This Week in Startups - The Blueprint: finding & developing all-stars + Mark Gurman on Apple's AR plans | E1549

Episode Date: September 1, 2022

Jam packed show! First up, The Blueprint is BACK as Jason breaks down how he finds and develops emerging talent (1:36). Then, Bloomberg's Apple Guru Mark Gurman is back to discuss the latest on Apple's AR project. (31:33) (0:00) J+M tee up today's topics! (1:36) Jason explains his strategy for finding and developing all-stars (13:30) Visa - Learn more about Visa’s online Small Business Hub at Visa.com/smallbusinesshub (14:26) Jason's tips for managing emerging talent (22:51) Brave - Download today at https://brave.com/twist to browse faster, search privately and so much more (24:16) How to attract the right people to your startup (30:12) LinkedIn Jobs - Post your first job for free at https://linkedin.com/twist (31:33) J+M welcome Bloomberg's Mark Gurman to break down all things Apple, including projected timelines for Apple's AR goggles and the importance of Apple's chip business (46:17) Mark gives his dream Peloton acquirer and grades Jason's Jay Trade on Apple FOLLOW Mark: https://twitter.com/markgurman FOLLOW Jason: https://linktr.ee/calacanis FOLLOW Molly: https://twitter.com/mollywood Subscribe to TWiST Clips for all the best moments: https://www.youtube.com/channel/UCS7tJlcUA6PzVHEMo-X7ddg?sub_confirmation=1

All right, everybody, we've got a great Wednesday show for you today. First up, the blueprint is back. This is episode 8 of 10, and it's my strategy for finding and developing future all-stars, Molly. Love it. I love it. You are a talent spotter, no doubt. And then, speaking of spotting talent, you know who's great? Mark German of Bloomberg, the Apple expert over at Bloomberg joins us.

He's the guy, of course, who had the scoop about the Apple trademarks about its glasses and what they might be called. he's also going to break down when he thinks we're going to see those glasses. And spoiler alert is pretty soon. All right. Yeah, we set some lines. And he has a great idea for who should buy Peloton that blew Molly and I away. Just really some great insights from Mark who brings the heat. It's going to be a great show.

Stick with us. This week in startups is brought to you by Visa. Are you a small business owner? Did you know that Visa's online small business hub has tools, discounts, and resource to help you run your business? Learn more at visa.com slash small business hub. Brave is an internet privacy company on a mission to protect your personal info online. Download Brave today at brave.com slash twist to browse faster, search privately, and so much more. All in a single click. And LinkedIn jobs. A business is only as strong as its people.

and every hire matters. Post your first job for free at LinkedIn.com slash twist. Hey, everybody, welcome back to The Blueprint. This is part eight of our 10-part quick hit miniseries. These are segments based on what I've learned myself over trying to be a high performer and be successful in my life, but three decades of being a journalist, a podcast host, and an angel investor in over 300 companies and watching people who are better than me do their jobs and create great things in the world. You pick up a lot just watching high performers. And I'm trying to summarize this to you in little 10 minute segments. Hopefully you learn something here that could change your life, maybe reframe how you look at your career, how you're building your company, how you're building

your portfolio. And let's get right into it. There's really no reason to delay what we're going to talk about. If you want to see all 10 of these miniseries, if you want to see all 10 of these episodes, go to thisweekendstartups.com slash the blueprint. Very simple. This week and startups.com slash the blueprint. Okay. So today, I want to talk about drafting and developing future all-stars. In other words, developing talent. I'm using, of course, a metaphor from the NBA here. And the reason I'm doing that is because we don't expect people who are coming out of the draft to immediately win a championship in your company. And having all-stars at your company is increasingly difficult in today's environment.

Why is it difficult to have a lot of all-stars? Well, there's competition for those all-stars. So if there is somebody who's an extraordinary sales executive, they're an extraordinary designer, they're an extraordinary operations person, an extraordinary investor, an extraordinary marketer, extraordinary developer right down the line, there's going to be a competition for their services. And there's always somebody who is going to be able to pay more or give more freedom, responsibility, or an interesting project to those All-Stars. In other words,

all-stars, they're hard to come by. That's why in the NBA, you see All-Stars be able to demand trades and to go wherever they want, essentially, and they get paid a pretty penny. Now, if you draft and you develop young talent, and I say young, not necessarily by age, but by how much they know about the skills and the techniques that you need to deploy to finish projects and to run your company, well, you might find yourself in this talent exchange, getting a little bit of loyalty and being able to keep people around and have great producers working for you. Now, I have had some of the great entrepreneurs out there in the world.

world work for me, whether it was Silicon Alley reporter, Shennie Jardin, who went on to Boing Boin, Rafit Ali, who went on to do paid content and skiff, Brian Alvey, who went on and I was working at WordPress, running WordPress VIP. Just tons of talented people have come to work for me and then gone on to other things. Now, how do I do that? People always ask me. I'm going to give you my playbook right now. And this is a playbook I've run over and over and over again, whether it's at Inside Launch, this week and start out as Mahalo, Weblogs, Inc. Silicon, reporter before that. And it really starts with hiring. Now, when you're hiring, you can hire opportunistically or specifically. Now, when I talk about hiring specifically, what I'm talking about

is you're looking for somebody with a very specific skill set at the top of their game to solve a problem for you. Now, this is a valid thing to do. But what most people don't do is that first part, they don't hire opportunistically. What does it mean to hire opportunistically? Well, let me give you an example. Examples matter, right? So let's say you're running a podcast like this week in startups. And, you know, you have certain aspects of running a podcast that you need to constantly have people doing, right? You have to resource the podcast properly. So one of them is obviously audio and video editing, right? You need video editors to make clips and you probably need a social media person, right, to share those clips on social media and engage with people.

You're going to need somebody to sell ads, somebody to manage the ads and make sure that the advertisers are successful. And of course, you need producers, right? But guests, you need hosts as well. So do you hire those six positions, I think I just talked about? Do you hire people who are with domain expertise in each? You might, and that might be valid. In fact, when we wanted to have a new host here to co-host with me because six days a week, what if I get sick, if I ever take a vacation?

It's a lot of pressure to have a daily show on the internet for an hour every day, six days a week, 300 times a year or more. And so I went specifically for somebody incredibly high end. and I hired very specifically, I recruited Molly Wood, right? She had a huge track record, y'all know and love her, and she brought a little bit of audience with her, probably a lot of audience and really a lot of expertise. So that was an example of me hiring specifically. Now, you could also hire opportunistically.

How do you do that? Well, you're hiring people who have some of the skill sets, but maybe can learn multiple. It turns out selling ads and doing ad management and doing social media, those are all very similar, doing video editing, audio editing, producing, a smart person can. can do all those things. In fact, if you're a great video editor, there's no reason you can't make clips and do social. And if you can sell ads, there's no reason you couldn't produce here. Not that we have those two functions overlap. But the truth is, the right people can learn new skills quickly. And I've talked about learning new skills quickly and the value of that and other blueprint episodes.

And again, you can find those at this week in startups.com slash the blueprint. So here's what you do, if you want to hire opportunistically. You put out four job descriptions. You put out five job descriptions. And then you put them at different levels. And then people, your organization going, hey, wait, are we, I don't understand. Are we hiring a senior video editor or are we hiring a junior video editor or we're hiring a video editor? Are we hiring somebody with zero to two years experience, three to five, or six or more? We're hiring somebody at 50K, 60K, 70K. People in your organization want to know because they want to please you, right, the hiring team. And what you say is, tell me what comes in. Tell me who is super

impressive, right? That's hiring opportunistically. you know, put out many job posts. And then, you know, the people who have to run the podcast or running that unit might say, what are we doing here? So you got to get them to buy into hiring opportunity. And we say, listen, we can hire senior people, sure, but we might have to wait six months for one of them to come loose. In fact, it took a year or two to, you know, from when I first said, hey, Molly, you ever

thinking, she told me she was thinking about venture capital. And I said, hey, you know, when are you thinking about maybe you want to come work with us or something, maybe we could work together on the podcast. And she had a contract with a, you know, market. place. She wanted to honor it. I understood that. And so I was playing the long game there. But we were looking for producers and sure enough, producer Rachel showed up. And she had done, as I famously talked about in this podcast, oh, producer Rachel had done her own podcast with another small incubator or something. And, you know, she had hutzpah and she had grit and she had knowledge

and most of all motivation to be great. And so we brought her in. She produced. We gave her a segment. That's okay boomer. People love it. And so there you have. an opportunistic hire, producer Rachel, and then you have an all-star hire, very specifically Molly. Now, could Rachel become Molly Wood? Sure, it may take her five years. And now I've got Molly able to, and myself able to mentor Rachel, right? So that's opportunistic. And in the example, producer Rachel, she's helped us produce the show, do social media, do community, and in fact, do ad management. She's done four or five jobs here. And that is amazing. So let's talk a little bit more about how you then develop that talent.

You've put out the job descriptions. You found somebody smart. Maybe they don't have five years experience in anything, but they're showing you something. They're motivated, right? And man, a motivated person who knows how to learn and has a low to intermediate skill level, they will beat a highly skilled person who is not motivated

or do as well as them nine times out of ten. I kid you not. And you know what, my friend, Raymond Green, from the Warriors, talks all the time about how he was drafted in the second round. He knows all the people who were drafted ahead of him. And he wants it more. And he did a great video recently where he talked about hustle.

And he talked about one of the great skills in life, and in basketball, in fact, is not just your ability to play defense or play offense or dunk or hit threes, all those important things. It's your ability to want it more. It's your ability in minute 35, 40, 45 if you're in overtime or whatever, minute 50 if you're in overtime. Your ability to maintain your ambition and motivation. your grit and your energy when other people trail off.

And I see that all the time. I see people get to hour four, five, six in the day and boop, they stop working. And then I've seen other people that hit six, seven, eight hours a day. And they're just getting started. And they put that extra two hours in at the end of the day. Maybe they put their kids to bed. It's, you know, nighttime instead of watching some Netflix, they go sharp in their blade or get better at their skills.

So this is point number two. So point number one, hire opportunistically versus hiring specifically. Get a group of people in and start developing your talent. Okay. So how do we develop that talent? Let's say you drafted people who you think are motivated and hardworking. Okay, well, you want them to do tours of service. You want to rotate staff from department to department.

And you want to monitor their progress when you do that. Why? Well, if you can see how somebody takes on a new challenge and how they learn, and they can learn holistically about the whole business, then they're going to know the why behind you do things. So somebody like producer Rachel, a great example, is producing this very show, this being startups, and she picks some news stories.

She pitches them to the hosts of the show. She writes them up, knows how to bullet point them. And then Molly says, hey, you know, this is the most important point. You left it out. These two points you put up top, they're kind of obvious. You can take one out and you put one at the bottom. And you want to tighten up how we frame this. And you get some learning there on producing.

And then you understand how ads work and why they're important and what the advertisers understand, hey, now you're building a mental model as an employee of the entire podcasting business and ecosystem. Okay, I know how the advertising side works. I know how I'm producing stories works. Oh, and how do we market the podcast? Okay, now I learn that. And they learn from different people. And maybe if there's, let's just call it five functions to building a right podcast, all of a sudden, if a person has done three tours of duty and gotten to 40, 50, 60 percent proficiency, my lord, they're starting to understand the totality of building a great product. And for the right person, that builds ownership, that builds pride and work. They haven't been pigeonholed. And because they haven't been pigeonholed, they get more confident. So if they take you and the chef says, you, you can spend your first year, and this is a tradition, making rice at the sushi bar. Or you can make the Tamago, you know, the beautiful egg omelet. They'll make you make the Tamago for two years and like some sadistic, like, you know, you have to scrub the floors, you know, way. Oh, you have to just cut the

vegetables and then maybe I'll let you make the salad at the salad station, but you're not touching the dressing kid. That kind of sadistic, crazy stuff, I don't believe in that. I think that that kills the spirit of people more than it helps them learn quickly. And at a startup, you want people to learn quickly. You want people, if we're going to go back to the basketball analogy, you want them to learn how to play defense. You want them to learn how to shoot the three. You want them to learn how to set screens. And you want them to be in peak physical shape so that when they're in for their 30th or 40th minute, they're doing really well. And I would rather see, if I was running a restaurant, I'd rather see that person who's coming in to work at the

restaurant. Yeah. Okay. Work service. Okay, yeah. You're going to be the major, you're going to work with the matriety and seat people and reception. Okay, yeah, you're going to, now I'm going to have you do the dishwasher station. I'm going to have you to the dessert station. I'm going to have you understand why people come to this restaurant and how it all comes together like in a symphony, right? This would be like taking an actor and having them work with the script

writers, having the script writers maybe do a table read or act out a scene so they can see that their own language is clumsy, right? That's a really super important thing. Are you a small business owner? Did you know that Visa's online small business hub has tools, discounts, and

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Once again, that's visa.com slash small business hub. Visa, a network working for everyone. Now, I've talked previously about a right first culture and my system of accountability called the start of day, end of day, and end of week reports. I'll just recap them here very briefly. A write first culture is what companies like Amazon pioneered, which is write something down rather than doing a PowerPoint, rather than talking, just write it down. And if you're in the age of Coda, Notion and all these and remote work, writing stuff down is a fantastic way to codify it and clarified thinking. And then at the beginning of the day, you're having your cup of coffee, hopefully, and you're this week in startups, Yeti Tumblr. You say, this is what I'm going to try to accomplish today. And at the end of the day, you reply to that and say, this is what I accomplished.

And you do it in front of your whole team. Now, yes, chef, we can see who high performers are. And when you're developing talent, it's like you're getting a report back. Steve Kerr, somebody says, yeah, this person shot 100, three pointers, you know, 200 three pointers. And here is their statistics over time. Yeah, look, their percentage went down when they hit, you know, 1203 pointers. And you say, okay, yeah, this person needs to hit the weight room.

They need a little more muscles so they don't get fatigued. or you look at their speed and you're saying, hey, you know what, this person needs to go a little faster, maybe we need to put them on a diet, drop five pounds and, you know, get some more explosiveness. Those kind of reports, self-reporting, third-party coaching, active coaching, deliberate practice, that whole category of work increases performance. Now, point number four, you're got to be willing to give people assignments that are beyond their ability and be okay with the fact that they might fall on their face. Steve Kerr might put somebody into the lineup and say, yeah, okay. Yeah, God, LeBron. Yeah, go ahead. Do it. Yeah, guard Kevin Durant, guard whoever the

hardest player on the other team is. And you might say, well, this is crazy. Well, that's how people become great is they are given assignments that are way above their ability. And that gives them a chance to shine. It gives them a chance to push themselves. So if you tell the person, yeah, okay, listen, you're in the kitchen here. Go ahead. Make the souffle. Go ahead. Tough guy is so easy to make perfect scallops, go ahead. And if you ever watch any of Gordon Ramsey show, put people on the front line, let them make the scallops. And, you know, chef's going to look at the scalps as they're going out.

So you have to be willing to be an active mentor to do these techniques. You can't be a passive person. If you hire a great talent, you hire Molly Wood, you hire some legendary developer, yeah, you can set it and forget it. They're going to do a great job. They've got 20 years experience. You know, that is one way to go. But that's not what we're talking about today.

Today we're talking just about developing talent. So you have to put them on assignments, right? I talked about rotating them around. I talked about them, taking ownership, you know, and you're doing deliberate coaching. But you also have to give them big, beefy assignments and see, not only if they can fish, but if they can find techniques about fishing and how to become a better fisher, fisher, I guess I guess I could say fisherman, fisher person, a person who fishes, a fish collector in the sea. You have to go teach them not only how to fish, but that they need to go on and say,

hey, maybe there's better methods for fishing that my boss doesn't even know. So I'm going to go on YouTube. I'm going to go on Google and do that. And in fact, I literally do this. We have like some great segments here on the show. Like we live in the future. And I'm like, hey, find me stuff. That's like really cool.

And you know what? I wasn't finding enough of that stuff. And I said, hey, find me, you know, little big things, things that are really clever, smaller product things. And I showed people by pulling up my browser and doing a search, going to Reddit, going to Hacker News, going to Twitter. And I showed them how I construct my searches, how I use advanced searches to search only in the last 30 days, only in the last seven days, to find interesting things.

Once you start teaching people your techniques of learning, they will hold themselves accountable and they'll find more interesting things. So it's very important when you give them those big problems that you check in with them, those big projects and door problems, you check in with them and you tell them how you would approach the problem. Because they're going to hit a roadblock. They haven't done it before. So yeah, dump them in the deep end of the pool. You know, let them and take it a big global water, you know, hopefully. they don't drown, but you got to be ready to jump in there with them. You got to be ready to get in there, roll up your sleeves and teach them. And it's not just talking to them and telling

them what the output is. Of course, you have to tell them what the outcome that you're looking for is, but you got to tell them the techniques that you would use and your process, your thought process for solving those problems. Now, finally, let's say you hire five of these ambitious folks from the draft, right? And you're going to develop talent. If you're developing talent, you're taking risk. And that means most of the talent you recruit are not going to make it. Now let me say that again. Most are not going to make it because you're taking chances. So every time, you know, you find a great producer Rachel or producer Nick, there's going to be three other names that are not going to stay. So out of five, five hires when you're developing

from the draft, I expect that you will have two. One, two become meaningful contributors. Now you're like, J-Cal, this is a sign of failure that you would hire five people and have three not make it. No, when you're drafting, if you were drafting as an NBA team and you had two of your five draft picks become meaningful contributors in the NBA, you would be very excited about that, you know, on average overall. Now, what happens to the other three? Well, one of them might leave voluntarily. They don't want to do the job.

They don't want to be in the NBA. They don't want to work as a chef or they want to work, you know, at some other restaurant or, you know, on some other basketball. team. And it's not your choice that they left. They left voluntarily. But then the other two, you're probably going to have to cut. Now, why are you going to cut them? Well, because if you're drafting people and their unknown talent, the reasons I typically say is that people don't want to put the effort in. And in order to be an all-star, you need to do work. God-given talent, innate talent, is incredibly, incredibly overrated. Let me state that again. Inate talent is overrated. Hard work. deliberate practice, learning, and challenging yourself, that's how great, great players are made.

And sadly, not everybody is cut out to work at a startup or play in the NBA. They would be better served and they would enjoy more having a nine to five. This is one of the classic riffs I see all the time and the anti-hustle culture versus the hustle culture movements. What's hustle culture? You see Gary V or maybe me talking about, hey, hard work pays off, work hard, crush it, yada, yada, yada. All that can leave a bad taste in some people's mouths because they don't get their value in life from what the people who are pursuing their careers. And that's okay. There are some people who get value in their life from their families primarily or their friends or their experiences or the art they make or the art they

consume or any number of things. Some people get it. from resting and sleeping. There are some cultures where people value their downtime more than they value their careers. There are individuals who value their downtime doing nothing more than doing something. There are some people who love their hobbies more than doing their jobs or doing nothing and leisure. So not everybody's cut from the same cloth and that's totally fine. All of the advice you're hearing on this weekend startups is for people building companies, funding them, building them, and who are enthusiastic about changing the world and working hard to do that. In fact, being competitive with other teams, just like anybody in the NBA, there are people in the NBA who just want to stay in the NBA, get their next contract, and they don't actually care about winning.

Some people might say James Harden, you know, gets paid huge salary. Maybe some people say Westbrook, right? They seemingly are great players, but they haven't become Steph Curry, Draymond Green, LeBron James. Michael Jordan level talents, even though they could be. Listen, I'm not singling out those two people for any specific reason other than they are MVP caliber players who just have not had a winning career. Winning careers take that extra amount of effort. And who knows, their careers aren't over, so maybe they will hit it.

This is the realization I've had over time is really, it's about drafting great talent, training them, holding them accountable, giving them assignments way beyond their ability. and being willing to cut the people who maybe don't make it. User privacy is one of the biggest topics in tech right now, and if you care about your privacy, you need to check out Brave, B-R-A-V-E. Brave is going to shield you from trackers and ads and cookies and all the creepy stuff that track you across the web,

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your bookmarks. You can import your passwords and all your settings from Chrome or any other browser with one click. I did this on all my machines. Brave search is a truly private and independent search engine, the Brave browser, second to none. So download Brave today at brave.com slash twist. Brave.com slash twist to browse faster. Search privately and so much more all in a single click. Please use our URL so they know we sent you. Brave.com slash twist. Now, if you do this consistently over time, there is an amazing payoff, an amazing, extraordinary payoff. You will get a reputation for being one of those bosses that if you go to work there, when you move on to your next adventure, whether it be starting your own company or business or working for

another business, people will say, oh, you worked for Jason Calacanus, oh, you worked for Elon, oh, you worked for Travis, oh, you survived that. Oh, we know that that's an intense place to work. We know you were giving great responsibility, and then people will want to hire you. So that's what will then get more people to want to come play in your program. They'll want to come work at Noma, that crazy restaurant, you know, in Copenhagen. I've been to it, actually, twice. It's quite nice. Thank you.

Tyler, shout out insights from Tyler, who invited me to go there. People will go there and work for well under any reasonable salary living on their own savings just to have the experience of working at Noma because they're so passionate and they've got such development. And when you get known for developing talent, man, the talent wants to work with you. The other thing is you build a level of excitement inside your organization, a winning culture where everybody is pushing themselves really hard to be the best version of themselves and to be as successful as possible. You'll also get some loyalty because people will say, you know what? This is, this is where I belong. I belong here. I belong in a place where people are given chances and people are judged based on,

you know, not where they came from or their degree or, you know, their theatrics, aesthetics, you know, how charismatic they are, whatever, just based on the work they do, right? They get judged based on their ability and their effort. And that really will build long-term loyalty in your organization. You'll start seeing people who you develop as talent, be willing to stick around three, four, five years, six years, seven years even. And that is very rare in today's environment. It's very rare in each subsequent generation as the business world it becomes more dynamic. People stay at jobs for shorter stints. And there's nothing you can do about that. Nowadays, a four-year stint, it's a long stint. When I was coming up as a Gen Xer,

they said, do not have anything on your resume under four years or you'll look like you'll never be able to work because people think you're too flighty. I regularly have people, and I hire them who do 18 months, 30 months, a year. It didn't work out. Six months. I didn't realize I didn't like it. The boss was a jerk. People do not just quietly suffer. I can appreciate that. If they don't think the job's right for them, they'll move on. And, you know, listen, it's your job as an employer, as somebody leading a company to make it a place worth staying. And so a final note on that is you're going to have to realize that if you develop talent at this level, you're going to have to have opportunities for them to grow into higher positions and have their salaries raise.

And if you don't, they can go somewhere else. Now, you can always have that discussion with your team members. Listen, if you come here, you work for me, you're always going to be able to get a plus 10%, a plus 20% offer. Here's how compensation works here. Here's how you'll look over five years. And that's just really important to tell people, hey, here is your career path. So if you're going to develop talent, you want to have a career path. In other words, hey, listen, you're a rookie.

We're going to train you up. We expect you to work hard. You'll get some minutes in the G League. And then we'll start getting you some minutes. People might call them junk minutes. We'll get you some minutes and some assignments. You get that five to ten minutes in the real games. And then if you do your job, you know, a starting position or, you know, coming right off the bench in that six, seventh, eighth, ninth position,

you'll get some rotation minutes, right? It's just got to be clear with people. And, you know, there can be long jams. You could, you know, in a basketball team, you have 15 seats. You know, most people keep the rotation to nine or 10 players. Some people who even make it shorter, like, eight players. But, you know, 10 players are going to get to play in every game. Nine players are going to play.

And then you have five people who have do not play. Some will be on the injury reserve list. You're going to have to convince those people that it's worth it to put the effort in and be ready, you know, when they're in practice. Hopefully you build an organization because it's not like basketball. You only have five people on the court at a time where everybody can make meaningful contributions. I've been working on that a lot is making sure people know, hey, listen, even if you're new here, if you're an associate, if you're a researcher, you can still meet with companies in our investment

team and you can still be an all-star like a principal or a managing director could be, right? So try to make it so there are no roadblock for people. And you're going to have to just keep up with their comp if they really do well, you know, and you hire them out of school for 50K. You can't put them on a 4% raise, you know, and give them 2K extra. You know, you're, you're, you're have to give a 5 or 10k raise. You might have to give a 10% raise. You might have to give a 15% raise. You might have a 20% raise at some point. And that might be hard for some people to conceptualize. Wait, it's like, and I hire this person and I'm giving a 15% raise, a 10% raise. That seems crazy. Well, as I talked about it in another blueprint, sometimes you have to go out and find out on the other side as the talent what you're worth.

And if somebody doesn't want to give you start a minutes and another team does, if somebody doesn't want to give you a contract or can't give you a contract because they're over the salary cap and they're just spending too much money. It doesn't make financial sense. Then you may have to go to another team and get that reward. So be prepared if you develop talent that you may develop them so well that they go start their own company. And just be at peace with that. I'm at peace with that because I've had many people who I've developed, other people love to poach my people. Totally fine. I'm always drafting new players and I'm always developing talent.

So if somebody gets poached, I can't tell you how many times I've had boomerang employees. They go work somewhere. They got poached. They got a 10, 20% better offer. And I said, listen, yeah, go do it. It's fine with me. You know, I've had people get offered like by crazy startups that raised a bunch of money double what I was paying them. And I'm like, yeah, definitely take it. I just tell them I'm about taking it. And I had that person come back. And I was like, okay, you know, and she's like, yeah, this company was a show. All right. Anyway, there it is. The Blueprint for today. Developing Talent. Thanks for tuning in to part eight of the blueprint. Remember, we're back with new blueprint episodes every Wednesday until we hit 10. And so you can go to this week in startups.com slash the blueprint. And thanks to our sponsors for supporting this segment on this week.

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apply because they're giving you something for free. All right, Molly, one of our favorite journalists is back on the program because it's been a lot of news in the ARVR space. So why don't you, why don't you tee it up for everybody? Exactly. Welcome back. Mark German of Bloomberg covers Apple and Consumer Tech and hardware. It's basically Bloomberg's Apple guru, always getting the scoops. Welcome back to the show, Mark.

And we have you on a head of an Apple event where even though we don't think there's going to be a B-R-A-R announcement. We would love your take because we're hoping it's something more than just another dang phone. I can't get excited about a phone. You know, I was thinking about coming on here and pulling Cali-Canets and telling everyone I actually have the Apple Air. It's pretty in the room.

Yeah, sure why not. Try to give some feedback and review it a bit, but. Enjoy your last day at Bloomberg. Yeah, I was warned against that. So I'll stay away from that. But yeah, next week, the iPhone 14, this iPhone, iPhone 13 in front of me will be replaced with something that looks a little similar or very similar in about two weeks or so.

But it'll be absolutely worthless once that new one comes out. This thing is a piece of crap. Why do I even have it? Pretty much. No, but it should be some good updates for those on who want to get the pro phones. Not going to be a big update to the regular iPhone 14. But of course, and I think we talked about this before, there's not going to be an iPhone 14 mini this year.

instead there's going to be an iPhone pro max sized regular iPhone 14 which I think will do quite well big updates the Apple watch across the board now I know you're talking about XR AR VR SR whatever you want to call it there'll be none of that next week right so the Apple reality headset the reality pro the reality one whatever they end up calling it that's not going to be shown probably until first half of the next year so lots of stuff over the next six months. This is probably going to be the biggest next six months of Apple news that I could remember. My big question is, and I just bought a thousand shares of Apple, I j-traded them, because I thought, I think they're going to win AR-V-R. I know they're going to win it. I'm convinced. But I want

to take it through my thinking, and tell me if I made a good trade or not. It's not an investment advice. Apple, I believe, is going to announce these headsets. they do what, three announcements per year on average? Three keynotes? Yeah, about three, yeah. So they're not going to announce this year. I think we all agree. That's consensus.

So now they're going to start making announcements, I believe, in, I don't know, the next six, I would say, out of the next six, they're going to be talking about ARVR in, you know, three or four of those starting sometime next year. So I think there's a 50% chance that they bring this up. you know, maybe 60, 70% yes, they bring it up next year.

What do you think the chances are they announce or show hardware? And if we say there are six new keynotes coming, one, two, three, and 23, and then four, five, six, where would you put the over under on the first announcement in the next six keynotes starting in 2020? The over under on which number keynote over the next six would we see hardware? Yeah. Two.

Oh, okay. Wow. Oh, really? So you think they'll announce the hardware as soon as 2023. In the second keynote of 2023. In the second keynote of 2020. That's my over under, right? And so I would say one.

Oh, so two is the line. One or two is the line. It won't pull past two based on the way Jason outlined it. Like if you look at, let's say there's three keynotes. Yeah, it'll be, it'll be by the second keynote for sure. Wow. Well, I was going to exist. because usually they announced up when you can pre-order.

Well, I'll say if it's not by, if I'm wrong about tubing the line, that means something went very wrong. And not for me for Apple. So, yes, I would, it would be very surprised if that was not the case. In terms of when it would actually be released, probably a little later in the year. It was supposed to come out already. It was supposed to come out last year. And then that was pushed back to coming out this year.

then that was pushed back again to next year. So we're already on the third or fourth launch attempt for this thing. I don't know if you guys saw my story over the weekend about trademarks. So this is an interesting story. I was pointed to these trademarks that were filed by a shell company and then did some more research, went to the website belonging to Delaware's government website where you can look up in corporations, search the corporation name, went to it. you have to pay 20 bucks to get the,

the agent information about who registered the corporation. Shocker, another shell company registered the Apple Corporation. So it's sort of just like, you know, you keep going, going, going, going. You're never going to find Apple is the origin of the trademark. But I can tell you it is Apple. And so I raced to get that story out. I was working on it.

I was on the East Coast last week. So past 1 a.m. on Saturday night, I know, really fun. finally was able to get that out Sunday and thank God it exploded because I put a lot of work into it. But this is confirmation of something I already knew that this headset was going to be called the Apple Reality. And we have two sort of suffixes for that. Apple Reality 1 and Apple Reality Pro. I don't know this for sure, but based on everything I know about the first headset, I believe the first headset will be called the Apple Reality Pro. I think Apple Reality 1 is either a backup name, right, a secondary option, or that would be the name of sort of a subsequent headset,

maybe a base model, right? Because the initial headset, I know Calacanis says Apple is going to win. It is going to take them some time, though, right? Because price conscientiousness, the first Apple headset is going to be between $2,000 and $3,000 where you have meta at sub-500, right now. And it's going to take quite a bit of time for Apple to get to that sub 500 price point, if ever, right, I find it hard to believe that given the trajectory of iPhone pricing, that XR pricing for Apple will ever get into that range. So I think they'll want to sit at the high end. But I think this first headset is where Apple sort of outlines its platform, right?

They have the hardware. They get app developers interested. They build this entire ecosystem in this app store. in this development kit for the headset. And then once you start getting into Gen 2, which they're already well into development of Gen 2 of the headset, that should come out in about two years. That might be a bit cheaper.

I think you're going to see way more people pull onto that. And then subsequently, the third generation, that's probably going to be the augmented reality glasses. That's the real game changer. That's actually where Apple wants to go. That technology is not going to be available for mass market for probably three to four years, minimum, but Apple can't just sit around twiddling its thumbs. And so what it's going to spend the

next three years doing is building that ecosystem and building that platform. So the day the AR glasses come out, you have three years of consumer education, you have technology improving, you have the supply chain nailed down, and you have that full ecosystem. Imagine if the iPhone in 2007 launched with two million apps or that full ecosystem behind it and the full breadth of supply chain behind it. The iPhone didn't have that sort of preceding product to come on top of, whereas these AR glasses, that's sort of going to be the pinnacle of the Apple XR strategy. Right. And that will be trying and ready to go. I got to say Apple Reality, one or pro, which everyone has so many wonderful things going for it, because it combines reality

distortion field, a joke we've all been making for like 20 something years. And as Nick points out, Apple reality also shortens to AR. I'm just saying it works on every level. Oh, right. Works on every level. Yeah. Yeah. And I think it'll be the reality pro because of how high end this headset is going to be.

It's going to have the same processor that you get inside of a MacBook Pro today. The M2, it's also on the MacGare. Really? An additional processor. Dang. Yeah. So it's the, it's the M2 with 16 gigs of RAM plus what, according to this trademark, is going to be called the reality processor, which is a sort of a co-prosecerer.

processor to do a lot of the AR and VR functionality on its own standalone chip. Just like in the iPhone today, you have the main A16 chip, or that will be in the iPhone 14, but there's a block in these chips that they've had for years that does the dedicated processor for AI, right, and ML and all that. And so these headsets will have that dedicated chip as well. You know, people who have used the headsets that I've spoken to early prototypes. The main differentiator is the quality of the displays, probably, going to be 8K displays, super high resolution.

They spent a lot of time on the speaker system, the sound system. And so it's going to be a real lifelike, maybe even a scarily lifelike experience. Is that why spatial audio has been such a focus for them? Because I was on my wife's, you know, those big chunky, over-ear headsets. I don't know what they call them. Apple Pro, AirPods, Max. The AirPods, right now. Yeah. Terrible name because AirPods go in your ear.

I don't know what they call them AirPods. odds, but, you know, they don't look great either. I mean, you look like the guy from Empire Strikes Back, who was working in Cloud City, you know, he's got a little... Pretty much. Nick made me put them on, so you can have a word with him. No, they look great on you. They're on-brand.

They're super heavy. And I tried, you know, I was like, I want to hear this spatial audio. And I started trying to find on Apple music, the spatial audio. I wasn't super impressed. I couldn't find, like, Pink Floyd or anything or dire straits. I was, like, trying to have a great experience. but I guess maybe music that's adapted for spatial audio will not be as good as experiences designed with spatial audio you know and you're actually seeing the space.

And spatial video. And spatial video, right? I think that's sort of going to be the intersection where you have your spatial audio and they have this spatial video and it all plays in together. It's going to be amazing. I really think it's going to be amazing. But it's going to be very expensive for many people. people.

We need to plug it in. We need to plug it in or it's going to be standalone. It's going to be standalone. I don't know how great the battery life is going to be. The initial initial version, when they started working on this six years ago, from the very beginning, their site was to make the highest end, highest performing VR, AR headset on the market. And getting that technology into a place where it can be standalone and not plugged into

anything is very difficult. They originally started off, like wanting to plug it into it. an external device or an external processor or a phone with a cable. Then, you know, by 2017, 2018, they wanted to have a device that had a standalone mode and a super high powered mode. And to enable the super high powered mode, sort of the intense functionality we're talking about, they were going to sell a device about the size of a Mac Mini or a Mac Studio with a Wi-Fi technology called YGig.

I'm not sure that's very mainstream at this point, that you would buy to keep in your home within a 30 to 50 foot distance or such. And the high-end processing would be done on that machine. And then all the encoding and all that would transfer over to the headset over these YGig networks, over your home networks. Johnny I, before he left Apple, one of the last major moments for him at Apple product-wise was sort of of standing, putting his body in front of that.

Apple does not ship a product that requires a second product in order to get your full functionality for it, right? And so there was a debate internally between him and Tim Cook and Mike Rockwell, who is, he used to work at, where did he work? Dolby, right? And they do a lot of audio video stuff. He's in charge of the Apple initiatives now on ARVR. And there was this whole debate.

And this headset that ships. is going to be fully standalone and you're going to get that high power in there. Well, this makes sense, Molly. You know, you think about the M1 and the M2, you know, you're like, why are they going so crazy with this M1 and M2 these things seem overpowered for laptops?

We're like, now the battery life is 20 hours, the processor's absurd, and you're like, wow, they're really focused on chips to a level that it doesn't seem like the laptop is coming anywhere near, using that M2 chip. Like they're like, unless you're a video editor

or you're making 3D models, nobody browsing in a Safari browser is using anywhere near that power. And now we know. And you look at the displays. It starts to draw a lot. I mean, like you just pointed out too with the spatial audio,

it starts to draw a lot of development together when you realize that this was a timeline all along. The red friends are there. Fascinating. And the M2 chip was developed from the beginning. Their line of sight was that this chip would be for the mixed reality headset.

And that's why you see a lot of the power there. And, you know, the core technology, it's actually amazing. The same core technology that they're using for these chip spans from the Apple Watch and then it'll span all the way up to this headset and their highest end max. But don't be surprised in a few years from now when the Apple car is powered by a chip with this same underlying technology. So in a sense, you know, the Apple chip division, you know, is really the core. core of the company at this point. It's probably their Amazon prime. It's their Northstar. That's a good way to

put it. Yeah. Yeah. And so that's that's really powering everything. And, you know, I've spoken to many people at Apple who believe that their head of their chip division, you know, could be their next CEO. For many reasons, practically speaking, I don't think that would ever happen. But I think the point people are trying to make is the importance of that chip unit to the company. Fascinating. Hey, I want to ask you a question on a completely separate note, which is you've been covering Apple for a long time. You really understand consumer hardware. We have been having this ongoing conversation about Peloton and whether Apple might ever buy Peloton.

Because they share a look. They share a customer base. We really want someone to rescue Peloton. You're shaking your head already. I don't think so. I mean, if you look at the market cap, obviously past history is no indication. of, you know, what someone will do in the future. But Peloton's market cap would probably make it its most expensive acquisition to date.

So that's one piece of evidence against that. Apple already has Fitness Plus and has invested tens of millions in that. And it's been getting pretty good. They have their studios there. So they really have no reason for a content-based acquisition of Peloton. And if you look at the hardware, Peloton has... essentially nothing that's proprietary. Apple could, you know, rig together a Peloton competitor in six months and put Peloton out of business with spending less money than it would take to buy the

company. So I see zero practical reason to buy Peloton. Now, who do I think should buy Peloton? That's another question. I think it's Netflix. Personally, I think Netflix has an extreme. Oh, wild card. Yeah, that's that's, that's my opinion. Let me just give you opinion on Netflix. I think Netflix, its brand is basically on par with Xerox or Kleenex, and they have been very unsuccessful in expanding beyond their core competency, which with inflation and as other services come out, they're actually raising prices while becoming less valuable over time. And I think Netflix could have done a much better job expanding into areas like music. Gaming so far has been, I don't know if it's been a failure, but it's had very

limited success for them. News and other forms of media, they have not made that subscription more valuable. Podcasting. Whereas podcasting, right? So they have done, I would say they've done a terrible job making their subscription more valuable and expanding the company. It's a one trick pony. And so it's a one trick pony. Now, if they decided to wake up one morning and decide they no longer want to be a one trick pony, making a content-based acquisition of Peloton and taking over the Peloton digital app and putting Peloton within their Netflix app or whatnot on their TVs and such, and really building on the digital non-hardware section of Peloton, I think that could make the Netflix subscription much more valuable. And if I were Netflix, I would, the first minute the papers are

signed, completely shut off Peloton hardware and just put that, just shut down that business immediately. Or are you kids open source and let other people do it? The number one thing people ask for on their Peloton and those are built on the Android operating system is the ability to put Netflix on it. And I can't understand why they don't let you do that. You have this giant screen on the Peloton tread, really big screens on the bikes as well. You'd be so dope to just sit there and watch Netflix.

I don't think you even need to turn up. the hardware, exactly. Like, you're HUD, and it would be amazing. And you start thinking about if Netflix had their own hardware. It had their own collection. Like, you start to think about this collection of subscription assets. You know, like the New York Times with the athletic, wire cutter, crosswords. They got like, you know, a little collection there.

So you may get some people who want the crossword. They stay for the news. They come for the news. And maybe they dabble in wirecutter. You get the idea. They buy the athletic. They get the other stuff. you get this like less reason to churn and it would be a great you're right imagine you turn on

Netflix Peloton and you're like my Netflix account gives me yoga classes yep great yes actually such a good idea dude I mean that I'm not on the freaking genius nobody else I have not heard this anywhere else we're giving this all this is an exclusive German idea right here I mean I'm confused as to why Netflix hasn't done it I mean it just makes it makes so much sense to me there's there's so much talk about Amazon and Apple. That doesn't, I don't know. That doesn't make a sense. Well, you know, Amazon, you know, would be, has gotten better at hardware.

Like, you look at Google and what they've done with hardware and how terrible they've done with Nest. You know, they say what you want, but the Kindle is a loved great product that's very refined. Amazon Fire phone didn't work, but the tablets did okay. And then you, you know, you look at their ability to ship that product and install it. that would be like major in the ability to market. Their TV stuff. Their TV stuff is also you.

It's basically ubiquitous at this point. Right? Yeah. As well as their home devices. So maybe there's a play there where Amazon supply chain, maybe more than six months ago, could probably get these prices down and the efficiency up on Peloton equipment to a very good place and then make the subscription part of prime.

But make it part of prime. And your goal is to not make money on the hard. it's just to keep people from churning from prime and increase the value of that. Okay, let me explain my J bet to you, my J trade. You tell me if I'm crazy. I came to the conclusion that the winner in this space is going to need to have incredible dexterity in terms of hardware, design, and an app store. I think we'd all agree that's what is going to win ARVR, right?

You need to have great apps, great hardware, great design. You know, and supply chain is a subset. of that. So if that is what we all believe you need to win, let's go through the three major players, Meta, Apple, and Google. On a hardware basis, meta's doing a pretty great job with the Oculus, and they've shipped a lot, but nobody beats Apple at hardware. So that's like the Apple gets the checkbox there. And then you look at Google and how they screwed up Nest and, you know, like pixel and Chromebooks. They just never take it seriously.

It's a hodgepodge. They don't have focus. So they're in third place on hardware. Apple's far and away, number one, meta, somewhere between the two. Okay, now let's look at app stores. Apple's by far the number one app store. And that's where developers develop first.

That's where they make the most money, as you pointed out, Molly. And then Google's number two. And Facebook is not only has no relationship with developers. They have screwed so many times, so many developers over such a long history of time, they have the opposite. They have a terrible relationship with developers.

They're not trusted by the development community. And then you look at how well is this thing design? Apple's just the queen and king of design. Like, nobody comes even close. And the pixel, I've had those Apple pixels. The Google pixel, gorgeous device. I've had their Chromebooks, gorgeous. They have, you know, flashes of great design.

The Nest has flashes of great design. So I put Nest in Facebook peer to peer. What that means to me is Apple's going to run away with this. And if you just look at like four apps that you love most, Molly and I, we were talking about four apps, Molly. What did you think you might have mentioned Spotify. I mentioned com. No, I went Pinterest. We talked about Redfin.

Redfin. Calm. And then there was one more. Spotify. Where you just would live inside that. So you, yeah. I mean, if you take out your watch, you know, Any developer who works in the Apple ecosystem has built a phone app, an iPad app, and a watch app if you're of note.

And like the Peloton app does a great job of putting your heart rate on there. But imagine you go into Calm, which, you know, I'm talking about my book here a little bit, and I don't have any inside information, but you can do some meditation in this incredible thing and get the spatial audio and visual, mind blowing. Now you imagine Redfin, Mark, you walk around houses and Redfin is like this killer app. And then Pinterest, Molly's, I don't know what the Pins, There is, but if I'm in 3D space and you and I are working on our pinboard and we're moving pins around. Yes. We're planning a party together. We're decorating a room together. We're like, you're helping me hang my art because I'm like, does it look good over here? Is this area rug over here? Like, da-da-da-da-da-da. Yeah, it's wonderful. It's wonderful. It's going to take a long time for all that, right? It's going to take a long time for all. It's, well, first of all, I don't know how long it's going to take to develop an app of that quality for that type of platform, right? Getting these things in developers' hands. I think.

this future where you imagine Apple winning, I think that will happen, but it's going to take five, ten years. Think about, you know, the cost of the iPhone coming down, you know, the lower end models and such. $3,000 is way too much money for 99% of people to buy a headset next year. Right sure, I'll buy one. You'll buy one. You'll buy one. You'll buy one. J trade. J. Trade is a 10-year trade. It's a time your trade. It's a buying home. It's a buying. Okay. Let's do this. We'll wrap on this. Yeah. Set the line on a mass market product price mark. You're good at gambling. I see maybe you play the ponies or maybe you've placed a sports bet before. So I like it. Blackjack. All right. Great. So let's come up with,

hey, what is the price that you're going to, you know, you're going to stand at? Then Pat. What is the price that you think it becomes like the iPhone, the, you know, category defining product? It may not have the most market share, but, you know, it's got that 30, 40. What is the iPhone market share in the U.S. now? I think it might be 40 something. 55, I think. I mean, I think they may have just actually tipped over. Globally, it's much less, but the U.S., I think it's now up to 50 or something. So it seems to me the price of the iPhone versus Android doesn't matter to consumers because

it's such value. Paying $1,000 for an iPhone or $500 for Android. People don't care. Yeah, but we're talking $3,000 for the Apple versus $500 for the meta. Right. So let's assume. And the phone is your life. And the headset is your occasional hangout place.

Maybe, but it could become your life. So just tell me, Mark, what's the number? What's the line? The number you think is the magic price where people will say, $500 Oculus, I'll spend whatever percent to get the Apple. So where, because Apple charges a premium and it's a premium product.

So where would people not care and 30% of people would pick the Apple product over the other options? Yeah. What's the magic? Most they could charge without losing market share. And we're talking for the VR headset, not the AR glasses.

Yeah, we'll go with VR for now, the three-year window here. So we're here sitting here, years from now, the mass market, people go to the store. $1,500 is the magic number. Okay. So like a laptop price.

Yes, I'm trying to, I was originally thinking game consoles, obviously was the PS5, 600, 700. Right. That's not, I was thinking in double that, right? So, perfect.

Probably 1500. Love it. Yeah. I think the number is going to be 12 to 1,400 was where I was going to say. This becomes like a no-brainer. It provides enough value. it's exciting enough.

People will buy it and keep it for three years and it's a dollar a day. I always think about a dollar a day price. Like when I think about iPhones, if you buy, I think I spent $1,400 on my last one because I bought the max memory. And I know I can trade it in for $500. So it's really costing me $900. I keep it for two years.

I'm a little bit baller. You know, maybe I keep it for 18 months. But whatever, it's costing me $2 a day. I think for an average civilian, you want to get to that dollar a day. If you're not treating yourself, right? When you're at a dollar a day, people don't care because they're like, I bought a Starbucks for four bucks every day.

Who cares about a dollar? And I think that headset would be a dollar a day, would be $1,200. And if they let you finance it on the Apple card for a dollar a day at 0% interest, you will do it. Mark German, scoop machine. You can find it on Bloomberg.com. Bloomberg.com follow Mark. Can we give Mark some Twitter followers here?

Like, how do you follow Mark? At Mark German. First name, last name. In my newsletter, Bloomberg.com slash power on. And you can find all the information there. Everything gets at the same time. All right. Thank you, sir.

Thank you, sir. Thanks, Mark. Take care. All right, everybody, thanks for listening. And stick around for tomorrow. We've got an amazing interview. For sure, going to want to stick around tomorrow. We talked to the power law author, Sebastian Malaby.

It gets a little rock back on his heels a little bit about after all those years he spent talking to investors. He gets a little lesson on what investors really think. It's a great conversation, though, about that book. It's a good conversation and a really candid conversation. We even got into maybe even changing his mind about should you fund somebody like Adam Newman a second time. We'll see everybody tomorrow. Have a great time.