🍌 Apple’s New “TV”
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🍌 Apple’s New “TV”
Could Messi convince us to buy the Apple Vision Pro?
Hi everyone 👋 Turner back again with The Split. Welcome to all new subscribers and the 21,000+ people now tuning in every week!
If you missed last week’s email, you’re not alone - I didn’t send one. I forgot a cord for my laptop on a trip so I took a week off.
In case you missed it THIS week, Apple’s long-awaited AR / VR mixed reality device, the Vision Pro, finally dropped (with a list price of $3,500). There’s a lot to unpack, and I’m sure you’ve read every take by now. But I think its current positioning as a content consumption product is very smart and a precursor of its focus over the next few years.
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Apple’s New “TV”
It was recently announced that Lionel Messi, 2022 World Cup champion and arguably best football / soccer player in the world, would join MLS team Inter Miami next season. Apple also just announced its new Vision Pro mixed reality headset (If this is news to you, The Verge did a thorough review on it here).
I think these two announcements are much more related than what meets the eye.
First, according to research from Matt Ball, Apple spent at least $40 billion building the Vision Pro since 2018. It seems like a massive amount. But it’s not that uncommon to invest that much to build a new computing platform:
Meta has invested $56 billion in its Reality Labs division (VR)
Amazon likely invested over $43 billion in Alexa between 2012 and 2022
Google Cloud has lost over $30 billion since inception
It underlines just how profitable new platforms can be. Some other numbers that stand out from the piece:
Meta estimated Apple’s IDFA / ATT changes cost it $10 billion in profits in 2022 alone. If only it owned the platform it was serving ads on…
In the US, iOS has 60% market share, is 75% of new US smartphone sales, and 90%+ share amongst teens.
Apple Pay has an estimated 90% share of mobile payments on iOS devices and 7% of all online payments. This roll-out has been slow but measured, and aided by the fact Apple controls the ecosystem.
Roughly $700-800 billion was spent via iOS apps in 2022, or 0.75% of global GDP.
Since the iPhone’s debut in 2007, Apple has generated roughly $915 billion in operating cash flow.
Speaking of new platforms, since 2012 $87 billion has been invested into crypto / blockchain startups. 70% of this occurred in the last 24 months.
The reason why: “Were Apple to take 30% of every trade, the value of the NFT would have to grow by 43% in between each transaction for anyone other than Apple to be profiting from the NFT’s price appreciation.”
And finally, since 2010, Google has paid Apple $120 billion to be the default search engine on iOS and Mac, or over 75% of Apple’s $145 billion R&D budget during that time. It’s 2022 payment was over 20% of Apple’s net income, or 75% of Apple’s entire R&D budget. Its estimated to be 25% of all revenue it generates from search queries on Apple devices.
My other big non-obvious takeaways are how the iOS and Android business models nudged the largest companies built on their platforms into ad-based business models since it could take no commission. It’s also surprising just how well Amazon’s ad business works inside its core product, and the potential to weave into Prime Video, Alexa, and many of its other moon shot bets.
And ads is what brings me back to Apple and the Vision Pro. If you scroll the website, the primary use cases shown are super-imposing a web page and a video streaming service in a living room. Apple is telling us Media will be a big first use case. And my assumption is it will have lots of overlap with its sleeping advertising business.
New platforms are extremely valuable. Its often worth it to spend obscene amounts of money to access the profit pools they unlock. And by focusing on media use cases in the beginning, Apple sets the stage to immediately start monetizing its recent investments.
It doesn’t need to sell a TV - it inserts itself in front of every other TV. The current Vision Pro has limited use cases, but the tech isn’t quite ready for true spatial computing yet anyways. A focus on content gives immediate and relevant monetizable mass market use cases.
While Messi comes to the US to join MLS team Inter Miami, Apple also has MLS streaming rights through 2032. Apple reportedly locked in the deal for only $2.5 billion, plus Messi’s reportedly getting a cut of all new MLS Season Pass subscription revenue. (It also sets a new precedent: talent commanding a cut of streaming revenue, just like Michael Jordan getting royalties from Nike’s Air Jordan’s.)
Apple needs a creative hook to convince Americans to spend $3,500 on a new device. With soccer in the US set to explode, watching a premium live stream of Messi with your friends on your Vision Pro’s (an example below) could help Apple kickstart initial adoption.
🚀 Product Launches
Arc Launches Boosts: Arc, the web browser for cool kids (Mac only), just launched Boosts. Boosts let you remix or edit any web page. Want to change the color of a button? Want to mute the 🧵 emoji on Twitter? Automatically the intro sequence on (HBO) Max? Anything is possible with Boosts.
Someone also launched arcboosts.com - an easy way to browse them.
Stripe Launches Charge Cards: This adds credit cards to its issuing product, which currently offers debit cards amongst a host of many other features like streamlining all bank relationships and compliance workflows. It’s a good reminder that Stripe is the most developer-friendly way to launch a programmable financial services product.
Assembly, A Marketing Calendar with Superpowers: Many marketing teams hack together a content calendar, generally inside a product like Notion. Assembly is exactly what marketers need right out of the box, plus takes it a few steps further. It integrates manager approvals, includes AI content generation, and pulls in all your analytics. They just launched on Product Hunt today.
Microsoft Launches Fabric: It’s new data and analytics platform unifies information across the entire Microsoft product suite. There’s some nuance, but it likely slots alongside Snowflake in those very large enterprise IT purchasing decisions.
Amazon to Launch Prime Wireless: It will offer free mobile service to US Prime members (there’s rumors pricing may actually be $10). Amazon will wholesale coverage from other providers, with Dish Network appearing to be the front runner.
It’s an interesting time to get into wireless. Some believe the traditional cable bundle itself is not actually profitable anymore, but it is a great acquisition tool for phone and internet service. It will be interesting to watch competition in the telecom space as cord cutting accelerates. And also worth watching if Amazon subsidizes phones. It can probably outspend the telco’s if it wants to.
🔗 News and Charts
Crypto is Down Bad: Crypto VCs only raised $500 million through May 16th of this year, down 98% compared to $21.6 billion in all of 2022. Considering how fast most funds were deploying, a few more quarters of this and there will be a significant supply/demand mismatch. If you like crypto long-term, that could represent a favorable time to enter the asset class.
19% of All Startup Rounds in Q1 Were Down Rounds: The broader startup ecosystem also saw one of its worst quarters on record. Nearly 20% of all financing events had a lower valuation than the prior round.
Bridge Rounds are Nearly 40% of Funding Rounds: And not just down rounds, startups are also raising money at the same valuations as the last round. It’s a good reminder that, while down rounds and bridge / extension rounds are often seen as a bad thing, this really just highlights the excess from 2021.
Startup Equity are Now Value Stocks: There is good news, at least according to Saccra. The chart below compares current startup secondary market valuations against what they may be as a public company. The results show startups are much more fairly valued than in 2021, and even significantly undervalued in some cases.
Series B Startup Burn Rates Down 69%: Part of this bottom in valuation is related to startups improving cash flows. New data form Carta highlights how later stage startups in particular have cut burn rates significantly from highs in Q4 of 2021.
US Money Supply Sees Biggest Drop Since Great Depression: Driving a lot of this drop in startup valuations (plus much more) is the historic drop in money supply, down 10% year-over-year. Less money circulating in the system means less risk taking, which among other repercussions, has a disproportional impact on startups.
The Societal Effects of Shanghai’s 2022 Lockdown: A new report on the effects of the 24 million-resident lockdown shows nearly 4% contemplated suicide, depression and anxiety affected 26 and 20%, respectively, and 65% reported food insecurity.
People Still Use IBM Cloud: Although declining fast, this will always surprise me.
Gen Z is Changing Dating: 18-24 year old’s make up over 50% of Tinder’s userbase, and 75% of them feel like they’re changing dating standards. According to the data, they’re 32% less likely to ghost someone, and 77% respond within 30 minutes and 40% within five minutes. In a romantic partner, they’re prioritizing authenticity, loyalty, and mental health. "We believe this generation is driving the most change that we’ve ever seen in how we date, who we date, and what dating actually is."
Facebook Passes Instagram in Popularity for Creators: I have no idea how to interpret this change. Anyone able to share in the comments why this is happening?
US Spending on Bikes + Accessories Up 620% Between 2020 - 2023: Over 10% of Americans engaged with bicycling in a new way since the start of the pandemic. Is this here to stay? I hope so.
Metaverse Land Prices are Down Bad: Very surprising that dropping $3 million for land in a metaverse with double-digit active users wasn’t a good financial decision.
Snapchat Passes 200 Million Monthly Users in India: Over 120 million of them watch content on Stories and Spotlight, with Spotlight time spent in India tripling year-over-year.
TikTok is Testing Tako, an AI Chatbot: Tako can be activated from any video, and appears to answer questions related to the content within. ByteDance joins the long list of companies experimenting with conversational AI. It’s always looked for ways to enter Search, and while unorthodox, this is another angle.
Phoenix Suns Drop Cable, Can View Games for Free: In one of its first bold moves, the new ownership group has struck an agreement to cancel its television rights deal. They’ll instead air games for free on free local channels, which is expected to increase the audience from 800,000 to than 2.8 million. I’d assume this means we see the Suns put more of a focus on a) their own branded advertising deals and b) more in-person monetization strategies. It also may be the first of many other pro sports teams letting their local media rights deals expire.
It Now Costs $500 Million For a US Soccer Team: Egyptian businessman Mohamed Mansour partnered with local tribe Sycuan Band of the Kumeyaay Nation to bring an MLS team to San Diego. To me, this rapid rise reflects the changing media landscape as the unbundling of the cable bundle has accelerated over the past three years. And this is all before Messi declared he was heading to the US. h/t Tetsuro Miyatake for sharing!
Why You’re Losing More to Casinos on the Las Vegas Strip: Players lost $1 billion playing blackjack at Vegas casinos last year. This is with fewer tables, and worse player odds and higher minimum bets. The changes are subtle, but are part of a broader initiative to make Vegas more of an upscale destination and attract customers with bigger wallets. It likely opens up opportunities for anyone working on similar products with a lower cost structure, like mobile gambling apps (which might just benefit the casinos themselves).
1 in 4 Female Physicians is Diagnosed With Infertility: This number seems very high. And its surprisingly only 2x the rate of the general public, which also jumps out to me as a very high number.
Americans Vastly Over and Under-estimate Societal Groups: You’ll have to zoom in to read this on your phone, but it’s eye-opening. Case in point: the average American thinks 20% of the adult population has a household income over $1 million, when the number is essentially 0%. The largest discrepancy is veterans: the public thinks 40% of Americans adults are veterans compared to the reality of only 6%.
Carbon Removal Pre-Purchases Increase 40x YoY: 3.9 million tons of CO2 removal have been purchased, and 74,094 have been delivered, or less than 1.9%. I’ve always been interested to see how well Carbon Removal works vs just not producing the carbon in the first place. Looks like I’ll get to see soon!
Student Debt Repayment to Resume in August: After six pauses and extensions since March of 2020, the average student loan payment of $393 for over 25 million Americans will resume in August. This equates to roughly $188 billion per year, which will probably reduce other discretionary consumer spending (and I would assume a death knell for crypto and other assets discussed on r/WSB).
45% of Parents With Adult Kids Pay $1,400/month for Rent + Bills: A directly related stat to the above, many do so at the expense of their own retirement savings. Parents over a decade from retirement average of $2,100 in monthly support, while contributing $643 to their own retirement. 25% of millennials rely on their parents for rent, and over 33% for at least one monthly bill.
Here’s what % of parents contribute to a specific category:
China’s Record 20.4% Youth Unemployment Rate: Things aren’t much better in China. h/t
at.But Those That Have Money, Are Spending It: China’s shoppers are some of the world’s most influential, accounting for a fifth of the $325 billion global luxury market. The average luxury client in China is 29 years old (five years younger than the global average) and spends $800 per week (30% more). Gen Z is expected to propel China to become the world’s top luxury buyer by 2025, passing the US and Europe.
Blizzard’s Big Error: Back when Hotmail was a startup, it offered Blizzard 10% of the company in exchange for free office space. 14 months later, was acquired for $400 million. h/t Julian
Four Facts on Big Food: Despite recent expansion of SNAP benefits, which are needed and critical if and when used correctly, there’s still a lot of corruption in the US food system:
Soda companies spend 11x more on nutrition than the NIH
95% of the panel who created the most recent nutrition guidelines had financial ties to food or pharmaceutical companies
In 1963, the Sugar Research Foundation (SRF) paid Harvard researchers the equivalent of $50k to refute sugar's role in heart disease, instead blaming cholesterol and saturated fat
80% of American subsidies go to corn, grains, and soy oil. Cigarettes (tobacco) receives 4x more government subsidies (2%) than all fruits and vegetables combined (0.45%) despite current government guidelines recommending 50% of Americans diets be filled with fruits and vegetables.
💌 ICYMI
Quick headlines in case you missed them:
Sequoia Is Splitting Into Three VC Firms
Nvidia Demo Brings Intelligence to AI Game Characters (video)
Is Ozempic Also an Anti-Addiction Drug?
340,000 UPS Workers Vote to Strike
📚 Long Reads
Why AI Will Save The World: You’ve probably already this. But if you haven’t: “AI is a way to make everything we care about better.”
14 Charts on The Story of AI: A data-driven look at what’s happening in AI. This chart shows that despite the headlines, over 75% the money going into generative AI are into startups over four years old.
How to Make SEO Optimized TikTok’s: Last year I wrote about how TikTok SEO was going to be huge opportunity. My friend Alex wrote a short guide on how to do it. The tl;dr on how TikTok ranks content:
In-video text
Speech
Captions
Hashtags
Automated closed captions
Find relevant keywords with medium and growing search volume + high relevance to your topic. Prioritize in-video text, and hashtags don’t seem to matter much.
All The Problems With US Healthcare: My friend Nikhil breaks down what some of the core issues (there’s probably more) with the US healthcare system. The list is long, and includes variation in rules between states, too many health systems, principal-agent problems, size as a means to negotiate pricing, data interoperability challenges, labor issues, and a system that only allows incremental fixes.
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Over 60+ companies are hiring 200+ open candidates, with experience across every function (engineering, product, growth, operations) at the companies above + many smaller startups you’ve heard of.
🍌 Monkey Business
🍌 Apple’s New “TV”
The societal groups chart blew my mind.