Will Hardware Companies Turn Into Ad Companies? HP Is Launching an Ad Business With Laptop-Targeted Ads

0:01I'm curious on your thoughts on this and I think this would be a fun topic to discuss is do you think hardware companies are going to turn to ad companies because I saw how HP is launching ad business with their laptop targeted ads. You know, like imagine just using your laptop and then you're trying to see more and more ads. I think everything's going to change. I don't know. So I'll kick it back over to you. But like what I mentioned, that's kind of related. But I'm like, okay, software will become agencies, agencies will become software and vice versa. So I'm looking at this. I'm like, you're going to try to maximize your shareholder value wherever you can.

0:33I don't like the concept of hardware companies turning into ad companies unless there's a deal for us and users. I'm not saying we should get a cut of the ad revenue, but the hardware should be cheaper. When I go to places like Brazil, people always ask me to bring them iPhones, and I don't want to break the law because they're trying to avoid tariffs and stuff, and they want me to smuggle in iPhones. Because an iPhone in Brazil costs way more than it does How much does it cost? I forgot what the rate was, but like at least 20, 30 % more. Wow. So like, keep in mind their currency exchange is worse.

1:07People make less money. Yeah. And then iPhone costs more. You basically can't afford it. You can't afford it. It's a huge luxury there. Huge luxury. Yeah. Ultra-litch have them. Yeah. You know, middle class to poor people. They tend not to buy them or they get older models. Yeah. Because Apple reduces prices. But I know there's a lot of people, including me, that would be willing to buy hardware if it was a lot cheaper. Like if my iPhone was free, but I got ads all the time. I would take it. I would take it, yeah. And it could be on my home screen or whatever. I would really take it. Now, if there was an ad before I would make a phone call, I would not take it.

1:45That's just causing me more time. You're just saying there has to be a win for the consumer. It can't just be, you're just trying to maximize shareholder value. Yeah, but I think Apple would make more money if they just made their iPhones free and they made revenue from ads. At least in specific regions, like the United States where the ad revenue can be high. Who knows, they might. I mean, they haven't been innovating recently. So it's an easy way to juice more revenue without the innovation. I would slowly do a trial run. You know, this version of Apple doesn't feel like the 1990s quite yet, but it feels like it's kind of going in that direction.

2:15Not quite yet, right? I think it's still a ways out and they have a lot more infrastructure. But I just remembered the slip in the 90s where Apple just started to go straight down. Yes. And then the PC went straight up. So we'll see what happens. But to me, it's like, Like, sure, they're part of the Magnificent Seven. We'll come back to this. But like, when you look at the companies who are innovating right now, like Meta's pushing quite a bit in terms of how they're poaching talent, right? And then you look at NVIDIA, they're innovating, right? Even Google, they're poaching talent, putting an arm and a leg.

2:40Yeah, and so like, they're pushing, but I'm like, where's Apple pushing, right? Microsoft's pushing. Microsoft's pushing. You could say Amazon's pushing too. Dude, I'm pretty sure Apple has released AI features on their iPhone. They suck. I don't use them, do you? You know what you can do? You can make an emoji. Yeah. You can make an AI generated emoji from it. That's all I know you can do. And Siri is still dumb as a rock. Yes. And then with the typing, I just use Grammarly on my iPhone. You use Grammarly on your iPhone? Uh-huh. Why do you need Grammarly on your iPhone? So when I'm scheduling out tweets, like if I'm on a plane and stuff and it's really long.

3:14Uh-huh. Because I got the smaller phone. So sometimes I mistype or like push buttons. Grammarly helps catch it and fixes it. You know what's weird? Do you use autocomplete on your phone? I don't use autocomplete or anything like that. I don't like it. And you know how you can like slide the thing? I hate that. I can't do that. Where you're squiggling your hand so you're not going up. But I also think because we're older, we just like to type it out. I do see quite a few younger people using the thing where there's zigzag with their finger instead of lifting it up. They're more efficient than people like you and I.

3:43We're actually getting old. We're middle-aged. We're getting old, yeah. I'm still not 40 yet. But anyway. Okay, back to you. But yeah, I genuinely believe looking at these companies like Apple, I agree. They're not really innovating. The iPad really hasn't changed. A lot of their products haven't changed over the years. I don't know if I'll upgrade my iPhone in the future. What am I really getting at this point? They're not doing anything new. A lot of these hardware companies that have the usage should just start showcasing ads. Imagine Tesla, there's this big screen. Why doesn't Tesla put more screens in the RoboTaxi and just make it even cheaper?

4:22Usage would go through the roof. I think the thing Apple has going for them right now is the ecosystem lock-in. And so it's still very convenient, but how much longer are they gonna have that for? Yeah, but I agree with that. But I think if they can start integrating into more home products, like automotive and stuff like that, I do believe they'll still be able to keep the lock-in. They just need to partner with other people who have the software and just integrate that software within their organization. Like I said, Apple building a search engine, they just partnered with Google, right? They're partnering with ChatGPT as well.

4:54The problem is they just need to execute on some of this kind of stuff. The big opportunity for Apple is to figure out how to just monetize all their users. And I believe the ad ecosystem is probably one of the best ways. I look at the same thing with Google. Their ad ecosystem makes them so much money. If they just figured out a way to get their Waymo costs even lower and they just, I know they're losing money, but break even on Waymo and make it where people are getting served ads, they would make way more money from that than anything else. They already have your email address. You're using the app.

5:25They already have all your Gmail info. I'm sure they're going to integrate ads in there because that's a little screen in the middle. Yeah. Right? You can either pay to not have ads or you can just leave the ads there. Yeah, I would pay to have ads everywhere. I don't mind ads. We're also in marketing. No, but even then, like some of my subscriptions, you know, like for the television streaming, I have ads and I'd rather have the ads and get the cheaper rate. Dude, as a gamer, I used to hate ads gamers block all ads I had every ad block everything I was like totally locked in so and speaking of gaming I was watching a video of Elon playing Diablo yesterday he's number one in the world in hardcore now for Diablo what that means is what is that yeah so if you so you know how like in a game if you die you can just respawn and go get your gear and like you can just keep going right I do now okay now you know well you know any game right if you die you can usually respawn okay so if you die let's go back so if I'm at level 5 not level 1 I don't know what levels these things go up to.

6:21And I had all these tricks and gears and trinkets, whatever you want to call them. And I die. Do I just go back to level five and I can just pick up all the stuff? Yeah, yeah. You stay at level five, you can pick up your stuff, right? You have to go find your corpse and pick it up, right? That's how it works in Diablo. Can someone else pick it up for you, before you? No, well, depends. If you're playing PvP, which is totally different. If you're playing PvP where I can kill you and then if I kill you, then your gear might come out and I'll steal your gear, right? But normally people can just pick up their own stuff and they don't have to worry about getting jacked.

6:49Yeah, exactly. So it's very safe, right? So he's number one in the world on hardcore. Hardcore means if you die, you lose it all, right? Including your level? Everything. Everything's gone. You have to start a new character. From level zero or one? Yeah, all the way down to level one. So what level is he? He's maximum level, number one in the world. He has the best gear. But the reason I even bring this up is one. How does this guy have time for games? People are wondering that. What I've read is he blocks his days into five-minute increments. He's doing the highest leverage things per five minutes, right?

7:18The other thing is when you look at, he always reasons from first principles, right? So I'm like, okay, I was thinking about this yesterday in the shower, right? I was like, think about how Elon plays like Diablo. I'm like, if he's reasoning from first principles, he understands that all he needs to do is spend a ton of his money on the richest gear because you can buy the gear, right? How much can gear cost? Like five bucks? Oh, dude, when I was 13 years old, I sold a helmet in a game for$3 ,000. A helmet. 13, how much is a silly helmet? This is not even a real helmet or a virtual helmet? Virtual helmet.

7:47This is a waste of money. Whatever. Somebody, some guy bought it for me. If your mom knew that you were - She did know. She did know. That you were buying stuff for$3 ,000? No, I didn't. I didn't buy. I sold stuff. I never bought anything because I thought people were idiots for buying it, right? But if you value your time like Elon does and you're the richest man in the world, you just buy the best gear. How much is it going to cost you? Like 20 grand at most? Maybe 10, something like that, right? So you think he spent like 20 grand on the gear? I think he spent a ton of money on the gear and then you can basically, like, you're unstoppable, right?

8:13And that is a very simple way of first principles. I just need the best gear and then I'm unstoppable. So it's kind of like a cheat code. Yeah, basically. So if I spent like a million dollars on gear, I could beat Elon. Yeah, well, I mean, you have to play at a high level too. So when I see him playing, he's playing on a 55-inch screen. And he's like, you can see his actions are, like he's moving very quickly, right? And he's like hitting his keyboard a bunch of shortcuts really quickly. Now guys, you can correct me if I'm wrong here, but I think directionally I'm correct because I played many versions of Diablo.

8:40So there's more than one version of this? He's playing Diablo 4, yeah. I played Diablo 1 when I was like eight, nine years old. Then there's Diablo 2 to Diablo 3 in DL before. Oh, it's like one of my favorite games. There's a lot of versions. What's your favorite game? Monopoly. Oh, yeah. Real estate and money. I love Monopoly. Makes sense. I even paid for it. Dude. On my phone, it's like a few bucks. Before we move on here, like talking about, I was debating yesterday with a friend and then we were talking about like, oh, you're throwing money away renting or whatever, right? And then I actually, you used to own a bunch of property, right?

9:15It's a waste of money. You're better off renting. Yeah. Talk about how your philosophy changed. Because the way we were brought up, there's a little investing lesson that our experience here was our moms and dads told us that you should always buy a home. You're throwing away money renting. You're always going to make money. And then I had my reasons, but I want to hear your reasoning. I know we can move on from here. If you've ever built a website, you know how tough it can be to keep a strong design while ensuring site performance is fast. That's where Framer comes in and it totally changes the game.

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11:15Shopify lets you easily create email and social media campaigns to reach customers wherever they are, whether they're scrolling or strolling. If you're ready to sell, you're ready for Shopify. Turn your big business idea into a game with Shopify on your side. Sign up for your$1 per month trial and start selling today at shopify.com slash marketing school. Go to shopify.com slash marketing school. Shopify.com slash marketing school. Sure. So I'll use one of my homes as an example because I know the numbers quite well. Property tax, a little bit less than$20 ,000 a month. So let's just round to$20 ,000.

11:51A month. A month. Mortgage,$39 ,000. It's not too leveraged. It's really actually very under leveraged. Yeah,$39 ,000. So let's just round up to$40 ,000 to keep the math simple. So you're at$60 ,000. Maintenance, gardening, pool, property manager, which is a contractor because no one wants to deal with it. and electricity, water, roughly five grand a month. I'm just rounding. I'm probably off by like no more than three, four grand on the whole thing. So let's call it 65 grand a month. All right. Now the home is a$30 million home at this point. We've spent a lot on renovations. So let's call it, I have$23 million in equity, $7 million mortgage.

12:36Technically the home's probably worth close to 30 to 35. but let's just go with 30 and we're just going with my rough costs. So when you're looking at the math there, that's$23 million sunk costs that's put into the house that I'm not getting back because that was the equity, the cash I had to put in. Then you have still with that, you have the monthly payments of roughly 65. And again, I'm off by a few grand, call it two, three grand, but let's just go with easy numbers. on the 23 million dollars you know because i was talking to my wife i can go rent a house like a nicer house uh it won't be as nicely done up but it'll be bigger land will be bigger it's worth more but it'll be older um it's still in beverly hills and let's say i can rent easily three-year contract 120 140 grand a month they could just negotiate that now you may look at that as let's say I get it for around 130.

13:35We'll go in middle point. And I'm at 65. That's roughly double what I'm paying. But the 23 that I have down. Opportunity costs. That 23, I wouldn't say easily, but I would say I'm probably like 80 to 90 % certain that I can ink out, call it four or five million dollars. Four on a worst case scenario, five on a good case scenario without any growth, just like buy businesses and ink out that much in profit. Plus there's opportunity to grow, but some could decline. But if you just keep it simple with just say four on the really low end, which would be a terrible deal for me. And I usually wouldn't spend 23 to only make 4 million in profit.

14:15But even at 4 million, it's just like, okay, 130 a month. You know, when you start looking at that, that's less than$2 million a year. And you're just like, I'm making four in profit. plus that those businesses scale too over time yes because the other thing too is if you look at the real estate oh well you're going to get a return okay what are you getting like four or five percent a year on real estate maybe maybe maybe a little better but on business what is your return that you're getting on it that that i'm getting on my business i'm just talking about like in general for people your return is going to be a lot better than four or five percent a year well not just that if i spent that money buying the businesses the businesses are probably worth double when I integrate them in.

14:57So if I spent 23, I'm probably inking out conservatively 35, 40 million just right there off of thin air, just from the purchase. But we usually don't buy stuff unless we know we can cut costs and grow it. So I would hope the 23 turns into at least 50 and turns into at least something like on the low end, five, 6 million in profit, if not more. My point is your internal rate of return is going to be a lot higher. The other thing too, is if you buy homes and things like that, then you have to actually manage it. It's like when Sam Oven's like, well, if I buy a TV, then I have to watch it. So it's like, it's stuff.

15:32It's cognitive load. Yes. And that's why I end up believing that we shouldn't own any homes and we should just rent them all. I believe, okay, and I think you're doing this, but I believe owning a home for your family is fine, but I think owning a bunch of homes just is a pain in the ass for me. So Eric and I were having this conversation because the economy is really bad. I'm like, dude, do I sell the home and just put all that money into business? And Eric was going through some tough times with his mom. She passed away recently and it gave him a different or a unique, a new perspective on life, I would say.

16:07And we were talking, he's just like, you know, he's like, you've made, I'm not the richest person, but he's like, you've done okay in business. Your life is decent. He's like, are you really gonna die and remember you making, you know, taking that 23 and turning it into 50 or$60 million? Or would you rather have a really nice house with amazing furniture? And like, when I say amazing furniture, I think our furniture bills like$1.7 million just for furniture. Which Neil didn't pick, by the way. I didn't pick any of it. I would have picked Ikea furniture if it was up to me. Some decisions, and I'm not hating on it, you know.

16:46There's other things that I spend money on that are a waste too. But Eric's like, would you rather have your kids really happy and have things like a theater or whatever they want in a house and a big backyard where they can play and play basketball with them and have those experiences? Or would you rather just have more net worth? And the old me would have had more net worth, but I think Eric was spot on because I now will have better memories with my kids because right now we don't have a yard and they want a yard. And you'll pay anything for those memories down the road. Correct. And the furniture and stuff like that, I think that's a pure waste.

17:24But the only reason I did it is I'm like, if I want to sell it, it actually makes it easier to sell the house, believe it or not. Yeah. No, I believe it. Yeah. So then you just get a premium. It's a product, just like the cookies. Correct. Yeah. Anyway, that's what I would say. A jack of all trades, guys, is better than a master of one. See you tomorrow.

17:47Thank you.