any of these AI things, they're always like a little bit of a hot button. A lot of people like to hate on them. You can kind of tell from like the quote tweets and the replies. Like this was engaging.

This was something that people were debating about, not just people saying, oh, congrats. This is so great. But that's, but that's actually key to going viral and getting a really broad reach. And a lot of brands will see this and say, hey, I want to be like Ridge. I want to be like mudwater. I have ads. I have problems to solve. I need to make my creative dollars go for.

This is a great way to do it. This is such a universal pain point. something that people have extreme willingness to spend on because they're already doing so, that if they can deliver a great product experience, it will be a big company. Fantastic. Well, let's move on to some more breaking news. Enron, the publicity stunt run by the guy who did Birds Aren't Real, has launched a coin on Pump. Dot Fun.

And so Enron, which they acquired the dot com, they bought the, they didn't buy the company. They didn't buy all the IP. They actually, I read something about this. they registered a new trademark for Enron in merch and other categories. They didn't actually have to go and acquire the old Enron name. Interesting. So they have the username and the domain. Exactly.

Which are important assets. I saw him put him in the truth zone because he says I purchased Enron for 275. That's not exactly what happened. He purchased the Enron trademark in a new category, which is often and easier to do. But anyway, it doesn't matter. He has Enron. He has at Enron on Axe. He has Enron.com. He has the logo and he's put it on shirts and he's done a bunch of publicity stunts with this like nuclear powered egg. It's all very Silicon Valley, HBO style. But they launched a coin on Solana. We should blur out the address because I do not want anyone losing money on this

thing. I don't even know if it's possible. It might have already rugged. But let's break it down. Yeah, so where to start with this one. One, from a pure marketing brand campaign, go-to-market standpoint, they absolutely crushed it. The creative was awesome. They sort of slowly built up hype, and they would sort of drop little Easter eggs. Easter egg. Easter egg eventually dropped a real egg. Literal egg, that's what I was about to say.

Global tour. They're doing key notes. This guy, Connor is like really embodying the, I don't, I don't. I don't know if that's his real name, but really embodying the CEO role. Yep. Really taking the audience on this sort of emotional journey around, please, we want to regain your trust. You know, we messed up. But, you know, it's his new team, right?

It's a new opportunity and we're going to take Enron into the future, really orienting around the energy aspect of it. They even did an interview with Taylor Lorenz. You said this was a very, you know, we've seen some very right wing. meme coins. This was a very left-wing meme coin in many ways, sort of making fun of tech, you know, doing sit-down interviews with Taylor Lorenz. But anyways, so, so in many ways, like what they did was very impressive. It seems like from a, you know, and yesterday they launched a token, you know, there had been a lot of, when a big project like this is sort of building up hype, right? A lot of people are basically sitting at their laptop refreshing, wanting to be the first

person to buy it because if you buy it at the right time maybe you'll make a lot of money right we saw this with trump people that happened to be on their computer when trump went live and just bought it ended up making you know ridiculous amounts of money if they sold in the next uh well even if they didn't sell until now right they could sell today and still make a good return and so look um what what they did here ended up falling falling flat in some ways they launch it it it sort of pumps briefly and then it's been on just a steady decline ever since then um They seem to have made some sort of blunders in terms of how they actually set up the tokenomics of it. A lot of people were pushing back because they had, you know, the team controlled 90% of the supply.

Usually, I think, in crypto projects that are more from the actual crypto community, it's usually the opposite where the team controls something like 10% and the community controls the other 90%. And so when they pushed it live, people immediately sniped it as and bought a lot of the supply, wrote it up, sold it, and, you know, presumably made a lot of money and then uh the chart has just been on the steady decline and the response in the community was not good um a lot of people were just like wow you you did all this just to like you know do a rugpole like it's it's and and they even there's this guy coffee zilla who yeah we have that on the side yeah where uh i think coffee zilla had made a video about andron and then they reached out to him and said hey we're fans just saw you put out a video on our efforts wanted to clarify we are not doing a coin and all coins on the market are unafeited

affiliated with us, we will be making steps in the energy sector soon. We are quite excited about. So I guess here, just like lying to Coffeezilla, which is kind of a weird, weird call. Never a good move. But anyways, it's just, it almost seems like I would have, you know, maybe they thought this was the best and most funny way to bring back and monetize the IP and do this campaign. Yeah. But you have to imagine they could have done something more interesting with it that would have potentially been a lot more lucrative. You know, who knows how much the team and things like that made, but overall, it's not, it just seems like, okay, you miss the timing, right?

Maybe, you know, the crypto market goes from absolutely roaring to completely dead, right? We saw this. There was, there was a podcaster from Redscare launched a token yesterday, barely clear to one million dollars. I don't think it cleared a million dollar market. And a month ago, it probably would have gone to 20 or 30 or who knows, right? And so the market was like humming and then sort of Trump was very clearly to the top. I think we may have said that or covered people that called the top.

It's like how do you beat the president launching a meme coin that like obviously has to be the the local top? And so yeah, it seems like they botched the timing. They botched the launch. And now they're just sitting there and Ron and they have to somehow keep. people excited to presumably, because again, we talked about this before in Cryptstow, your product is your price. So if the price is going up, people are going to love your product. If the price is flat or down, no one cares. And so now they're going to have some responsibility

to try to sustain it or make it go up. And I'm not personally not super bullish, but we'll see what they have in store. Yeah, the just meme coins and these pumped out fun things, they feel a little long in the tooth. They're just, we're kind of over them. They're not as exciting as they used to be for a lot of people. And yeah, it's just odd because this feels like it had the trappings of like the good outcome here would be they launch a kind of mischief style studio agency and they're doing funny projects like this and breaking through and monetizing with merch or some cool thing every few months. And you hear from them. I mean, mischief launched a like a fraud, startup broad based drop once that was you could buy a miniature Theranos blood testing kit and a miniature juicerro pump

and a juicer, all these different products. And it was very fun. And it was just like the people who bought that, they might have been auctioned off. It might have been expensive. But I saw some people that bought the, you know, the collection of trinkets from startup disasters. And it's great. And whatever you paid, you feel like you got your money's worth. You enjoy that.

And even if you paid a couple hundred bucks. it's like, yeah, I have a token from mischief, and I like that. And that's what this could have been, and yet they went this other weird way. But the issue, though, too, is the IP was a little bit too old, in my opinion. And I wasn't, yeah, was it, it was early 2000s. I don't know. Yeah, it was a dot-com crash company. So I was seven years old, right?

Yep. So I, for me, it's not really that meaningful. I didn't get to experience it, right? If you, if somebody were to buy the FTX merch, and five years from now booted up again. Yep. That I would, you know, I don't, you know, not saying I would be the customer for that, but I think that their audience of like terminally online zoomers.

Yep. Are just looking for a financial return. And so people cared about it when it was like, hey, this might be a billion dollar token. Yep. And then now that it's not a billion dollar token and everything kind of flopped, the excitement a lot of the wind is going to be taken out of their sales. But I'm sure, again, I'm sure they have more plans for the kind of campaign. I mean, with Enron, I think more people know it just as a, it's a fraud.

People don't actually know that they were an energy company or what they did. And it's actually fascinating because it wasn't, it wasn't, they did, they did things. There was an accounting fraud, but they actually did energy trading and stuff. It was like a fund. And like there were people there that had real jobs and did real business and created some sort of value for a while before the fraud kind of began. Yeah. And the original company went to zero. Yep.

every shareholder lost everything. And now they have a token which gives people an opportunity to lose it all again in the new generation. Yeah. And so I wonder if the CEO is going to come out and be like this was all a performance art piece. This was all a stunt.

And like the token was part of that. It was like a commentary on America's obsession with fraud and how you could even fall for the Enron token after knowing that Enron's a fraud and it's some sort of art piece. And I wonder. if there'll be some sort of justification or attempted justification like that, but I don't know. When people are going to lose money on this and they're not going to think it gets nearly as entertaining as if it was just actually some type of non-financialized stunt.

So anyway, yeah, it could have been done way better. So we'll close with Gwart with a banger. Gwart says it's getting harder and harder to have a coherent bear case for Solana when established companies like Enron are launching there. amazing post. And just to give you a history, people were very bearish on Solana for a very long time, right? Totally. Certainly not Mike Salana.

That's been a permanent bull run, generational bull run. But people were bearish. And then having Trump, the president of the United States, the launch on Solana was like, again, how do you get more validated than that? Maybe you have like Google or Apple start to use it in some way. But anyways, great joke. before we jump over, we got to jump to a meeting with our friends over at X because we are signing a distribution deal with X.

Should we cover the post with Salana's post? Yeah, let's tab through. Moon should be a state. The movement has hit the Times Square in New York City. AdQuick, they partnered with Pirate Wires and they're also partnered with us. Best place to buy billboards. if you're looking to you out of home, an amazing stunt like this. This went mega viral.

Elon reposted this post. And not this one on pirate wires, but the one Mike Solana shared. And it has like millions of views, 5,000 likes. And, you know, that's the way you have to think about out of home is how can I do a stunt, something that speaks to my brand, something that's jaw dropping, that then can go online and get organic views. And that's exactly what happened. I'm sure this was a massive ROI driver for,

pirate wires it's a great example of what ad quick can do and uh we're just so happy to be affiliated with both those organizations they're fantastic what you got for me geordie no i think it's a great example i think uh i think it's hilarious to think about somebody just walking by who's not on x who's never seen this and seeing that and just being like yeah actually i never thought of it like that but you're right the moon should be a state um so uh anyway shout out to pirate wire Solana and Adam and our friends over at AdQuick, lots more to come there. Fantastic. Well, short show today, but stay tuned for tomorrow. We got a Timu deep dive. We're taking you through the full history of the company, breaking it down, and we got a ton of

timeline that we didn't get to. And, of course, a ton more ads and promoted posts. So stay tuned. Thanks for tuning in. People are saying that our Timu Deep dive is going to be a Timu acquired deep dive. Let's go. Timu, Timu acquired deep dive. So there's level of this. And I cannot wait. Sorry to cut the show short. If you're angry about it, go DM Tyler Gold over at X.

Say, hey, you schedule the meeting and just let them know what you think. We should just have him on the show. He should just call in. And we have a meeting here, live on the show. Next time. We're working on that. Thanks for watching. Thank you guys.

Appreciate it. Cheers. Bye.