"I Don't Think Apple Has A Chance" - The Brutal Truth About Apple - Chamath Palihapitiya

do you have a device or an angle for Apple to go after if they were truly ambitious or maybe they are and it's just in stealth what do you think you think it's the goggles the glasses you think it's a pendant you think it's Optimus what do you think i don't think they have any chance of anything great love it i would take the exact opposite of what Freebrook says look at this chart and I'll tell you why okay here we go this chart is not This chart is not a strategy so this is a chart of Apple's revenue and what you see is iPhone has completely stalled out and so to Thomas's point where do you make money you make money in other hardware this is not a strategy of success this is a

strategy of inefficiency i lost my AirPods i need to buy a new pair oh the cables changed i need to buy a bunch of those this and that and a this and that strategy is not a strategy it's a tactical play for revenue optimization in the short term a company that focuses on this kind of revenue growth is not capable of creating something that's exceptionally unexpected that will come from a new company who has no ties to the past has nostalgia on the fact that we're going to swap out the connector type and you know book another billion dollars the what Thomas said is an indictment actually about their ability to do it when your AirPods

business is two or three times bigger than Open AI what there is internally when you try to have a strategy meeting about what to do is derision about Open AI because you're like that's small and even our AirPods business is three times big that's what some smartass MBA will say in that meeting and it'll shut the meeting down so how do you expect that culture to then all of a sudden get their act together i think it's exceptionally hard and here's the clip on Q play the clip Nick it's a great point here's the clip i'm Apple nostalgic me too bring Steve Jobs back watch this lunacy you probably saw that Johnny IV has linked up with Open AI to create some sort of future AI

device yeah I don't know what that is i don't either yeah is this a space that Apple's looking at is this a space that goes beyond what you have in the current lineup of devices something that is more personal maybe you wear it glasses i I think I mean I think we have some extremely personal wearable devices if you want something that's uh aware of your environment with with audio I think you're you're wearing one right now on on your wrist um if you want something that you can capture the environment with and see and also receive visual content you might just have one in your pocket right now um are there other form

factors that can make sense to AI uh sure but uh pretty hard to beat something that's uh with you all the time and glancable or you know provides a nice screen that you can interact with um so uh yeah I I don't know what they're working on what do you think Jimoth again I think I want to be very clear about what I'm saying that is a very competent Craig Federi very very competent executive and whoever the person beside him is that guy's I'm going to assume competent as well they're competent at making money the way that they've made money for the last 17 years with no meaningful disturbance

and I think it's just something to appreciate that after 17 years of unmitigated linear success it's very difficult to retool yourself it's like asking Michael Jordan to go and all of a sudden become an all-star baseball it doesn't work and so I think I I think it's okay though this is my point it's okay guys to have creative destruction of companies like there was probably a version of us blathering on about HP and being nostalgic about the transistor radio that they made and the you know HP12B calculator that they made and oh my god why can't they figure their out and where are we today hp doesn't even exist it's okay i mean just Thomas the fact that they launched Siri they

bought that company and Siri can't do anything other than like an alarm can barely play a song it barely can do directions i I I mean literally we're in year like 27 of Siri and it can't do anything and then I have the the Google and Gro voice and when I turn that on it does whatever I want it will load on my Pixel it loads other applications fires it off does specific tasks in it it's absolutely discretzia on your on your Pixel I have a Pixel when I when I flip open my Pixel I have to I have the Pixel 9 Chimath it's the Anaconda of smartphones pixel 9 foldable got it it's the greatest assistant ever

it's what Siri It's what Steve Jobs showed Siri i had you at nine you had me at Anaconda yeah I had you at 9 in and we can all aspire maybe get Roman extra get that extra inch thomas go ahead chimath I would argue to you that I think this management team has done it once and it's in the transition of their gross profit base which doesn't show in the chart that you just highlighted but was something that I kind of lived as an analyst covering the stock for a long time where if you remember over a decade ago 90 plus% of their gross profit was a onetime hardware sale on the iPhone and no one thought that they would ever be able to get away from the drug of

selling that one iPhone unit right and cut to you know over a decade later it's 40% right and I don't think they get enough credit for actually transitioning from hardware to a recurring gross profit base but look you might argue that that was an easier pivot and challenge than what they're going to face and so let's see whether they can do it the other thing guys I wonder about um let's I know we want to talk about IPOs but I do wonder whether Zuck buying scale for 15 billion gives air cover for other companies to really start being aggressive right and and to me as we think about circle and coreweave two companies that have gone IPO recently

it's it's kind of amazing kind of numerically that the charts are almost identical even you know on a dollar basis on a share price right because to me what it says we were talking about the dispersion of the Mac 7 before right which are going to do well which are not i expect we're going to have a lot of opinions on this over the next few years and frankly they may change we you know we may think Apple one way today it may change in a month right but I do think the market is starting to realize that there is dispersion that AI might create some all winners or some winners and then some losers right and is starting to think about okay how do I want to be positioned for the next five years what

are big open-ended growth opportunities and here comes two companies one lever to crypto right and the other lever to AI so I don't think it's a surprise to me these things are intertwined you're 100% on because here's the thing the average profit margin of the S&P 493 is drum roll please 12% the average growth of the S&P 493 is drum roll please single digits so to your point why would you belong any of these 493 companies that may turn around and one day just get decapitated by something you don't even know that's getting cooked up by a couple kids in a garage using OpenAI or Grock or what have you it just makes a lot more sense when you find investable companies in the big themes of the

future to at a minimum hedge right be less long the past and frankly make some bets about the future and I think that that's where you're seeing these IPOs just absolutely rip what is a better comparison in my opinion are the companies that are truly levered to the future themes of AI and crypto versus any of these IPOs that have happened of companies that are not and I think what you see is there's a dispersion there as well and they are being treated almost as similarly Jason as the S&P 493 it's like yeah it's good yeah it's fine they get some reasonable gains but if you're lever to any of those two

two trends you're off to the races because it's just so disruptive people don't want to be bag holding these old legacy companies