This Week in Startups - Apple’s WWDC 2024: Reactions, Highlights & Breakdowns with Jason and Alex | E1964

Episode Date: June 11, 2024

This Week in Startups is brought to you by… Squarespace. Turn your idea into a new website! Go to http://www.Squarespace.com/TWIST for a free trial. When you’re ready to launch, use offer code TWIST to save 10% off your first purchase of a website or domain. LinkedIn Jobs. A business is only as strong as its people, and every hire matters. Go to https://www.linkedin.com/twist to post your first job for free. Terms and conditions apply. The Equinix Startup program offers a hybrid infrastructure solution for startups, including up to $100K in credits and personalized consultations and guidance from the Equinix team. Go to https://www.equinixstartups.com to apply today. * Timestamps: (0:00) Jason and Alex kick off the show (1:50) Jumping into the keynote from Apple and whether or not it impressed. (5:24) “Apple Intelligence” has landed! (8:32) Reactions to the new Siri. (10:00) Squarespace - Use offer code TWIST to save 10% off your first purchase of a website or domain at http://www.Squarespace.com/TWIST (12:42) The importance of Apple’s addition of “on-screen awareness”. (16:30) Breakdown of Apple’s use of data with their AI. (19:48) LinkedIn Jobs - Post your first job for free at https://www.linkedin.com/twist (23:53) ChatGPT’s integration with Siri. (26:32) Unpacking the “free” use of ChatGPT with Apple products. (30:01) Equinix - Join the Equinix Startup Program for up to $100K in credits and much more at https://deploy.equinix.com/startups (31:07) Discussing the relationships between OpenAI and Microsoft and now Apple. (34:44) More “ooohs” and “ahhhs” from Apple’s new Image Playground. (40:25) Jason breaks down other key announcements from WWDC 2024 including a password manager and Apple TV’s new “Insights”. * Subscribe to This Week in Startups on Apple: https://rb.gy/v19fcp * Links: Watch Apple’s WWDC 2024 Keynote: https://developer.apple.com/videos/play/wwdc2024/101/ Article on Fearless Fund: https://www.bloomberg.com/opinion/articles/2024-06-06/the-fearless-fund-should-keep-fighting-racism-in-venture-capital * Follow Alex: X: https://x.com/alex LinkedIn: ⁠https://www.linkedin.com/in/alexwilhelm/ * Follow Jason: X: https://twitter.com/Jason LinkedIn: https://www.linkedin.com/in/jasoncalacanis * Thank you to our partners: (10:00) Squarespace - Use offer code TWIST to save 10% off your first purchase of a website or domain at http://www.Squarespace.com/TWIST (19:48) LinkedIn Jobs - Post your first job for free at https://www.linkedin.com/twist (30:01) Equinix - Join the Equinix Startup Program for up to $100K in credits and much more at https://deploy.equinix.com/startups * Great 2023 interviews: Steve Huffman, Brian Chesky, Aaron Levie, Sophia Amoruso, Reid Hoffman, Frank Slootman, Billy McFarland * Check out Jason’s suite of newsletters: https://substack.com/@calacanis * Follow TWiST: Substack: https://twistartups.substack.com Twitter: https://twitter.com/TWiStartups YouTube: https://www.youtube.com/thisweekin Instagram: https://www.instagram.com/thisweekinstartups TikTok: https://www.tiktok.com/@thisweekinstartups * Subscribe to the Founder University Podcast: https://www.founder.university/podcast

With iOS 18, iPadOS 18, and Macawes Sequoia, we are embarking on a new journey to bring you intelligence that understands you. Okay. So there's a lot to unpack here. You and I were both going, ooh, and ah, during this. I like that you took every single thing I was going to say that was negative about this and distilled it down to human joy. The technology makes for strange bedfellows.

This is getting weird. And Sam is playing it perfectly. And makes plain the tensions between OpenAI and Microsoft. I mean, no conflict, no interest. Here you go, folks. It's certainly a dramatic upgrade and I think shows us how we can get to real intelligence on these devices. Yeah, this is really going to be powerful. And I think what we're seeing here is a massive moment for computing.

This week in startups is brought to you by Squarespace. Turn your idea into a new website. Go to Squarespace.com slash twist for a free trial. When you're ready to launch, use offer code Twist to save 10% off your first purchase of a website or domain. LinkedIn jobs. A business is only as strong as its people and every hire matters. Go to LinkedIn.com slash twist to post your first job for free. Terms and conditions apply. And the Equinic Startup Program offers a hybrid infrastructure solution for startups, including up to $100,000 in credits and personalized consultations and guidance from the Equinix team.

Go to Equinix Startups.com to apply today. Welcome back to this week in startups. My name is Alex. I'm here with Jason, of course, at Jason over on X. I am at Alex over on X. And we are back with the second show this week because Apple dropped a whole host of news that we absolutely have to get into. It impacts the device in your pocket, the device in your friend's pocket, the device on your

desk and also the startup that you might build. So, Jason, you kick things off. Were you impressed at the overall mix of things that Apple showed us? Or were you a little bit let down? I'm very impressed. I think this could be a seminal moment in technology. This is one of the first times I've seen Apple give a lot of like forward looking. Here's what you're going to be able to do. Here's where we're taking this, which is not their style. Almost universally, when they give a keynote, They say, tonight, when you update your software, you'll have this feature. And some of those features were like that. With the exception of the important AI ones, those were like, here's the things we're

going to enable. Clearly, Apple is feeling the pressure, just like Google did, of OpenAI and Microsoft releasing tons of features. So Apple's got no choice here, but to give very forward-looking statements. And the forward-looking statements outline a vision that I think makes Apple a huge, buy here and will push the hardware envelope, the storage envelope on smartphones, and increase people's willingness to pay for more iPhones. So I'm actually saying it right now live here on the air.

I think Apple is a screaming buy based on today's announcements to me. I do not think they're getting displaced by AI. I think this is going to accelerate their dominance. So I want to leave it at that. Let's get started and just, I guess we've run through it. You have any initial thoughts on it? I mean, that's a pretty strong statement for me, but, and it's not financial advice, but you may see a J-trade this week. Yeah, no, the thing that strikes me about your comment is right now, Nvidia is worth more than Apple.

And so what we're discussing here is where the value will accrue, will it be the people making the chips, the power of the AI, or in the companies that are then using the AI to take it to the end user, the consumers in this case. So it's kind of a fun race and challenge to see what's going to come out on top. Yeah, and both can be true, right? If you look at Amazon, there's the duplicity right there in one stock ticker. You've got AWS cranking massive profits for them that enables a consumer product called Amazon that lets you buy anything. So, you know, you're right. There's the infrastructure play here and then there's a consumer play.

And I am more convinced than ever that Apple has a very unique advantage because of the iPhone and what's stored on it. Just like, you know, to a certain extent, but a lesser extent, Google does because Google does not control the full stack, right? They don't have control of the hardware. And there's a lot of hardware that's going to be necessary here. But I guess the top order bit is Siri has been reborn and she is going to be awesome. Or they them, I don't know, I guess you can set it in a male voice and English voice. So I guess referring to Siri as a female might get me canceled here, but fade them it, whatever you want to call it, is, I think, reborn here. They said it has a billion

5 queries to Siri. They released that number today, which is pathetic. There's a billion five iOS devices. That means on average there's one request per device. Most people don't use it. That means there's a lot of room for improvement. That thing's been out for, I don't know, seven, eight years? Siri's been around?

13 years, according to the keynote today. 13 years. Wow. I mean, it's being used once a day on average. I'm sure that half the people don't use it and then the rest of people use it twice a day. I use it five times a day, three times a day. take a note, play music. That's it. But man, they outlined something here that is going to be a

juggernaut. I think we should just play some clips and then give our reactions. The iOS 18, iPadOS 18, and Mac OS Sequoia, we are embarking on a new journey to bring you intelligence that understands you. Apple intelligence is the personal intelligence system that puts powerful generative models right at the core of your iPhone, iPad, and Mac. It draws on your personal context to give you intelligence that's most helpful and relevant for you. It protects your privacy at every step. And it is deeply integrated into our platforms. And throughout the apps you rely on to communicate, work and express yourself. All right. That's a pretty crisp, clean description of it. I like that they're calling it Apple intelligence. Yes. It's not artificial intelligence. It's Apple intelligence. Really good. I think subtle or not so subtle. Play on words there.

your thoughts of his overview. He did seem to hit all the important notes. Yeah, I think the reason why I don't despise them calling it Apple intelligence, which seems to be, in my view, too cute by half, is that they have a really big focus on two things. One, your personal information, as in this is actually not broad intelligence. This is kind of you intelligence on your Apple devices. And also, they've had this big privacy push as a company for the last,

I'm going to butcher this, but three years is my guess off top Jason. Yeah. Yeah. And I wonder now, sitting here, in this moment, looking backwards, I wonder if that was a kind of a prelude to this moment, because they built up that muscle of people thinking of them as the privacy first company, and then to whom will you trust your data to use an AI model? Probably not the advertising company, but probably the one that has a history of telling

you privacy first. So to me, it makes a lot of sense. And it's good branding and they managed to explain it crisply. So I can see this having high resonance with consumers, frankly. Yeah, it's very clear that people want to have AI. look at their data and tell them things about it. It's also very clear that the public has become quite aware of the dangers of privacy breaches because everybody now has been hacked.

There's been tons of iCloud hacks, these hacks, those hacks, you know, people's credit cards. And so the idea that, you know, you would give your information to Microsoft, Google, Facebook, or OpenAI, most people don't trust those companies when it comes to their data. And so we're entering a new sophistication level, I think. amongst consumers, and they are looking at Apple being the extreme privacy-first company. They block Facebook's ability to read into their system and kind of screwed with their ad network, right? Everybody knows that you can obscurify your email address and give people a burner email built into it. They have relays and kind of light VPNs that are now keeping your

privacy on your phone. And you know, you have terrorist attacks like the tragedy in San Bernardino where Apple refused a backdoor, even for the government getting into the iPhone, and they had to go to, I believe, in Israeli security company to hack that iPhone. So they are even willing to deny the CIA, FBI law enforcement access to your phone. I think, you know what? Consumers kind of like that. We don't want to live in a police state. We don't want to live with the Stasi. And I think for AI to work, you know, it's going to work really well with your data. And this is great. They gave a couple of examples. Here's an example of series new AI. boost. Today, Siri helps you get everyday tasks done quickly and easily. In fact, Siri users make 1.5 billion voice requests every single day. 13 years ago, we introduced Siri, the original intelligent assistant, and we had an ambitious vision for it. We've been steadily building towards that vision. And now, thanks to the incredible power of Apple intelligence, we have the foundational capabilities to take a major step forward.

Right off the bat, you'll see Siri's got a new look. Let me show you. When you talk to Siri, you'll notice it's more deeply integrated into the system experience with this elegant glowing light that wraps around the edge of your screen. And you can speak to Siri more naturally, thanks to richer language understanding capabilities. Even if I stumble over my words, Siri understands what I'm getting at. What does the weather look like for tomorrow at Mear Beach? Oh, wait, I meant Mear Woods.

The forecast is calling for clear skies in the morning. I love this interface. What do you think of this new glowing? You're keeping your apps and everything as opposed to an overlay. This is like integrated into the app experience. It's much better. And I think what it does visually is take Siri for me to think that sits on top of your apps and homescreen makes it different and bakes it into the actual home screen that you look at.

So it feels less jarring and a little bit more sinuous and synonymous with your existing experience. So that makes a lot of sense to me. One thing that drives me crazy is when I want to buy something on a website, but there's too much friction when I go to checkout. I want a smooth and easy payment experience. And of course, it's got to be safe and secure. And sometimes I like to have other ways to pay, like through my digital wallet or even buy now, pay later, which by the way is super popular these days with a lot of people. If you're a merchant, you've got to be able to offer alternative payment methods. So called APMs in the industry. And you know who's the best of this? That's right. Squarespace. Sparespace payments makes it easy

for customers to make purchases, which equates to more revenue for your business. It's super easy to set up and will keep your MRR going up and to the right, which is what we're all looking for. So check out Squarespace.com slash Twist for a free trial, and when you're ready to launch, go to Squarespace.com slash twist to get 10% off your first website or domain purchase. Once again, Squarespace.com slash TWIST. The 1.5 billion queries thing to your earlier point about people not using it, I think that's because Siri was just bad.

Like, just legitimately poor for a long time. Slow and inaccurate. Slow and inaccurate. 13 years ago, amazing. 13 years ago is 10,000 years ago in technology terms. So way overdue. I use Siri all the time. I'm one of those terrible people who dictates their text messages using Siri.

Yeah. I know no one likes us. But hey, this though, Jason, I think is fantastic. If it learns my voice, if it knows my information, I will use this even more frequently. And I'm very impressed by it. It feels like an operating system level. tool, not something tacked on top of the OS. And that to me is what I've wanted from Apple, from Microsoft, et cetera.

So this is, it has me very excited. I feel it feels like the guide on the side as opposed to this like an app itself. It feels like it's integrated into the operating system into the desktop of your phone. Yes, sir. It's the guide on the side, not yet another app that you're firing up. And I think that's very intentional because what we'll see next is they now have an API to drill down inside of apps and do things inside of apps

which unlocks everything. You know, being able to, and we've seen this slowly progress over time, you can say, hey, to your digital assistant, I want to navigate to this location, the nearest in and out, but I want to use Waze, right, as opposed to,

or I want to use Apple Maps. That kind of like little nuance is super important when using these things because you don't just want to navigate using Apple Maps. You might be a Ways person. But I think that's where this is going to get super interesting, which is why they're making it like a genie or like an agent guide on the side

inside the operating system. Let's play the second clip here where they give an example. For one, Apple Intelligence will provide Siri with on-screen awareness, so it'll be able to understand and take action with things on your screen. This is critical. For example, say a friend texts you his new address. Right from the messages thread, you can say, add this address to his contact card. And Siri will take care of it. Siri will also understand more of the things you could done in your apps. And with new orchestration capabilities provided by Apple Intelligence, Siri will take actions inside apps on your behalf.

Siri will have the ability to take hundreds of new actions in and across apps, including some that leverage our new writing and image generation capabilities. Okay. For example, you'll be able to say, show me my photos of Stacy in New York wearing her pink coat. And Siri will bring those right up. Then you might say, make this photo pop. And Siri will enhance it just like that.

And Siri will be able to take actions across apps. So you could say, add this to my note with Stacey's bio. And it will jump from the Photos app to the Notes app to make it happen. This is going to bring us closer to realizing our vision in which Siri moves through the system in concert with you. Okay, it's halfway there. It's halfway there. Explain. Because this depends on a thing called app.

Intense, which I think are the in-app equivalent of like web hooks, essentially places you can link in and tell it to do stuff. So I will now expect, once we all have this new version of iOS, every app that I use to have all the appropriate app intense hooks into series. But it's not like Siri is saying, okay, Alex said this. Let me think about this. I'm going to grab this, move over there, think about this. But it's certainly a dramatic upgrade.

and I think shows us how we can get to real intelligence on these devices, but it's going to feel like magic when it works. The question is just how often will it be and how often will you hit a roadblock like with current Siri, the drives us all absolutely bonkers and causes us to drop it. Yeah, this is really going to be powerful. And I think what we're seeing here is a massive moment for computing. So let me explain. Allowing Siri to do these deep dives into the apps and then leveraging Open AIs knowledge base, you know, which could coordinate with this.

Even though they're saying it will do this and its future looking, I do think they're going to get this done. I think it's going to take a year. It's going to be slow, but they'll get it done. And what this does is, first and foremost, it's going to make speech not touch the dominant interface, right? And we've been waiting for that to happen, but it's faster to touch it, right? And you may not want to talk when other people are around.

But if I could say, hey, Siri, I would like to order sushi based on my life. last order from Uber Eats from this restaurant. And it says, okay, and it pulls up the order. Is this the order you're referring to? And I say, yes, that's the order. Reorder it. And it says, oh, actually, that sushi place opens at 530. It's 515. Would you like to put the order in 530? That's where your point about the web hooks come in. And so now, and then maybe it says, oh, you know, they don't have the spicy tuna rolls anymore. Would you like to substitute some for it? So now they might have a substitute web hook, essentially. And so we're going to have to iron out of all those details. But I do think the ordering your standard sushi order for your family

is going to happen. And it's going to happen through you just talking to it. That finally, you know, hey, I'm going to Japan. What are the three best flights in business class that leave over the weekend? And I want to come back, you know, seven to 10 days later. But I'd like it to be the cheapest flight. And I don't like early morning flights. And it's like, yes, of course. And I'm recording to your preferences that you don't like early morning flights and that you have flexibility typically, and you would like to get the lowest price, whatever it is. I wonder how much of this data will be stored on device that is not currently being used, because you just said, it now knows that I don't like early morning flights.

Right. I hope that it's going to hold on to that. And Apple just do a lot of discussion about data and if it's on device processing or in the cloud processing, and they're going to work to make that super secure and just, I think, invisible to the end consumer. But I'm hoping to build a personal dossier on my phone so it knows that I'm East Coast time or that my mom's specific. Pacific Coast time or that Jason doesn't like it if I text him after 4 a.m. or whatever it is.

Yes. But it's going to have to hold on to all that for me. And I think that information is going to be what every advertiser wants more than anything else in the world. And I just hope Apple doesn't bend on its privacy pledge to chase incremental revenue. They make their money from hardware and services. They got it locked up. And I think you already have this in Open AI, right? Open AI has history and memory now.

You don't have to explicitly tell it. You like things at tables. it knows from the last time and best tables or it knows you're a venture capitalist, it knows you're a podcast or a journalist. So, you know, this is just Siri doing that and you're right. All those preferences get stored locally. Okay, so that's my first point is that this is going to dramatically push us towards speech and away from touch.

What it's also going to do, this is my second point, is it's going to take Siri from being like a single task doer to more of an agent able to do and thread together complex queries. So I just gave the example of one for the flights to Japan and booking that trip. And sometimes these take multiple apps. So now imagine I say, listen, I want to book a hotel. I want to book a flight. And I want to book a reservation for this sushi restaurant.

And it starts going to work. Okay. Your first point was to get a flight. Here are your flight options. Would you like to book one of these? Great. Opening the United app. Booking your flight in United.

Confirming with you. Face ID, boom. Okay. Your second request was a hotel. here are our three choices. And by the way, we know you like boutique hotels. You know, here's your boutique hotel. And we opened open table and we booked you a reservation. Would you like five, six, seven or eight o'clock? There's plenty of reservations. How many people are going to be doing there? So this is agenting, right? As opposed to task. I want to send the text message. I want to play this

playlist. I want to go to this address. That's a singular task. You're not threading together a complex task. And so single tasks can be done by computers very easily. Multiple tasks you tend to get a human. This is going to be that bridge. And by the way, they've been watching us do it for all this time. They've watched us use the United App. They've watched us use the Open Table app. They've watched us use Uber. They've watched us use DoorDash. They know all the swipes and all those hooks. This is going to be one of these cases where if Apple's been recording the screen this whole time, they're going to very quickly be able to tell the app developers, these are the hooks you need. these are the behaviors people do most often.

And that, when we had the Rabbit OS guy come on the pod, he said that's what they were doing. They were watching people's behavior in simulators to then figure out how to do this stuff. And they would pop up a simulator of an iPhone. When you said you wanted to order a DoorDash, they would pop up a simulator and have it do it like almost like a ghost in the shell kind of situation. So that's my second point, complex tasks, complex queries versus simple tasks. And the third part is obvious. They have all your data.

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Because LinkedIn knows who might want your job. You know, I got a lot of AI and machine learning going on over there. So even if they're not actively searching, they're going to see your role. And you know what? Those are some of the best candidates. And did you know that 70% of LinkedIn users don't visit the other leading job sites? If you're not looking on LinkedIn, you're looking in the wrong place. And the best part is when you use LinkedIn jobs, 86% of small businesses get a qualified candidate in 24 hours. So hire professionals like a professional on LinkedIn. LinkedIn jobs helps you get the right people faster. And guess what? The first one's on your boy, J-Cal. Post your first job for free. LinkedIn.com slash TWIST. That's right, LinkedIn.com slash twist to post your job for free. Pairments and conditions do apply. Now, the data they have is, obvious. They have your notes. They have your messages. They have your email. They have your

calendar and they have your photos and videos. They also have your health data. They probably also have some money and some insights into money with your wallet. They also have all the tickets you put in your wallet, whether that's your United Flight or your movie tickets. And then they have all the data that's stored inside of different apps that could be exposed, right? Your bank account information. You got Mercury Bank. You got Bank of America, whatever. They probably have some of that. They know your account information. All of that being stored on the phone is information I would never, ever give to Google, Facebook, or chat, JBT. I'm not giving them my bank account information, certainly not. But I would let the language model on my phone, you know, be able to tell me my bank

balance. That's a wonderful idea. Or let me know if I got a deposit and, you know, oh, if I get a cash deposit from a poker debt, put that into the savings account or buy more Apple stock with it, which is what I think I'm going to do. So you also got your poker. I got my poker one. I take it. Yeah, you too. But anyway, the point is, here's three major, major, major evolutions to computing that I think Apple's in a very unique place to thread the needle on. This means the app economy becomes even more important. The app economy becomes even more important because this is the modality is going to be apps and it's going to be watching the app do the action. So this is extraordinary. I don't know. Who do you think wins more here? Open AI for the integration.

Okay. Or Apple who can hot swap out open AI at any point in time. Because I think this is apps. Apple against Open AI right now of who owns the consumer. And I don't think it's going to be Open AI that owns a consumer. I think they know Apple's going to win the consumer. It's also a question inside of the app economy, who owns the consumer? Because Apple's going to want to hold on to you as the person that uses Uber, not a Uber user using iOS. So there's going to be some supremacy battles there. I think in this case, given that the chat GPT integration is with Siri, that's the public thing.

I don't think they said which AI models they're using at the device level or in their personal private cloud. But yeah, I think Apple's going to win here. For another reason as well, they have phones, tablets, and desktops, which means that they have the full range of screens that I use. Google has phones. Microsoft has desktops and tablets. Apple's the only one that can go kind of from your smartphone all the way up to your widescreen.

And so that means they can make a more integrated experience across all those screens, which is going to be more consumer-friendly. Microsoft gave up on Windows phone. Google doesn't actually really have a desktop OS. Chrome OS is lightweight trash, frankly. Yeah. So to me, Apple has a unique hardware position here to actually flex on the software side. So going back to your point about Apple being a buy, it's hard to argue against that just because this looks so cool.

But for folks who are curious, we have a clip of chat GPT and its integration with Siri. We're going to play that for you right now. Still, there are other artificial intelligence tools available that can be useful for tasks that drawn broad world knowledge or offer specialized domain expertise. We want you to be able to use these external models without having to jump between. different tools. So we're integrating them right into your experiences. And we're starting out with the best of these, the pioneer and market leader chat GPT from OpenAI, powered by GPT40. First, we build support into Siri. So Siri can tap into Chat GPT's expertise when it might be helpful for you. For example, if you need menu ideas for an elaborate meal to make for friends

using some freshly caught fish and ingredients from your garden, you can just ask Siri. Siri, Siri determines that Chat GPD might have good ideas for this. Ask your permission to share your question and presents the answer directly. You can also include photos with your questions. If you want some advice on decorating, you can take a picture and ask

what kind of plants would go well on this deck. Siri confirms if it's okay to share your photo with Chat GPT and brings back relevant suggestions. It's a seamless integration. In addition to photos, you can also ask questions related to your documents, presentations or PDFs. We've also integrated ChatGPT into the system-wide writing tools with Compose.

You can create content with ChatGPT for whatever you're writing about. Suppose you want to create a custom bedtime story for your six-year-old who loves butterflies and solving riddles. Put in your initial idea and send it to ChatGPT to get something back to your love. Compose can also help you tap into ChatGPT's image capabilities to generate images in a wide variety of styles to illustrate your bedtime story. You'll be able to access chat GPT for free without creating an account. Your requests and information will not be logged.

And for chat GPT subscribers, you'll be able to connect your account and access paid features right within our experiences. Of course, you're in control over when chat GPT is used and will be asked before any of your information is shared. Chat GPT integration. People don't trust over. an AI. iPadOS 18 and MacOS Sequoia later this year.

We also intend to add support for other AI models in the future. Okay. So there's a lot to unpack here. You and I were both going ooh and ah during this. I think the biggest ooh I got from you was, hey, this is free, put in here, and you can connect your paid account if you want the most elite features. That seems notable, yeah? Absolutely.

I mean, one thing we have seen is AI products and services cost money. Why? Well, because the compute costs are very high. So I think there's been an expectation setting by Microsoft and OpenAI and others that if you're going to use computationally complex AI models, you're going to have to pay some money for it, which is different than the old web advertising based, etc. So if Apple is going to work with OpenAI to offer chat GPT to let's just say a billion iPhones, whatever the number is, and even 10% of those people use it once a day, it's 100 million queries, a couple of pennies each adds up to a material amount of money. So, Jason, the question that you and I are both asking is, where is the money flowing in this relationship? Who is paying for this? Who is paying for this? And how much are they paying for it? Because we recently learned how much Google pays Apple to be the default provider. But Open AI is not going to pay Apple to take on the compute cost to be the default backup option for AI.

So Apple has to be paying Open AI, which means, ironically, that now Tim Cook is paying Satya for AI on your iPhone. Oh, tell me why. I don't think so. I think Apple probably shopped this and said, whoever wants to launch first, you got to pick up the tab. You're picking up the 10. So in a way, it's pay to play, even though they're not paying money. But I do think this is going to wind up being the Google search deal.

So the default, Apple's going to look at this as a revenue generator. And so now you got Chad GPT, Gemini, and even like XAI, Claude, you know, an indie, could all pay for carriage to get people to use their and to be the default. And defaults matter, right? So you can change your search engine on your safari. Nobody does. 99% of people leave it at Google. And Google pays billions of dollars a year to Apple and it's pure profit for them.

I think they're going to look at this like who's the default the same way. High is bitter type situation is my guess. But Google gets so much revenue from that relationship. It pays for itself several times over. Right. I would think you have some profit margin. Oh, absolutely. You don't pay tens of billions a year to not make money.

But with Open AI, does it have the same near-term revenue potential? The opposite, as you pointed out, it's going to cost you money to start. So this is a way, this is what AOL did in the early days. They were like, yeah, that's your problem. You want to be the number one player? You want to be the hot shot? Pay us. And we'll send you all our users.

We got 40 million, 50 million users. We'll send them to you. But you got to pay us. And so I'm sure that's Apple's approach, which is, hey, this is your problem. You figure out how to monetize it. And I guess the monetization path would be prompting you, hey, would you like the most recent version? We'll get you a son and say, put your credentials in. So maybe you could figure out a way to do it.

My guess, Google's margin on the Apple search deal is very low, but it blocks competitors. So Open AI, super aggressive, sitting on a ton of cash. I'm sure Sam Malman was like, you know what? We got to make this work to block some other Claude coming in here, you know, or XAI or, you know, Facebook or somebody. But you can be sure that they said multiple times that this was swappable, hot swappable for a reason. They want to create a marketplace. And then it would just be like your browser. Pick your browser, pick your search engine, pick your mail client, pick your maps, pick your music.

It'll be a setting. Pick your GPT. Who's your default GPT? But who's the default by default is going to be pay for play. And they did great examples here. I think this should be nerve-wracking. You start thinking about what is Microsoft thinking right now. Okay, cloud computing has revolutionized startups over the past decade. You know that. But the reality is,

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And of course, you'll get up to $100,000 in startup credits. So here's what I want you to do. Head to EquinicStartups.com to apply. And when you apply, James from Equinix is going to reach out to. you directly. That's equinix startups.com to apply EQU-I-N-I-X startups.com. Well, Microsoft is thinking, well, we put all this money into open AI and now they're working with Apple and making Apple look fantastic on the mobile OS that we don't have.

So instead of Open AI being a lever to get Tim Cook's money into Satya's pocket, it's actually they put money into Open AI to give more money to Apple, which has got to feel slightly strange over in Redmond and may explain the tensions between Open AI and Microsoft. I mean, no conflict, no interest. here you go, folks. The technology makes for strange betfellows. This is getting weird, and Sam is playing it perfectly. You know, there's a lot of complaints about Sam from the previous board. I don't know if you saw that clip or the like. And it was, I kind of nailed it. Remember I said on the show? Like, I know I said it on all in or here or both, but I said, you know, I think it's the VC arm that he started on his own and all that dealmaking that probably upset them. And it turns out the woman came out and it's like, yeah, you know, this VC arm. Like, we didn't even know about that. We don't know what this guy's doing. He's a consummate dealmaker. He was there. He was There this morning, somebody took a picture with him and sent it to me and said he was, he was at the announcement. He's working all angles, all angles constantly.

And so here we are. He's got Microsoft deal. He's got an Apple deal. Yeah. And also, really big Apple billing, because Apple doesn't spend a lot of time talking about your company, your product, your brand name. But did you see how much branding they gave them? I was going to bring that up.

Not only did they say Open AI, they called them the industry leader. They gave them their flowers. and they said power by chat GPT and powered by the specific 4-0 model. Yes. I mean, that is like from a level of effusement that Apple does not normally do. So that was carefully negotiated. But one thing they also highlighted during the clip was when you want to use Chad GPT, it's going to be super opt-in.

Do you want to send this out to Chad GPT? Yes. Yes. And this goes back to our point about privacy from earlier. Apple is actually sticking to that. far from what we've seen. And that makes me more confident in its overall approach to things. Hey, there he is.

He's there. The man himself. Sam, I'm doing deals. I mean, he'll do a deal with anybody. You know what I love about. Sorry,

go for it. No, no, just like, Palm OS, want chat GPT? We got you. You want to put it in your,

Nokia phone. We'll put it there too, man. He wants that distribution. He took good notes coming up. You want to talk to that refrigerator? No worries. No worries.

The thing about Sam. Alman, though, you know, like, Jeff Bezos has now gotten super jacked and wears sunglasses and looks on, you know, Sam Allman still looks like the same old nerd. And I think that that's got to be a deliberate affect because you see him and you're like, this guy can't be Skeletor. This guy can't be the ball guy who tries to kill Superman. No, I think he's, I think he's kind of like a Bond villain, like a like a, a, like a, a, a, wayfey, like, you know, super brained bond villain who can cut any deal.

Like, he's got this, like, um, very, um, like, um, understated power broker kind of thing. I'm trying to think of like who in the cinematic universe is not like physically intimidating like the Hulk or Galactus, but is intimidating because they're clever. Who's clever and intimidating? Does that be Lex Luther? No, Lex is bald and large and kind of like kind of brooding. Yeah, so less so. I don't think we have that many examples of of someone who ends up with that much power and money and ends up still looking like a guy that's going to like fix your iPhone screen down the street. Sure, yeah, they'd be working at the genius bar.

Actually, that would be, someone should do that Photoshop, because I think that would be a direct hit. Okay, so there's a lot more to talk about, though. I want to grab the Image Playground clip to show people what else Apple has up its AI sleep. Image Playground. This is a new way to create playful images in just seconds. It's so easy to use, and we've built it right into apps like messages. To get started, you can choose from a range of concepts like themes, costumes,

accessories, places, and more. When you select them, they get added to your playground. No need to engineer the perfect prompt. In a few seconds, you'll see Apple Intelligence creates a preview of what your image could look like. A moment later, you'll see more previews you can swipe through. This all happens on device, so you have the freedom to experiment and create as many images as you want.

This is great for quickly responding to your friends with just the right image. Amazing. When you have a really specific idea in mind, you could just type a description to add it to your playground. And you can easily adjust which style you want to use. Ooh. Very nice.

And choose from animation, sketch, or illustration, whichever suits the vibe of your conversation. If you change your mind along the way, no problem. Just switch back and you'll see your previous previous. Very well done. It's that simple. Since Apple Intelligence understands your personal context, you'll see suggestions for concepts related

to your messages conversation, including you and people from your messages thread. When selected, it uses appearances from photos to add you or one of them to the image you're created. Wow. Wonderful. So I want to say that you're giving this a more positive review than my emotions. So let's start with the positive vibe here. There was a lot of you going, ooh, when this was on.

So what did you like? Yeah. So the reason I like this is I think Apple always takes things that are complex, like Dolly or stable diffusion and, you know, all this complexity. And they reduce it down to something that people can actually use and get some joy from. And so what I liked about this was, the U and Ah for me was, they're watching the context of our messages. And, you know, mom and dad are talking with their two kids and they're talking about, hey, we're going to do a rooftop party for the birthday. And so now it knows birthday rooftop. And somebody says sushi and somebody says lobster roll. Somebody says

sunset. And it starts making this image in real time. And then you click to send. It's like it's really simplified and dumbed down the process of creating it. So instead of writing a prompt, you're an artist. I would like you to make me an image in a cartoon style of a rooftop at sunset with lobster rolls and sushi. It's just like, let's just make this super easy. You don't have to write a prompt. Here's some keywords, boom, swipe through the animation styles and go. So it's just reducing it down to something that people will get simple joys from.

So it's not as industrial strength as using Dolly and chat GPT4 or stable diffusion, you know, in your own instance and whatever. But it's enough that a billion people would instantly know how to use this and have creativity in the way Instagram made filters accessible to everybody. And before that, you could do those filters very easily. Not very easily. You could do those filters for a decade in Photoshop, but not easily. So I love when somebody takes something and complex and joyful and makes it. effortless and joyful because more joy is then spread. I like that you took every single thing I was going to say that was negative about this

and distilled it down to human joy. And therefore, I look like a Grinch now because I was going to say, this looks done down. This is not industrial strength. This is a little too cutesy. It's so much like, here are the three styles you can have because you know Apple is like Pixar.

You put on a Pixar movie, you know it's going to be PG. And Apple has made the PG version of Dolly here. And I was thinking my parents, love this. I can see them. My dad loves chat, GPT, but he's not going to go mess around with different image prompt things to draw a McLaren sports car, right? I can see them using this. But to me, that's kind of why I wish for something more, because to me, I've already seen the powerful tools that are out there. But your point about joy and it being accessible, I can't refute. That's solid.

You know, it's kind of like Apple Pay. You ever send somebody money in Apple Pay? It's like you're, you're in a chat and you're like, you click the Apple Pay button and it gives you a slider and you're like 20 bucks and you hit send and the 20 bucks is in there. You don't open Venmo. You don't have to open PayPal. You don't have to open an account. You don't have to scan a QR code. They're just geniuses at abstracting away the friction and making something super simple. And so I applaud them for that. And the first real experience is people have a generative AI will come from Apple, not chat GPT. That's really interesting because I feel like we've already gone through a couple of waves of getting people onboard. to chat GPT. 100 million. That's 100 million monthly users. So it's 200 million or 300 million

out of 5 billion people online. So they've probably got maybe 5 to 10% of people have been exposed in earnest to AI. And now it'll be up to Google, Facebook and Apple to bring it to them in a dumbdown. Here's how you can actually use it

because we've been tinkering with the stuff but man, we're so under the hood with it and having to jimmy rig it and finesse it. That like, okay, let's simple it down. You want to make an invitation for a birthday party. You know, like there's Canva and there's Figma.

Like you get in Figma, you can design an entire app with the team of 200 people in 10 different offices and five different languages. Or you can go on Canva and you can make something really simple and have the birthday party invite out and the poster done, you know, within 10 minutes. And both companies super successful. Absolutely. You can segment the market. Yeah.

I can see it. Yeah. I think Apple's. nailing this. And there were a couple of other announcements. We got to wrap because we're going so long here. But a couple of other announcements I just wanted to point out that I thought was really interesting. They have a password app now. So if you use Apple password manager, it's buried in your settings. You can go find your passwords in there. But now I think they've got a proper app, which means they're going after one password last pass and these other great companies that we all

use. It's not an enterprise solution, but I think this is great for mom and dad and your cousins to have a password app finally, right? So I did like the password. app being a standalone app. You see that sometimes Apple takes something that's, you know, kind of trapped in your settings and then makes it into a bigger thing. The podcasting app was trapped inside of iTunes. Then they made its own podcasting app based on a company swell that I was an investor in that we sold them. I think that's like a nice moment and adds value. There was another Apple TV. I don't know if you're a fan of Apple TV, but I believe it's Amazon because they own IMDB. They do this really great thing. When you're watching a TV show and you're like, who's that person?

Yeah. If you click the information button, it tells you, and then you can click and see all their credits. I love that as a person who loves directors and film and TV shows. They've added that inside of Apple TV. It's called Insights. So again, it's something that's existed for a long time, but if you have Apple TV, you don't see it. And I don't know. Did you see the thing about voice levels?

I did. Okay. Talk about that. This is... Okay. So there's two kinds of people in the world. People who have subtitles on and absolute bloody heathens. And I think that we've become so readily accepting of subtitles because a lot of modern media, Netflix, often has audio levels for voice that are too low compared to the ambient volume in the background, music, sound effects, whatever.

So what they've done here, as far as I understand it, I watch this live. So don't cut me to pieces, everybody. But I think now there's going to be a setting inside of Apple TV that lets you essentially takes it just the people talking and boost it. Yes. I still won subtitles, but now I'll be able to actually. actually understand things. And if you are someone who is hearing impaired, I bet you this is going to be an absolutely revolutionary feature. So it's accessibility as well, which is good because a lot of folks out there have hearing loss for one reason or not. I have a little hearing loss in one of

my ears in a very small range. I got to test it. It happens to be the ear that I listen to my wife with. So sometimes I don't hear what she says. That's our internal joke. But no, it's seriously, it is my left ear and sometimes I turn my right ear to get like a little bit of extra fidelity. But you do have this issue where whatever's going on with the sound. in Game of Thrones, you know, or, you know, pick a hit show. There's a lot of dragons. There's a lot of names and locations that you're trying to follow along with. And then they're blowing everything up.

And it's loud and you can't hear the dialogue. So you are required to put the subtitles on. And this is what everybody wants. Lower the explosions. I know you sound lunatics who do sound design for movies, love your explosions and sound and whistles. We need to hear the dialogue because on the other side, the screen. Playwriters and the directors are making these things more complex. So it's almost like two sets of artists are colliding with each other. The sound design people and the FX people want to make this thing like just a visceral experience for you. Like it's born on the 4th of July or full metal jacket. Things are blowing up everywhere. And then the other side, you want me to remember 25 different characters and where they're from and where they're going and you're naming things. You know, Westero's, wait, who's Westeroose? Oh, no, that's a place.

Okay, you know, you're trying to, I need like a menu of the characters, the people, places, and things just to follow these shows. I love this idea. This is a very Apple feature. We know people are having a problem. We're solving the problem. I could tell that this was going to be amazing. I knew you were going to pick up on it. I'm super excited.

And I really do hope that everyone out there in the world of streaming media goes, okay, this is now table sticks. Now, we have to record audio so that this is possible. But we have to offer the feature. Please, God, everybody do this. This is going to be so consumer-friendly. And you're right, it is a distinctly Apple feature because it takes a thing that everyone struggles with and just says, we're going to fix it for you and hand it to you. No thought required on your end.

Just use it. It's got to be AI-based, right? So this has got to be done with AI, which is what they've been using in the AirPods. They showed AirPods doing even better sound isolation. That's all done with AI. So congratulations on just making life a little bit easier. There's RCS. Can you explain to the audience what this is and why it's important? Yeah. So if you're not familiar with RCS, it's rich communications services. It's essentially

IMessage for Android. And as we all know, there's been a big battle between the green bubbles and the blue bubbles. Sometimes people say that if you don't have an iPhone, you're sitting out the wrong kind of bubbles, it's a poor signal. Perhaps for your social group or your business community. Yeah, breaks the group. I mean, welcome to my family's group shots. This is why we have 47 across. It's a hot mess. So by supporting RCS, which Apple announced is going to come in iOS 18, the next version, hopefully some of the fractiousness of group chats across mobile OSs will be sought. Jason, they gave it like 0.5 seconds of airtime.

They're like, and RCS is coming in iOS 15. Okay, moving on. Like, they really didn't stress it. I think because they didn't want to do it, they wanted you to buy an iPhone and get off of Android. But because they're finally going to bend to consumer requirements and do this, I think it's great. I also love watching them Apple by just throwing it kind of out with the trash as they announced it. And I think this might get them out of some of these antitrust issues.

Lena Khan has future competition as one of their issues. But of the sub-issues that I am focused on, I think interoperability and openness of like stores and messaging platforms, I think this is where, you know, when people do unfair tactics to try to reinforce a monopoly position or a duopoly position, that's where I have problems. And so I think this is like a super important, but very quiet thing. It also helps them, I guess, with satellites. Did you see that? That they're going to be able to get SMS messages via satellite and you'll be able to do the tapbacks.

I know Elon's working on that as well. I mean, I'm torn. That was the question that I had. Who satellites is Apple going to use? Because they have to have lower orbit. They have to be LEO, first of all. And then two, they need to be everywhere because the whole point here is you're off the grid. You're in the mirror woods or whatever.

And so I'm really curious who they're working with. Though Apple is one of the companies out there who could afford to have their own satellite network, sure. They might not want to take on that complexity. That's tough. There was a rumor for many years that Apple would buy their own carrier. Now, of course, some people might have problems with that, like governments, but, you know, buying T-Mobile or Verizon or something is well within their ability in terms of cash position.

And it would be very interesting if they abstracted the cost of your phone and the cost of all those services, but I guess there's enough competition they didn't feel the need to do that. So that's going to be interesting. I'm kind of torn. I kind of like the fact that there are some places on earth where you can't be reached. And that's kind of cozy and delightful when I went on my rafting trip to actually be not able to get SMS messages. But here we are.

Yeah, that's going to end. That's going to end. I want to bring up, I know we need to end, but like I want to bring up one more thing about this event. Because if you tuned into the live stream, it started off incredibly slow. They were talking about widgets on iOS and the new settings you can use. I just wanted to screen. It's like watching Microsoft go like, and here's the control panel on Windows 12.

You click this button. Like, I don't care. It ended with a bang. But to me, the AI stuff that Apple announced is so needed because the rest of it was kind of snoozy. And so to me, like, I think we reached the end of the last iteration of iOS, macOS, and so forth. They finished it. Thank God there's a new chapter or a new book in this series, because otherwise we will be bored two pieces. I think this is going to start, you know, by showing the use cases and what's possible, then they're going to say, you know what, to really do this well, to really make that image creation fast, to really write good stuff, to have your privacy, to be able to search your photos and do all this cool stuff.

We're just going to need you have an M4, you know, like these new features, you need the M4 or M5. And, you know, they're just going to force us to upgrade. And they're going to say, you know what? And you got, you had a, you know, one terabyte, probably should have four terabytes of storage to really make this work. And you might need an extra chip set. And so congratulations to them. They're going to keep the upgrade cycle going, which is always what this is about is antiquating the previous hardware cycle and giving you a reason. And maybe even you need more battery. Maybe this is going to burn a little hotter. We'll get you a little more battery. So great. Congratulations to them. And I think it makes them a screaming by. I see some folks. say Elon says he's banning iPhones of opens AI is native in the OS and visitors have to check at the door. What do you say? Yeah. They've already made it very clear that any data, this is not built into the core here.

And you're going to have to like every time. It's kind of like sharing location or your photos already. They do such a great job. It's almost, you know they're doing a good job with permissions if it gets annoying. So like, yes, I want to let Waze use my location. It's like, it used your location 60 times in the last 48 hours. And I'm like, oh, okay, only when using the app. Like, they've done a really good job of training me.

It's like, do you want Signal to have all of your photos? I'm like, no. It's like, do you want them? Do you want to select some additional photos from choose? I'm like, yeah, I'll do it one at a time. I love this kind of stuff from Apple. So, yeah, no, I don't think that's going to be an issue here. Apple's too savvy for that.

Apple's too savvy. They're smart. But as last thing, I almost forgot the most important bit of news in this entire event, which is that finally, ladies and gentlemen, there is a calculation. there's a calculator app natively on iPad. They've finally done it. I've been waiting for this. And it's a really cool app because it lets you draw equations.

And so it's kind of got like a little bit of Sal Khan magic in it. You can draw, if you put equal, it starts solving the equations with AI. That's really slick. Really, really slick. Really well done, Apple. It took you only 12 years to release a calculator app, but you found a reason to do it on the iPad, which is, you know, using the peck. to draw equations. It's going to help a lot of kids do math. So I like it. I love it too.

It's also going to have a lot of kids cheat on their homework, which is why I am not buying an Apple Pencil Pro for my children because I want them to do it. Maybe this was good. We're going to have to like the chalkboards in the house to like prove that they can actually do the math versus having the solve it. Though we have Wolfram Alpha and people still do math. So maybe I'm being kind of a ludite here. But I like the idea of having both. I like the idea that you got the chalkboard. You get that nice feel. You got to erase it, you know, a little acoustic, but you could also play electric, you know, so like learn on the acoustic guitar, upgrade to the electric, maybe get some good licks in. And anything that does adaptive learning, I think is critical. You know, the reason

our generation, really there was a great variability between the wordsmiths and the math wizards and, you know, everything in between, kinesthetic people who, you know, specialized in sports, is whatever you showed innate ability in during your educational years, they reinforced and they kind of put you on a track. There weren't enough teachers to adaptively say, you know what, you are terrible at chess. You lost your first three games. Let me go slower. You obviously missed the pawn movements. Let me explain to the center of the board. And now with adaptive learning, you know, when I play chess, you can replay a game and it gives you like, here's your mistakes. Here's where the better move is. You would have to hire a $100 an hour, $50 an hour coach to do that.

Yeah. The fact that a coach is built into everything and adapts to your learning style. and your learning pace and your weaknesses. Like, I had the chess app explain to me like where bishops go. And I was like, oh, I didn't even think about the, I could tell you where knights and pawns and everything go. But I just, it just taught me like a very simple thing I didn't understand about bishops. Change my game. Boom, rating goes up 10%.

Wow. So there's all those opportunities. And that wasn't AI. That was just me stumbling into a micro lesson inside of there. I bought the domain name microlessons. When I use the chess, dot com app, what it says is, dear Alex, you're so bad at chess. I'm not even going to give you advice. Please bounce and never come back again, which I think is quite insulting. I think it's

not a nice to me. I'm trying to learn. Before we go, yeah, anything else? No, I think, you know, there's a really important story I want to talk about, but I'll save it. People know we've covered this, um, was it fearless or fierce founders story? I think the fearless fund. Fearless fund is a fund for black women by black women to kind of bridge the gas. because black women get the lowest amount of venture of any group. And there's been a lawsuit about this. And they've got an injunction against them because it's illegal to discriminate against people in the United States.

It is such a complex issue. I have a lot of thoughts on it. I want to try to bridge with you, Alex, trying to make the world a better place. Yep. And trying to make the world a better place. Because both people are coming to it, trying to make the world a better place.

But they're seemingly incongruous. So look it up online, everybody. We'll address it on the next live episode. He's Alex. I'm Jason. at Alex, at Jason, I want you all to participate in the docket. You find a story. You want us to talk about it. Boom. Get in there. We're going to be launching the Twist 500 this week. Go to ticker dot this week in Startups.com. Sign up for the email. Alex has taken that over. We're going to reinvigorate it

with our process over the next year. We can take a year to do this of naming the top 500 private companies in the Twist500.com. See you next time. Bye-bye.