Earnings Season, Palantir Rips, Has Apple Topped, Google Misses, Penny Joins a16z

29:30And it wasn't available for months after the phone started shipping. And so you could imagine in America, a lot of people saying, well, yeah, I am excited. I do want to try that, but I'm going to wait until they, until it's actually available. Now, obviously the negative, the negative word of mouth is, is very real in the sense that people that do have access to Apple intelligence are posting screenshots of the, uh, you know, completely botched summaries of, um, uh, you know, which is, I'm sure Apple intelligence has, you know, other features that maybe are valuable, but... Yep. And so if we go to Unusual Whales, Unusual Whales summarizes the Q125 earnings for Apple.

30:15Earnings per share were at$240. This was a beat. They were estimated to make$235. Revenue was$124.3. This was also a beat. And iPhone revenues were down at$69 instead of$71. And most importantly, down year over year. So their golden goose, the iPhone, is not selling as well as it was last year. It didn't fall off a cliff. If you look at US, it's just completely flat. It's a completely mature market. Everyone that has an iPhone has one. Everyone that wants one has one. And they're just continuing to selling the same amount. And so if you look at what Ben says, he says, First, it's notable that iPhone sales could be down year over year, even as Apple reports both record revenue and record profits.

30:59The story, of course, is services as it has been for a while now. It's striking, though, that services doesn't just mean record profits thanks to the higher margins, but also record revenues thanks to the absolute number. The long-run increase as a share of Apple's revenue on a trailing 12-month basis to smooth out seasonality has been relentless. And so Apple has been a tear with their services. Of course, this is like the App Store. Second, Greater China's year-over-year revenue was down for the sixth straight quarter. Just as it has been for nine of the last 12, I graphed China's trailing 12-month revenue to avoid seasonality with year-over-year quarterly growth.

31:40And so revenue has been declining in China for several quarters. The key takeaway here is that the recent decline in revenue isn't a new issue, but actually a continuation of a trend that started nearly a decade ago. The iPhone 6 took China by storm, and Apple built up a large user base, but it never really penetrated beyond the tier one cities. The one exception was the Huawei chip ban in 2020, which drove premium Android users to Apple. Apple has done pretty well to maintain its customer base. One thing to note, China is no longer adding people to its major cities. There's actually been an exodus from cities, which is a whole other issue in China right now, leading to Peter Zaihan has a good bid on, you know, basically how much oversupply there is from a housing standpoint in Chinese cities.

32:31And so Apple is not going to get the benefit of people moving to, you know, tier one cities and telling themselves, oh, I should get an iPhone now. It's just not happening anymore. Yeah. Yeah. And so there's a little bit of a question here. What's missing is the long pins to China's middle class and Apple's massive opportunity in the country that used to characterize these earnings calls. So Apple used to say, oh, when we hit China's middle class with our iPhones, that's when we're going to be really ripping in China. And it just kind of never happened. Apple is hoping for a bit of a bump from government stimulus, but that's a pretty weak sauce.

33:09I love it, Ben. Get them. The reality is that China as a growth opportunity for Apple seems truly finished. The best hope for now is that revenue doesn't decline too precipitously. And then lastly, Apple's executives, including Tim Cook, mentioned a couple times that Apple had better growth where Apple intelligence had launched. And Ben is putting him in the truth zone. I'm not buying it as a real driver. Cook's framing suggests that China's growth will return when Apple intelligence arrives. I think it's more likely that China's decline was independent of Apple intelligence being there or not, but that at least it gives the company a chance to point out that non-Apple intelligence countries grew less on average because they include China.

33:50In fact, Europe outgrew the US in iPhone sales and they don't have Apple intelligence at all, with the exception of the UK for a couple of weeks in December. And so why would iPhone sales grow in Europe where they don't have Apple intelligence, if Apple intelligence was that important? And so it's a very, very good, it's a very good question. And I like that. And then he drops these massive research reports from OpenAI Deep Research. And it is a remarkable report. It's great. It pulls in, you know, product segments and deep dives and can create not just bullet points, but also tables. And it really does a good job of analyzing it.

34:35But what his conclusion from all of this was, was that while it was impressive, there's nothing novel in the analysis and it only really worked. He says, it's also the case that the reason why the second answer is so good and insightful is precisely because I gave the model specific talking points instead of asking it to come up with its own insight. In other words, the model does a much better job of filling out a thesis than coming up with one. And so it seems like it's great. Deep research is super great for, hey, I already read the report. I understand this. I have a thesis. I just need you to go and pull together all the different quotes and data that support and substantiate that thesis as opposed to really just saying, hey, Apple research report, go.

35:25you're not going to get something as not to be clear that's the way we use it too we use it to speed up the process of researching the show but then ultimately uh the takes are artisanal so exactly exactly and so yeah i mean but ben actually talks about that where he says um in in in 2022 before chat gpt uh ben was talking about how ai will affect uh publishing and just communication and the information economy. And so he's broken down the value chain into five steps, creation, substantiation, duplication, distribution, and consumption. And so there's this evolution of the value chain where it all started with when writing, though unbundled consumption, increasing the number of people who could consume an idea, then the new bottleneck was duplication.

36:17And so the printing press removed the bottleneck for distribution, dramatically increasing the number of ideas that could be economically distributed. Then the new bottleneck was distribution, which is to say that was the new place to make money. Thus, the aforementioned profitability of newspapers, because the printing press could copy, but then you needed to actually get it to someone. So owning a distribution line was very important. Then that was removed by the internet, because this made distribution free and available to anyone. And there was one final bundle, creation and substantiation of an idea.

36:52And so you have an idea, how do you actually create it? And then the internet makes it free to distribute. It can be duplicated, obviously, through the printing press and through the internet, and it can be consumed anywhere. And that is exactly what AI does. It takes the human's ideas, the creation and substantiates them and uh obviously this is most prominently viewed in uh the ai generative image models because it would take me forever to paint a painting of a sci-fi thing but if i come up with a good prompt i can just get it instantiated immediately i can post it on twitter it's distributed and if it's a good idea everything else downstream is taken is completely egalitarian and taken care of and so uh it's interesting that now he has the ability to have a good take about Apple and substantiate it more quickly with AI in some ways.

37:43I don't think you will be using this. But one of the issues with deep research right now that was pointed out by some poster, I don't recall their name, but they were saying that what deep research is doing, it doesn't necessarily have access to all the things that it's sourcing from. And so it will summarize the abstract of a source, which is not, or a specific study, something like that yep which isn't necessarily the actual material that you want to pull from right i ran into this fact is just kind of like a teaser for the actual piece maybe has some light data yeah and so yeah bringing your own sources bringing your own facts i mean a lot of these like the best research reports on apple are often by uh analysts that talk to the ceo on background or have phone calls.

38:32I mean, at Citadel, their global macro team, one of their public markets teams conducted thousands of CEO interviews to understand how they were thinking about the business while they were trading the stock. And this happens all the time. Some big hedge fund calls up the CFO and says, hey, tell me how things are going off the earnings call. You can't share material non-public information, but you can get a vibe check from this person and get a ton of more context and more information that could inform your decision. And so if that's not on the internet and it's not baked into the LLM and it's not available for the LLM to pull, you're never going to get that analysis.

39:13So there will still be a huge alpha and huge premium, not just on the interesting thinking and being able to puzzle things together, which I think humans are still uniquely good at, but also just bringing new facts to the system, bringing new tokens. You can't imagine a future though, that the time it takes for Ben Thompson to write a essay, dropped by 90 % because he says, hey, basically look at my writing style, look at my reporting and have access to my entire database of content. Because he does a lot of this, referencing back old material, old writing. David Senra does the same thing with Founders Podcast where he says, hey, the McDonald's founder does something very similar to Brad Jacobs.

39:57And so it's like models can do that pretty well in terms of helping draw comparisons. But ultimately, yeah, the delivery and the stamp, I think, matters a lot, especially with Ben's work. Yep. And so I think we should close out with a post that you ripped yesterday that got over a million views. Jordy says on X, Apple is giving up on VR. their current marketing is laughable and they're sitting on$162 billion of cash. At this point, they should just buy an F1 team, sign Verstappen and win some championships. If we're entertained, maybe we'll forget about the company they used to be. Okay, let me break it down.

40:39So this, I think it resonated just because it's a funny idea, Apple getting into F1. And I would rather them spend their brand marketing dollars on doing, you know, having an F1 team than doing these Genmoji campaigns. Completely agree. Super cringe at this point. Oh, yeah. And so this struck a chord within the VR, AR, MR community because they were saying, you know, a lot of people are saying they're not giving up on VR. A lot of people were saying, well, I didn't even do VR. It's AR. And, you know, no, it's actually MR. So a lot of sort of disagreement on just their product strategy in general.

41:17We had been referencing, I think two days ago, Mark Gurman's article about how they did they did kill a project internally related to that would have been competitive with uh meta ray ray bands which no no no uh not that it's a it was a uh like a pro level device for connected to your mac to replace your six screen giga chad finance bro setup which is admittedly like a very niche product but ben thompson would talk about it and he said this is exactly what I wanted. This is the product that I wanted. And for me, I want that product too. I would have loved it. But I mean, there's a lot of reasons they could have killed it.

41:57We don't even really know. And they got so many projects on yours. But I think the sentiment is correct. They didn't get across the finish line. Yeah, what seems obvious is that it appears that they don't have the conviction to continue with the pace at which they had been spending on the development of future products that may not be hits right and so it's easy to to i think the winner out of this is certainly not consumers uh but it's more so you know somebody like zuck who's said i'm willing to spend tens of billions of dollars to own the next personal computing platform so um and uh and yeah and then somebody took issue with with first happen.

42:41I don't make F1 driver signings. So feel free to sound off on who you think would be a better fit. But but yeah, and then the irony was that yesterday morning, they also launched this invites product, which is basically somewhat of a clone of of part of all, I do think it's a pretty different audience. And I don't see Apple just crushing on building a a social media app, which which their invites product is in some ways. But anyways, I think they're, you know, I would like, you know, the timing of all of this iPhone sales peaking and actually dropping. We don't know if they're actually peaking yet, but they hit some type of local top.

43:24And then simultaneously, like not having the conviction to really go founder mode and, you know, spend the necessary R &D dollars to develop, you know, really own that next category. You know, only time will tell, but, um, yeah, this is a company that I just Apple, you know, somebody in the comments also phrased it as Apple's like a new luxury brand now where they make the best phone, but they're no longer the company, the hardcore zero to one, you know, innovator. And I think that's okay. Right. Like I'm not trying to argue here that Apple's, you know, um, I don't even necessarily think they're in trouble.

44:02They're just not the company that I was from that what that they were when I was a kid, when every campaign was inspiring, every product was trying to push the boundaries of what was possible in terms of, you know, user joy, and also performance and all these other things. And so anyways, hopefully, I do think I do think that it will become more and more clear that Tim Cook seems to be able to generally manage this like luxury brand type version of Apple, but it doesn't feel obvious that they have this sort of visionary product leadership that's going to have them have whatever comes post iPhone, right?

44:43Whether it looks more like Neuralink or it looks more like, you know, Apple Vision Pro. Yeah, I mean, it feels like Google. They have erected a toll booth on the world and the internet and the digital economy. Everyone buys their phones and that has flatlined. They have reached their market saturation on their phones. And now they're taking a cut of all the transactions that happen. That's the service revenue. The service revenue is growing. That's why their stock went up, even though they've clearly reached saturation on the hardware side. And so it's kind of like they're enjoying the fruits of their labors and they're just going to sit back and enjoy, you know, the massive money that just comes in.

45:25And maybe they'll still work on ambitious projects here and there, but that doesn't seem super baked in the culture at this point. That's unfortunate because I think as tech people, we always look to Apple as like, oh, man, the next cool thing from Apple is going to be incredible. The epitome of amazing hardware. Always. Even like the first iPad. It was mind-blowing. Yeah, the areas in which the iPhone is pretty perfect, right? So it's not meant to throw shade at the device. But the area for me as a consumer that I would actually want them to try to, you know, 10x improvement is battery, right?

46:02Like the camera is good enough. But the issue with them, if they massively improve their battery, that's a huge reason that people, you know, actually end up renewing their, you know, buying a new device. So it's, they're sort of not the same incentive to be like, Hey, let's, let's spend$10 billion and try to build a 10 X better battery. Right. I just don't see them doing that because it's not necessarily in the interest of, of growing sales. Yeah. Yeah. There's a lot of places where they've clearly tugged in either direction. They've made the phones like a little bit bigger and they're too big and a little bit smaller and they're too small.

46:35And they've just found they've, they've kind of min maxed everything to the point where everyone wants the same thing. and they've just created like even my my favorite is that by by putting uh by having uh you know that this is not actually level unless you have a case so how do you walk out of the obviously i don't use a case but how do you want you know most people are like well if i put my phone on the ground and it's and it's gonna not even sit on a flat surface okay i'll buy the apple case on the way out and that's that's just them squeezing an extra 45 dollars of uh of net revenue out of view and it's a beautiful business but and that's why the stock's up and and it's a safe place you know it feels like a safe place to put your money because uh yeah and it's not going anywhere it's just so lindy yeah and if you look at it from the lens of like lvmh being somewhere in the range of a 250 to 350 billion dollar company yeah and apple being a multi-trillion dollar like being worth an order magnitude more than that it makes sense right like the price is is yeah um i mean imagine yeah imagine if lvmh could take a cut of everything that you put in a birkin bag or whatever is that them they do they own birkin they own her uh no no they they don't know that that was the one that got away that was the one that got away but i mean yeah if you buy some louis vuitton uh imagine every other piece of clothing that you put on when you're wearing an hermes belt or uh i guess uh i guess an lvmh you know piece of clothing uh they take a cut of that's the Apple model.

48:06And so it's so much more profitable. Um, no, it's more than that. It's like, yeah, it's Hey, when you're, when you are wearing our shirt, we're going to, we're going to tax everything that you do throughout your day. That's basically what the iPhone is. It's a beautiful thing. So, um, I'm not a, I'm, I'm a, I'm not an Apple, a full Apple hater. I just, um, you know, I love them. I just want to see more. Yeah. I want to see more. And I want, I want more ambitious VR headsets. I want more risks. I want more F1 teams. Give us an F1 team, Apple. Yeah. Design the car. Design the car. Yeah. Build the motor.

48:45Build the engine. Yeah, the other people that critique was like, okay, you could have bought Tesla in 2018, 2019 and owned the car, right? Like it's. I don't know if that was an option. You remember that deal? They had the money, but Elon said, I'll only do it if I can be the CEO of the parent company. Yeah, yeah, yeah. I'm not saying it was a good deal, but they also could have 2x the price and still done very well from that. Totally, totally. Anyway, let's move on to Google. We mentioned them briefly. Google also released earnings and it was a little bit rockier. shares dropped 7 % in response.

49:26There's a post here from Consensus Gurus, bumps in the road, revenue missed, and they need an incremental$20 billion in CapEx next year relative to estimates. They plan to spend$75 billion versus$58 billion estimated. And so Stratechery has another great breakdown we'll dig into, and we'll give you some high-level overviews here. Alphabet reported 96.5 billion in revenue for the quarter, up 12 % year over year. But this is the slowest growth they've seen since 2023. Shares fell roughly 7 % in after hours trading, erasing much of this year's modest 8 % gain. The deceleration in revenue was primarily driven by a slowdown in cloud computing, which is obviously very important with the AI revolution.

50:14They have the TPU system. They want to be training these massive models, but the demand just isn't quite there yet as to what the market wants to see. And so Google cloud generated$12 billion in revenue, which is up 30 % year over year, but it's down from a 35 % growth rate seen in the previous quarter. So people want accelerating growth, not just linear growth. And this is decelerating growth and that, you know, you start projecting that out and it stops and it's not very, it's not very good. And so despite every, every, uh, every seed stage founders gone through that where they're like, we're growing two X month over month.

50:50And then they're like, wait, I have to do this again. Or I have to do more. I have to do 3x month over month. I have to accelerate my growth, not just maintain my growth. It is not enough to merely grow. You must also accelerate your growth. And so they have healthy margins rising from 17 % to 18%. But the slowdown signals the demand for AI powered products is outpacing available infrastructure. And so there's a big question about is Google building enough data centers right now. So the CFO, Anand Ashkenazi, noted two factors behind the deceleration, lapping a very strong Q4 2023 and current capacity limits.

51:31Strong AI demand has created a supply side bottleneck, prompting a planned CapEx surge to$75 billion in 2025, up from$52 billion last year. Google Cloud Platform continues to outperform overall cloud revenue, partly driven by higher demand for AI innovations and favorable pricing trends, i.e. workspace adjustments. And so this is something that like you could see as a bull case. Like there is a lot of demand for AI workloads and they just increase their CapEx spend because they're going to build against it and they're going to handle that. But obviously when the money's flowing out into CapEx, it's not going into the shareholders pocket.

52:12And so people get a little worried. And to be clear, the market and analysts are not excited about what Google is doing on the AI side as a, in terms of consumer products, right? They have way less hype and sort of positive sentiment towards their AI products, even though their products are good, they've really struggled from a positioning product marketing standpoint uh even usability right um and uh and just kind of letting down uh consumer users and so uh you know if open ai uh when open ai says it's going to spend you know 500 billion dollars uh people generally get uh you know it's a it's eye-catching number and people are generally excited about that but when google a a you know infinitely larger company much more profitable says the same thing, or sorry, says they're going to spend a fraction of that, everybody starts to freak out a little bit.

53:12Yeah. And so there's two main things going on here in this earnings report that you need to focus on. One is that massive increase in capital expenditures, all the way to $75 billion,$20 billion more than people thought they were going to spend, basically. And then the other side is the cloud miss, that they didn't make enough money in Google Cloud. And so last quarter, Google had arguably its best cloud results yet, 35 % growth on 17 % margins. This quarter saw only 30 % growth on 18 % margins. And so there's a chart here that we can pull up. It's the next slide showing Google Cloud's revenue, growth, and then their margin.

53:54And it's pretty crazy to see how they've driven profits. From 2019 Q4, they were doing$2.6 billion in revenue with$1.2 billion loss, negative 46 % margin. And they've 5X the revenue and they're now profitable. So they went from$2.6 billion to$12 billion, essentially. And this just shows how brutal it is, one being a public company and one being any type of company that has shareholders. It's that the expectations just continue to accelerate over time. And it's worth noting the, you know, going back to Apple, this is the highest pressure situation that Tim Cook has ever been under. I would say the exact same thing with Sundar.

54:47Many people thought last year that Sundar's job was potentially on the line. Yeah, people were talking about that. After that really brutal launch of their image generation product and just feeling like he didn't have the vision to lead the company into the next stage. Anyway, so both these companies have had the last decades have been very favorable. There's been a bunch of positive trends. And it certainly hasn't been easy, but it does feel like we're hitting this sort of critical point where the pressure is certainly on. And for the first, not for the first time, but you can't imagine that the job of CEO of Apple or Google is very fun in 2025.

55:31Yeah. In the same way that Palantir is, right? Where like the market loves it and they don't care that the Palantir is not making any money. You know, everybody's, you know, just focused on the stock price and the broader narrative. Yeah. And so Ben goes on to compare this to the last time Google Cloud disappointed. That was Q3 2023. In that quarter, revenue growth disappointed and margin decreased, which suggested that Google had too much capacity for the revenue it earned, which is to say the problem was a lack of demand. And so if you remember in Q3 2023, this was kind of very early days of AI workloads.

56:14And so clearly the margin decreasing means that they didn't have leverage over their customers to drive higher profits. And the revenue growth disappointing, meaning that there wasn't that much demand. But this time, what happened was revenue growth was a disappointment, but the margins still rose. this suggests the problem was a lack of supply in terms of infrastructure so they're getting good margins 18 percent up from i mean three percent they're the highest they've ever been basically and the reason for that is that they're able to have leverage over their customers but they're just they just aren't able to deliver enough services to people and so that's a very good sign in general in terms of like like do companies want to do large ai workloads and uh and the answer seems to be yes but uh there just isn't enough infrastructure and that's yeah and this All of this is a, you know, anytime you're introducing a new technology into the market, you're going to have this ultra high volatility.

57:14And this is what Jeff Lewis was talking about yesterday. Having a multi-trillion dollar company go down 7 % in a day after going from negative 46 % margins in 2019 all the way to 18 % margins in 2024. and potentially needing to spend on CapEx in order to sort of catch up for the demand. And then it's still dropping by 7 % just shows the market is trying to price in these sort of changing trends in the broader tech ecosystem, but it's not quite sure how things are going to pan out. Yeah. And so digging into the cloud platform results in more detail, you kind of have to tease out Google's names are not terrible, but also not amazing.

58:09So there's actually two different products that have substantial revenue lines. There's Google Cloud Platform, and then there's Google Cloud as a whole. And Google Cloud's revenue growth has been benefiting from workspace price increases. So that's just like, oh, you get a Google Gmail for your company, and you get Google Sheets and stuff. And they raise the prices on those products because they integrated Gemini. And so Workspace, meanwhile, is getting another price increase, which Google is justifying by including Gemini without requiring a paid add-on. It will be interesting to see if the trend of GCP outgrowing Google Cloud as a whole continues as this increase makes its way through the system.

58:52And needless to say, this does suggest that there wasn't a lot of uptake on the Gemini add-on. So they used to say, hey, you have Google Workspaces. You know, you got your startup.com, you got your startup.com emails from Gmail and you get Google docs and Google drive and all that stuff. We're going to give you what, if you want Gemini, it's an extra 20 bucks a month per person, per seat. And for some organizations that did that and they pulled that trigger, that was really expensive and that caught, and that drove a lot of growth. But clearly that wasn't really happening. People were like, I just use chat GPT or I'll use different services as needed.

59:30Now Google's saying everyone's getting Gemini and you're going to pay for it. Yeah. And the issue with launching products before they're fully baked. We talked about this with Apple earlier. Apple intelligence doesn't feel fully baked. People got access to it. They started talking about how sort of hilariously underbaked it was. And now Google's dealing with the same thing, right? Gemini's had a number of issues. their image generation product was not quite ready for production. And so now when I'm in Google Workspace and I see a pop-up that says, hey, do you want to add Gemini? I just don't even, I don't even think about it, right?

1:00:08I'm like, I already pay 200 bucks a month for ChatGPT. It performs great for my needs. Like I'm not looking to spend more on a sort of language model. Yeah. And so there's a similar narrative here with Google where the thing that's moving the stock right now is the, just like with Apple, it's the services revenue that's kind of changing the business. And it's something that they can take advantage of because they've built this stable iPhone business. With Google, it's Google search. And the search results have been very much to expectations and very predictable and nothing is really changing because it's such a huge and robust business.

1:00:48And so everyone's interested in like, oh, what's going to happen in AI and cloud workloads and GCP and Google Cloud. But Google search results were mostly in line with expectations. YouTube got a boost from election ads. Search is holding steady from a revenue perspective. And then there's some interesting quotes here from Sundar and the chief business officer, Philip Schindler. So Sundar says, on search usage overall, our metrics are healthy. We are continuing to see growth in search on a year-on-year basis in terms of overall usage. Of course, within that AI overviews has seen stronger growth, particularly across all segments of users, including younger users.

1:01:29So it's being well-received. But overall, I think through this AI moment, I think search is continuing to perform well. And as I said earlier, we have a lot more innovations to come this year. I think the product will evolve even more. And I think as you make search, as you give, as you make it more easy for people to interact and ask follow-up questions, I think we'll have an opportunity to further drive growth. When our products and platforms put AI in the hands of billions of people around the world, we have seven products and platforms with over 2 billion users and all are using Gemini now.

1:02:04That includes Search, where Gemini is powering our AI overviews. People use search more with AI overviews and usage growth increases over time as people learn that they can ask new types of questions. This behavior is even more pronounced with younger users who really appreciate the speed and efficiency of this new format. Yeah. And so there's stuff in AI everywhere. They want to bake, they want to say that we have basically all these 2 billion people are using Gemini, which is, you know, again, they look at themselves as I'm using Google and okay, you summarize some results for me. So it's a little bit disingenuous to say that it's all Gemini usage.

1:02:42Overall, I look at it as a lack of exciting leadership, like the difference between how Alex Karp is coming into an earnings meeting and actually getting you that feels like the company is like on a mission, a very important one. And it's making massive forward progress doing very important work. Totally different from how you hear Apple executives and Google executives talking about sort of managing the empire and saying like, oh yeah, we're threatened. You know, basically if you look through it, it's like, okay, Apple is losing market share in China. Google is their search product, the goal, you know, which is Apple's golden goose.

1:03:50or the iPhone is a golden goose. Nobody wants to invest in a growth story for a company that's being defensive, right? It's just not, it doesn't get you inclined to say, you know, I think this business is going to be worth significantly more. You know, maybe you think Google is going to be worth significantly more years from now. I can totally see that, but they're not driving that sort of excitement because it doesn't feel like there's real vision, right? It's management versus, you know, on CARP side, it's pure, you know, vision and momentum. Yeah. And so, I mean, Google's mission for decades, I don't know if they've changed it, is to organize the world's information.

1:04:32And AI and LLMs are like the final boss of that. Like you literally compress down the entire internet to just a bunch of numbers and these model weights. And you can ask it any question and it will just give you the answer or the fact. Yeah. So if you're sitting in the Google exec team's chair, you would want to position people around and be honest about the fact that the rollout of AI across Google's ecosystem has been rough. It hasn't gone nearly as well as it could have, right? And if you're saying there, hey, we have the narrative of, hey, we know AI is going to be transformative. It aligns to our mission already.

1:05:15And we already have billions and billions of customers. And so our sole focus is helping them understand our products better, making our products better, et cetera. But the narrative seems to be more around, oh, they're already using Gemini. or oh we're going to just bolt this on here versus we're going to get users really excited about these products and actually make their lives better versus the workplace the work uh the workspace sort of upsells right are very much uh uh hey please sign up for this so that you pay 20 bucks more a month that's all i see when i see the pop-up i don't see i'm not in a doc seeing something uh hey you know i can pull in this information from gmail right you already typed this out over here.

1:05:57Let me pull it in. It's not like proactively making my life better as a user. They're just sort of asking for that incremental, um, you know, SAS fee. Yeah. Yeah. I mean, again, it's a, it's a defensive story. Uh, at the same time, I, I mean, I agree with you that they haven't created a new, any new products that have really surprised or delighted. Uh, the growth story really is on the cloud platform side. They say, Hey, we have some of the biggest data centers, the best data centers, some of the best AI chips. We're going to make a ton of these, and then we'll make a bunch of money and we'll let everyone else figure out what products monetize on top of it.

1:06:30And that's fine. But most importantly, the golden goose of Google, they're arguing, sure, it's not like, you know, transformed and we're not dominating the new paradigm, but we are monetizing just as well as we always have. And this is good news. And so revenue is steady. AI overviews are being used. And critically, they are monetizing without cannibalizing revenue, which is what everyone thought. We talked about this yesterday. The way that one of the best sort of mechanism, like Google operating as a toll booth, right? I search tennis shoes and I get ads. I'm not doing that in ChatGPT right now, right?

1:07:10And so I imagine ChatGPT wants to eat into that and get better at product recommendations, and that will be a threat to Google. But it is slightly, that behavior is sort of different. And chat GPT is operating more of organizing information. But again, it's still somewhat of a threat. We got to probably jump into the timeline, just being conscious of time here, unless you have anything more you want to cover. No, we can wrap that up. Did you want to do TEMU today or you want to move on to timeline? I think we should do TEMU tomorrow. I just want to give that proper attention. We had a couple of comments that were good.

1:07:49I'll read through. Venturi says, uh, walled garden sells iPhones. Apple AI is copium for shareholders. Uh, and I don't think it's actually copium for shareholders. I don't think any of the shareholders are really smoking the Apple AI. I think it's, I think it's the Apple executives that are, I think it's Tim cook is getting a little high on his own Apple intelligence supply. And then, um, a more, even more aggressive comment from Vic. He says, iPhones really are mid at this point. billionaires and day laborers shouldn't have the same devices. And yeah, I mean, in many ways, it's awesome that that is the case right now.

1:08:29But it would be cool if Apple was like, we're coming out with a$50 ,000 iPhone, and I'm sure they would get a lot of people that would buy it. And anyways, so more to come there. Well, we have some breaking personnel news on the channel. Daniel Penny was hired by Andreessen Horowitz. And Barry Weiss reported it out in the free press. Ben, let's click through some of these slides. In less than two months, Daniel Penny has gone from facing a potential 20 years in prison to landing a role at Andreessen Horowitz, the premier investment firm in the Valley. An internal statement seen by the free press, David Ulovich, a general partner at the firm, confirmed the hire.

1:09:12He will learn the business of investing and he will work to support our portfolio companies. On May 1st, 2023, Penny's case became a lightning rod for controversy when Jordan Neely, a black homeless man with more than 40 prior arrests and a prior history of mental illness, wandered onto his subway car and according to witnesses, began threatening passengers. Penny intervened, placing Neely in a chokehold. When Neely died shortly afterwards, much of America turned on Penny and the city's progressive district attorney charged him with criminally negligent homicide and second degree manslaughter.

1:09:45Penny faced a possible 20 years in prison. After a month's long trial, a New York jury acquitted Penny in December. Announcing the hire, Ulovich did not shy away from the May 2023 incident. In fact, he cited Penny's actions that day when explaining the hire. And so Daniel, Penny is at Andreessen Horowitz. It shook up the timeline. Lots of people were commenting on it. Jordy, You got any comments? It, uh, one of the, one of the craziest headlines because it almost feels like a, like a fever dream of just like combination of different, uh, you know, different, different memes, all, all converging into one.

1:10:22I think it's awesome for Daniel. It's, you know, Andreessen clearly wanted to make a statement with us. Um, you know, there's no reason that Daniel should be discriminated against because he was in this total culture war crisis and went through this very tragic incident. He's a veteran. He seems like a good guy. And I'm glad that he has this opportunity. There's a lot of ways that people could knock it and people certainly did. It's funny because that news was coming out while Trump was saying that he was going to turn Gaza into a U.S. territory. So there was a lot of stuff going on yesterday.

1:11:03But overall, I think it's this is a cool opportunity for Andreessen portfolio companies. Imagine you're just sitting there, minding your own business, and you get an email from Daniel, Daniel at a 16 Z. And it's like, Hey, have you seen this? And it's like your competitor announcing like a fundraising announcement? Yes, yes, Daniel. Yes, Mr. Penny. I saw the announcement. Yeah. But, but yeah, you know, overall, overall, you know, I I think it's cool, and I'm glad they're giving him the opportunity, and I'm excited to see where his career goes. There's an alternative version of the story that's very dark, where he goes to prison for trying to stand up for his fellow citizens.

1:11:47And I experienced, I didn't personally experience this, but I had a family member held up at Knife Point in New York and had their watch stolen, and that family member went to a police officer immediately afterwards, and the police officer just said, sounds like your problem, not mine, even though he was bleeding at the time. And so I think that New York basically made crime legal in many ways. In this case, the guy that Daniel O 'Penny was in an altercation with had been arrested, you said, 40-something times. And so, you know, we don't comment on politics or social issues here, but it seems like New York in general needs to get a hold on their entire judicial sort of system.

1:12:29And anyways, I'm excited to see Dan's first bet. I want to see him betting big. Yeah, it's interesting to see how he fits in at Andreessen. Ben, can we pull up the slides and kind of tab through these quickly? I want to see the keep going. That's the Cultural Leadership Fund at Andreessen. Keep going. Okay, that's still a Cultural Leadership Fund. Keep going. Okay, so yeah. So Ryan is an investor there, and he's listed as a partner and a friend of the show. And so Andreessen does their naming schemes a little bit differently. For a long time, everyone was a partner. If you're an investing partner, like you could be in a, most firms you're like an associate, principal, partner, general partner.

1:13:17At Andreessen, most people come in as partners. And then if you go to Catherine Boyle in the next slide, you'll see that she's a GP. She's a general partner. Um, and then Daniel is listed as a deal partner. If you go to the next slide, Ben. And so there is a question about like, is this more like a venture partner role where he gets carry and deals he brings in, or will he be working from the office and fully staffed on, you know, deals all the time? um there's a whole host of different structures that the uh that these firms can take with sometimes i mean there's this they also have scout relationships where uh you you don't even have an email address with andreason i'm an andreason scout i have been for years so so look at this there's two things going on here one this is a mark like don't get it wrong this is a marketing moment for andreason to say we are going to stand behind an individual that we believe did the right thing and was proven you know to be innocent right and second is we want to give this individual who did the right thing in a uh tough moment that uh you know we want to give that person an opportunity on the other side for daniel it's just an amazing you know opportunity to go from being a veteran who i believe didn't have a lot going on prior to the incident to now getting to work at you know the biggest venture capital firm in the entire world and get to be involved with some cool companies.

1:14:37And I do think this will resonate with a lot of the founders that Andreessen has backed and plans to back in the future. Yeah, especially on the American Dynamism side. So it makes a lot of sense. Well, let's move on to our next story. Change of CEO, some more personnel news. Match Group has announced its new CEO, Spencer Raskoff. I've helped create category leaders in online Real Estate Zillow and Travel Hotwire. Now I'm focused on the most important category, human connection. He says, Match Group's mission to spark meaningful connections for everyone worldwide is inspiring, and I can't wait to help achieve it.

1:15:18Here's the email I sent to our 2 ,500 employees. In the next few minutes, we are releasing news that I have the great honor of stepping into the role as Match Group CEO, and will join you in shaping the next chapter of this incredible organization. And so I want to acknowledge and thank them for everyone that has contributed to Match Group. I have enjoyed partnering with him and I know I will join all of you in wishing him every success and happiness. What do you think about this change of CEO at Match Group? The stock has been down for a while, I believe, and I think this might be part of the change.

1:15:51Lots of people asking about dating apps in the future. Spencer is an absolute dog a fixture of la's uh startup community helping put la on the map and uh going long la i think he had he had a media company at one point that was um centered around la tech and uh has done a bunch of stuff in in sort of real estate uh and real estate tech uh so anyways i think this is cool i mean it it's a match group in general gets a lot of hate right it's it's a pretty controversial company. A lot of people don't, even if they were using a dating app that they make, they don't necessarily have super positive feelings towards it.

1:16:31And so I think it's a huge challenge for Spencer, but everything I've heard about Spencer, he's a great dude and a great, you know, a great leader. So I'm excited to see what he does. At a company like this, you want, you know, it actually can't be understated if they are facilitating the connection of millions and millions of people every single day. We want, you know, we want good visionary founder types leading these companies. And, and I think that done properly, you know, there's, there's the sort of black mirror analysis of dating apps. And then there's the sort of real potential that everybody like constantly wants to see out of these, right.

1:17:14And dating apps have this, you know, dichotomy and that, that if their users want to find long-term love. Maybe that's not so good for the dating app, but there's a lot more innovation that can happen here. And I'm excited to see where Match Group goes. Well, good luck to him. Let's move on to a big product launch announcement from Kenan Davison. He's excited to introduce Icon, the first AI ad maker backed by Founders Fund and execs at Frontier AI Labs like OpenAI, Pika, and Cognition. Icon is like ChatGPT plus CapCut, but for making winning ads with AI in minutes. Icon looks at your video library and tags scenes, close up, unboxing.

1:17:59These scenes become reusable clips used as Lego blocks for making ads. Prompt Icon's AdGPT to generate scripts focused on specific angles and audiences. Icon finds perfectly matching clips for every script scene and generates an ad that is 80 to 99 % complete and then you make edits yourself with a CapCut-like video editor until you're happy. Three-person creative teams make 30 ads per month. With Icon, they make 10 times more. They can make 300. We co-built Icon with$100 million revenue brands like Ridge, Jones, Road, Immy, Backbone, Mudwater to solve big pain points. So you've worked with Ridge.

1:18:41What do you think about Icon? Yeah, so there's this interesting thing that happened probably five years ago, maybe six years ago at this point where Meta got so good at delivering your ads to the right people that the real challenge of performance marketing was having really good ad creative, like the videos and images and GIFs and things like that, that all performance marketers shifted from, okay, I have to perfectly optimize my audiences and targeting, which they still have to do to some degree, to I need to spend all of my time building. this sort of treasure trove of ad creative that i can deploy across you know facebook and instagram and snapchat and then tiktok and things like that and so you're a consumer brand founder i've started rora as well so you you you've been through the process of understanding like there it's it's this treadmill where ad creative you can create a great ad and it'll perform amazing sometimes for like two weeks and then the performance will drop off because it works so well you were able to spend so much money against it that it started declining.

1:19:44And so it's, it's literally, uh, you know, the, these, um, brands get on this infinite treadmill of needing to produce more and more and more and more ad creative. So the problem that they're solving is massive. Um, this, uh, founder previously started a company called skio. That's a pretty well-liked, um, subscription, uh, management platform for e-commerce brands. So clearly, uh, had, had talked with enough people, that were experiencing the pain point and then built a product that they loved already. So I'm bullish on this. I saw one person respond, like a thread boy was responding, like many people are calling him the Sam Altman of ad creative.

1:20:22And then somebody else, I think it was like Bass Baron or somebody like that, like was like, absolutely no one is calling him the Sam. That makes, but very, very cool product. And yeah, already, if you think about just how much a brand like Ridge is spending on ad creative, they have a big team. They're already spending probably hundreds of thousands of dollars a month to make creative. And so if you can help them generate 300 extra ads out of their existing library, you can easily charge multiple six figures and potentially a seven-figure contract. So I see this company growing very quickly if they can really deliver on what their demo does.

1:21:06Yeah. And what I love about this is that it realizes like what AI can do great, like script writing, tweaking, a little bit of AI avatars here. It's not trying to be end to end full AI ad, just one prompt and that's it. It's like, hey, give us the real 4K graded footage of your product. Give us your interview with your CEO on a podcast. Give us everything. And then, yeah, if we need to throw some stock footage in there, we can. If we need to throw in some AI voiceover, we can. And a lot of these products that really succeed, they blend everything together and wind up just amplifying the distribution and creating more content out of what's already great.

1:21:51And in this demo video - Yeah, they're giving it at$99 a year. they're clearly just trying to completely undercut the market and, and, uh, make it really difficult to compete. So$999 a year, but still a steal for sure. Well, oh yeah, sorry. Not nine. Yeah. Yeah. Basically$99 a month, a thousand dollars a year for any, for any company that's doing DTC ads. This is a no brainer. Absolutely. Um, and so congrats to the team on the launch. I hope it goes very well. It already went super viral and you clearly know how to go direct and get a lot of attention, which is great. Uh, and yeah, any of these AI things, they're always like a little bit of a hot button.

1:22:29A lot of people like to hate on them. You can kind of tell from like the quote tweets and the replies, like this was engaging. This was something that people were debating about, not just people saying, Oh, congrats. This is so great. Uh, but that's, but that's, that's actually key to going viral and getting a really broad reach. And a lot of brands will see this and say, Hey, I want to be like Ridge. I want to be like mud water. I have ads. I have problems to solve. I need to make my creative dollars go. This is a great way to do it. This is such a universal pain point and something that people have extreme willingness to spend on because they're already doing so that if they can deliver a great product experience, it will be a big company.

1:23:02Fantastic. Well, let's move on to some more breaking news. Enron, the publicity stunt run by the guy who did Birds Aren't Real, has launched a coin on Pump.Fun. And so Enron, which they acquired the.com, they bought the, they didn't buy the company. They bought all the IP. They didn't buy all the IP. They actually, I read something about this. They registered a new trademark for Enron in merch and other categories. They didn't actually have to go and acquire the old Enron name. Interesting. So they have the username and the domain. Exactly. Which are a lot of, you know, which are important assets.

1:23:41I saw someone put him in the truth zone because he says, I purchased Enron for$2.75. That's not exactly what happened. he purchased the Enron trademark in a new category, which is often easier to do. But anyway, it doesn't matter. He has Enron. He has Enron on X. He has Enron.com. He has the logo and he's put it on shirts and he's done a bunch of publicity stunts with this like nuclear powered egg. It's all very Silicon Valley, HBO style. But they launched a coin on Solana. We should blur out the address because I do not want anyone losing money on this thing. I don't even know if it's possible.

1:24:17It might've already rugged, but let's break it down. Yeah. So where to start with this one, one from a pure marketing brand campaign, go to market standpoint, they absolutely crushed it. The creative was, was awesome. They sort of slowly built up hype and they would sort of drop little Easter eggs, Easter egg, Easter egg, eventually dropped a real egg, literal egg global tour. They're doing keynotes. This guy, Connor, is like really embodying the, I don't know if that's his real name, but really embodying the CEO role. Really taking the audience on this sort of emotional journey around, please, we want to regain your trust.

1:24:59You know, we messed up, but, you know, it's his new team, right? It's a new opportunity and we're going to take Enron into the future, really orienting around the energy aspect of it. They even did a, you know, an interview with Taylor Lorenz. You said this was a very, you know, we've seen some very right-wing meme coins. This was a very left-wing meme coin in many ways, sort of making fun of tech, you know, doing sit-down interviews with Taylor Lorenz. But anyway, so in many ways, like, what they did was very impressive. It seems like from a, you know, and yesterday they launched a token. You know, there have been a lot of when a big project like this is sort of building up hype, right?

1:25:45A lot of people are basically sitting at their laptop refreshing, wanting to be the first person to buy it. Because if you buy it at the right time, maybe you'll make a lot of money, right? We saw this with Trump. People that happened to be on their computer when Trump went live and just bought it ended up making, you know, ridiculous amounts of money if they sold in the next. Well, even if they didn't sell until now, right? They could sell today and still make a good return. And so, look, what they did here ended up falling flat in some ways. They launch it. It sort of pumps briefly. And then it's been on just a steady decline ever since then.

1:26:18They seem to have made some sort of blunders in terms of how they actually set up the tokenomics of it. A lot of people were pushing back because they had, you know, the team controlled 90 % of the supply. usually I think in crypto projects that are more from the actual crypto community it's usually the opposite where the team controls something like 10 % and the community controls the other 90 % and so when they pushed it live people immediately sniped it as in bought a lot of the supply wrote it up sold it and you know presumably made a lot of money and then the chart has just been on the steady decline and the response from the community was not good a lot of people were just like wow you you did all this just to like you know do a rug pull like it's it's um and and they even there's this guy coffee zilla who i think we have that on the slide yeah where uh i think coffee zilla had made a video about enron and then they reached out to him and said hey we're fans just saw you put out a video on our efforts wanted to clarify we are not doing a coin and all coins on the market are unaffiliated with us we will be making steps in the energy sector soon we are quite excited about so i guess here just like lying to coffeezilla never a good kind of a weird weird call um never a good move but anyways it's just it almost seems like i would have you know maybe they thought this was the best and most funny way to bring back and monetize the ip and do this campaign yeah but you have to imagine they could have done something more interesting with it that would have potentially been a lot more lucrative you know who knows how much the team and things like that made.

1:27:53But overall, it's, it's not. It just seems like, okay, you missed the timing, right? Maybe, you know, the crypto market goes from absolutely roaring to completely dead, right? We saw this. There was there's a podcaster from from Red Scare launched a token yesterday, barely cleared a$1 million. I don't think it cleared a million dollar market cap and a month ago it probably would have gone to 20 or 30 or who knows right and so the the market was like humming and then sort of trump was very clearly at the top i think we may have said that or covered people that called the top it's like how do you beat the president launching a meme coin that like obviously has to be the the local top um and so yeah it seems like they botched the timing they botched the launch and now they're just sitting there enron and they have to somehow keep people excited to presumably, because again, we've talked about this before in crypto, your product is your price.

1:28:54So if the price is going up, people are going to love your product. If the price is flat or down, no one cares. And so now it's, they're going to have some responsibility to try to sustain it or make it go up. And I'm not personally not super bullish, but we'll see what they have in store. Yeah. The just meme coins and these pumped out fun things. They feel a little long in the tooth. They're just, we're kind of over them. They're not as exciting as they used to be for a lot of people. And yeah, it's just odd because this feels like it had the trappings of like the good outcome here would be they launch a kind of mischief style studio agency and they're doing funny projects like this and breaking through and monetizing with merch or some cool thing every few months.

1:29:41And you hear from them. I mean, Mischief launched like a fraud, startup fraud based drop once that was, you could buy a miniature Theranos blood testing kit and a miniature Juicero pump and a juicer, all these different products. And it was very fun. And it was just like the people who bought that, they might've been auctioned off. It might've been expensive, but I saw some people that bought the, you know, the collection of trinkets from startup disasters and it's great. And whatever you paid, you feel like you got your money's worth. You, you enjoy that. And even if you paid a couple hundred bucks, it's like, yeah, I have a token from mischief and I like that.

1:30:20And that's what this could have been. And yet they went this other weird way. But the issue though, too, is the IP was a little bit too old, in my opinion. And I wasn't, yeah. What was it? It was early 2000s. I don't know. Yeah. It was a dot-com crash company. So I was seven years old, right? So I, I, for me, it's not really that meaningful. I didn't get to experience it. Right. If you, if somebody were to buy the FTX merch five years from now, boot it up again, that I would, I would, you know, I don't, you know, not saying I would be the customer for that, but I think that their audience of like terminally online zoomers are just looking for a financial return.

1:31:00And so people cared about it when it was like, Hey, this might be a billion dollar token. And then now that it's not a billion dollar token and everything kind of flopped, a lot of the wind is going to be taken out of their sails. But I'm sure, again, I'm sure they have more plans for the kind of campaign, but. I mean, with Enron, I think more people know it just as a, it's a fraud. People don't actually know that they were an energy company or what they did. And it's actually fascinating because it wasn't, it wasn't, they did things. There was an accounting fraud, but they actually did energy trading and stuff.

1:31:33It was like a fund. And like, there were people there that had real jobs and did real business and created some sort of value for a while before the fraud kind of began the original company went to zero yep every shareholder lost everything and now they have a token where which gives people an opportunity to lose it all again in the new generation yeah and so i wonder if i wonder if the ceo is going to come out and be like this was all uh you know a performance art piece this is all a stunt and like the token was part of that it was like a commentary on America's obsession with fraud and how you could even fall for the Enron token after knowing that Enron's a fraud and it's some sort of art piece.

1:32:14And I wonder if there'll be some sort of justification or attempted justification like that, but I don't know. When people are going to lose money on this and they're not going to think it's nearly as entertaining as if it was just actually some type of non-financialized stunt. Yeah, it could have been done way better. So we'll close with Gwart with a banger. Gwart says it's getting harder and harder to have a coherent bear case for Solana when established companies like Enron are launching there. Amazing. You love this one. Amazing post. Very good. And just to give you a history, people were very bearish on Solana for a very long time, right?

1:32:54Totally. Certainly not Mike Solana. That's been a permanent bull run, generational bull run. but uh people were bearish and then and then having trump the president of the united states launch on solana was like again the apps how do you get more validated than that maybe you have like google or apple start to use it in some way but uh anyways great joke before we jump over uh we got to jump to a meeting with our friends over at x because we are signing a distribution deal with x okay should we cover the post with uh solana's post uh yeah let's let's tab through moon should be a state the movement has met has hit the new york uh the time square in new york city uh adquick they partnered with uh pirate wires and they're also partnered with us best place to buy billboards if you're looking to out of home an amazing stunt like this this went mega viral.

1:33:47Elon reposted this post and not this one on pirate wires, but the one Mike Solana shared. And it has like millions of views, 5 ,000 likes. And, you know, that's the way you have to think about out of home is how can I do a stunt, something that speaks to my brand, something that's jaw dropping that then can go online and get organic views. And that's exactly what happened. I'm sure this was a massive ROI driver for pirate wires. It's a great example of what AdQuick can do. And we're just so happy to be affiliated with both those organizations. They're fantastic. What you got for me, Jordy? No, I think it's a great example.

1:34:22I think, I think it's hilarious to think about somebody just walking by who's not on X, who's never seen this and seeing that and just being like, yeah, actually, I never thought of it like that, but you're right. The moon should be a state. So anyway, shout out to PirateWire, Solana, and Adam and our friends over at AdQuick. Lots more to come there. Fantastic. Well, short show today, but stay tuned for tomorrow. We got a Timu deep dive. We're taking you through the full history of the company, breaking it down. And we got a ton of timeline that we didn't get to. And of course, a ton more ads and promoted posts.

1:34:58So stay tuned. Thanks for tuning in. People are saying that our Timu deep dive is going to be a Timu acquired deep dive. Let's go. Timu acquired deep dive. so there's level this and i cannot wait sorry to cut the show short uh if you're angry about it go dm tyler gold over at x say hey you scheduled a meeting uh and just and let them know what you think but we should just have him on the show he should just call in and we can have a meeting here live on the show next time we're working on that thanks for watching guys appreciate it cheers bye