The Talk Show

125: ‘They Buy a Hole in the Wall’, With Guest Horace Dediu


  horse that you welcome I think this is the first time I remember yeah [TS]

  definitely you know now that you had you know nobody yet still on I guess it's [TS]

  you know you're legitimate doing you know there were some exposed to say last [TS]

  week I should I forgot it's a little bit of follow-up from that live episode of [TS]

  the show with with Phil Schiller so at the end of the live episode right [TS]

  towards the end as I thanked him I tanked everybody and then I asked the [TS]

  audience if the live video stream had stayed up because we we had tried [TS]

  something new we actually had that setup before I knew that that for sure is [TS]

  going to be the gas we're going to try to live stream it anyway so I asked the [TS]

  audience hated the livestream stay up because my thought was hey once word [TS]

  gets out on Twitter that Phil Schiller is on the show might you know [TS]

  overwhelming and some knucklehead down in front yard know and and then fill [TS]

  fill made a very funny joke he said hey these things are hard but I felt bad I [TS]

  thought although i stream is down and then as soon as we got our stage my my [TS]

  phone started going off and people were texting me and they were like I'm [TS]

  watching right now live on the video streaming and watching right now live on [TS]

  a video stream did not go down so I don't know who the knuckle head is in [TS]

  the audience who said that the live stream went down and maybe there were [TS]

  problems for a few people here and there but apparently did not go down and they [TS]

  were awful lot of people who who did watch it live in the same and I wanted [TS]

  to the reason I want to call that out though is that the company that did it [TS]

  as a company called hybrid events group and I'll put a link to their their [TS]

  Twitter in the show notes their their twitter is a hybrid events GRP because I [TS]

  guess they ran up against the lumen Twitter user names but anyway they did a [TS]

  great job could be happier with them and I feel terrible that at the end of this [TS]

  live stream that they worked their asses off to keep up and do a good job on it [TS]

  looked like it did not stay up [TS]

  went down but it didn't so well you know you know they have knuckleheads i mean [TS]

  the thing is there's always someone you know is not happy so there's always an [TS]

  apple people are still likely maybe more so to complain right so yeah I guess so [TS]

  I just don't know what would have driven some adidas shutout know that the stream [TS]

  didn't stay up when in fact it did and if there were any problems they were [TS]

  minor and sporadic but anyway it was a lot of fun out at WWDC I was I was there [TS]

  and I was sitting was actually fortunate to sit pretty in a pretty good spot I [TS]

  would actually day they've managed I came in late I had gone to the bathroom [TS]

  because I always tell you go to the bathroom real because it could run lawn [TS]

  and and by the time I came back out you know they had let everybody in so I was [TS]

  like almost the last person to get in and I'm wandering around near the front [TS]

  trying to find a place because sometimes people people in the front don't fill up [TS]

  completely and and and I was actually kindly taken by hand by an apple person [TS]

  then sat next to a set behind baharon and his father and and so I had a I was [TS]

  like the 5th row and it was it was really the best species I ever had and [TS]

  for bed that that's what I got for being late you know as soon as it was for me [TS]

  it was a thrill to be to be in a great spot and and you know I'm previous shows [TS]

  I remember sitting behind you that was funny sandwich behind a between you and [TS]

  like rene for example you know so as always these great people you meet there [TS]

  and that's almost more exciting than than the show itself you know just [TS]

  getting to meet these people [TS]

  yeah I have been to enough of these now it's funny because it's like it's dawned [TS]

  on me that now I've been through enough of these keynote sort of a veteran [TS]

  a rocky and I but I still think of myself I still think every time I go to [TS]

  believe that I'm invited to attend one of these Apple Keynote I know it's a [TS]

  thrilling every time a pretty good three or four and it's it's still you feel a [TS]

  little bit of a single every time and it's kind of feel privileged to be there [TS]

  I've had the same experience over sometimes if you want a good seat it [TS]

  actually advantageous to not wander in with friends or colleagues are you know [TS]

  because what happens is you may go before they open the doors and you see [TS]

  people who you know like member I think it was you who took the picture of me [TS]

  and Ben Thompson wearing seemingly identical to see me when I thought they [TS]

  were there is they weren't that different brands but it would be very [TS]

  hard for anybody I think you have to look at the label to see the difference [TS]

  so Ben Thompson and I showed up it at the Keno dress like twins and you were [TS]

  kind enough to document that proposes to run into people who you know like that [TS]

  and then you go in the Keno together but then if you take a group of five or six [TS]

  of you you look for five or six seats and it limits sometimes going in just by [TS]

  yourself or going to like you say you go to the restroom one time I think was [TS]

  last year for WBC it at the keynote it used to be for years and years has [TS]

  always been a ten ten o'clock start and it used to be that they'd let pressing [TS]

  in very close to the end I mean sometimes to the point where people [TS]

  would start like getting nervous and be like they've forgotten start without us [TS]

  like there is one near you know the members of the media didn't get in until [TS]

  I don't five or ten minutes before ten o'clock but part of the new Apple with [TS]

  Tim Cook is that stuff around alot more regularly in stuff starts exactly on [TS]

  time and if you've noticed but Tim Cook the keynote started 10000 I mean like [TS]

  this second but you know I notice a couple of the details maybe you already [TS]

  went over this with your audience but I the couple details when they when they [TS]

  let the press in [TS]

  they they segregate the photographers from everybody else they've always done [TS]

  that yet they've always done that but I purposes that you know they've got their [TS]

  own little they've got their own little bleachers whatever wing and then the [TS]

  other thing that's interesting is that then this kind of like this time when [TS]

  the executives who usually sit in the middle section in the front middle so [TS]

  the executives begin to cut you know come in and take their seats and they're [TS]

  basically they're mingling a little bit with each other and it's like you see [TS]

  the camera guys just going nuts taking all these shots of the executives [TS]

  mingling and I i wonder how much of that is plans so that they have this photo op [TS]

  for for this kind of casual interaction that happens with with with some of the [TS]

  superstars of Apple if you will you know you see people would just like in the [TS]

  audience stand up and and you did I see I see johnnie ICN July see so-and-so and [TS]

  it was funny to see how you do it seems so natural but I wonder how much of it [TS]

  is actually on purpose done that way to create the opportunity for the [TS]

  photographers to take their shots and have something I don't know that's why I [TS]

  think it's definitely strategic I'm not quite sure what the strategy is though [TS]

  and and about which site lines they're looking to give the photographers it [TS]

  seems to me like what they want is they want the photographers not close but so [TS]

  if you are if you're serious about taking the photography and even you [TS]

  really want to bring a long lens and you're gonna be doomed in from a [TS]

  distance and that you're not gonna get close but anyway last year but I think [TS]

  it was last year I you know was walking to the to the Moscone from my hotel and [TS]

  it was around 9:30 so is about half hour before but I got a text from a couple [TS]

  people they've already let us in and I was like oh crap so I was like you were [TS]

  this year I was one of the last ones in and had a similar type thing where it [TS]

  wound up you know somebody from Apple PR spotted me looking for a seat as they [TS]

  come up here and I said [TS]

  or something but it's weird sitting up there because when you're up there with [TS]

  all the Apple employees they're the people who sort of applied at strategic [TS]

  points and sort of try to get the applause rolling and applause points [TS]

  which you know to me as a member of the media's is not really appropriate it [TS]

  feels a little bit like living in the home team crowd when you're up there [TS]

  really i no i didnt sense that but I did sense and other events that they were [TS]

  some cheerleading going on that I didn't see here this one but it is it's it's [TS]

  kind of interesting experience I i guess its very privileged that we have that [TS]

  access to to the event that we do it and to each other and that's on the fact [TS]

  that's where I i I asked yesterday how about we we get together and do this [TS]

  right so yeah yeah that was exactly where this could set up so now we're a [TS]

  couple weeks out and I feel like we're about to enter what's more or less this [TS]

  summer doldrums newswise I don't think we're gonna get you know other than the [TS]

  launch the imminent launch of a pop music there's not much going on you know [TS]

  never really isn't July or August so I'm just curious what you think overall with [TS]

  a couple of weeks behind us what you think in hindsight of you know the WWDC [TS]

  keynote so I'm not a good analyst [TS]

  fans that way because I tend to look for under the under the understated and he [TS]

  is there is there a deeper thing and I don't do well on the feature set so much [TS]

  I'm not making a list of the big idea I'm trying to find where the small ideas [TS]

  and the to me the the big thing this whole year has been around what I call [TS]

  schuman is all that Apple the idea that Apple is presenting [TS]

  a new face a new definition of its of its principal operating strategy which [TS]

  is really about not the algorithm hard to put a word on it because the the the [TS]

  the the dominant logic of Silicon Valley's that that power of the [TS]

  algorithm is power of the business and and all that flows from it and and [TS]

  somehow what I sees this shift where Apple's saying you know we don't [TS]

  necessarily believe in the power of the algorithm in fact we may actually [TS]

  believe in the anti algorithm and the anti algorithm is the human being and [TS]

  the word I came up with his humanism other humanism is a word that was used [TS]

  to counter the notion of a world based around faith and so so this was a sort [TS]

  of maybe I got the timing wrong but there may be a renaissance for a period [TS]

  of time when when people began looking at that humans at at the center of the [TS]

  universe or the center of thought and and that that idea of putting man in the [TS]

  center was was big deal because the church was the dominant leader and so my [TS]

  way of thinking is that I'm not trying to position against faith but rather [TS]

  position against the notion of the the all powerful algorithm as as the [TS]

  counterparty to this to this idea and so what's the evidence the evidence is [TS]

  number one that they believe in curation they believe in actual people making [TS]

  decisions one we've seen this already for years and years on the App Store [TS]

  that there would be someone making now so that means they're fallible that [TS]

  means they're gonna make mistakes that means they're gonna make all upset [TS]

  people and offend people but with it comes also the benefit of judgment that [TS]

  comes from the mind of an individual second piece of evidence Jony ive in all [TS]

  his in all his visions of what people want he's making a judgment he's making [TS]

  a call he's calling the is curating essentially what it is that we want and [TS]

  rather than offering every possible option they'll tell you these are the [TS]

  best options we believe that so these are old stories the news stories bring [TS]

  it even more to the surface are well actually going to decide how to surface [TS]

  the music that people should listen to or we're going to surface the generally [TS]

  speaking media and so trust us with with our judgment with our tastes and that [TS]

  ideas so opposite to the algorithmic ideas that exists as the norm that I [TS]

  feel like somehow this is the beginning but also by the way the idea that trust [TS]

  us comes down to privacy trust us comes down to to being able to put together [TS]

  the the integrated packages that we think are the features that you really [TS]

  need that no more than that and so this whole idea has been around too late but [TS]

  suddenly springing up and going head-to-head with algorithm based [TS]

  business models I think that's a great observation that's exactly the sort of [TS]

  insight that I'm looking for you from from the keynote like words it's not [TS]

  about point-by-point critiquing the the performances on stage but rather trying [TS]

  to suss out what the actual meaning was because I and I think you'll agree with [TS]

  me here that I i think one of the more interesting things of today's Apple [TS]

  let's call it Tim Cook supple as I think that's roughly you know I think it does [TS]

  correspond roughly 22 when he took over as CEO and I think it's it's deliberate [TS]

  and I think it is his personality coming to the surface I think Paul wants to be [TS]

  better understood by people outside the company [TS]

  whereas before I don't think there was so much a date they wanted to be [TS]

  misunderstood but they just didn't care if you did [TS]

  they they want they reveled in the mystique of Apple I think the mystique [TS]

  of Apple was there's value in being mysterious there's value in being [TS]

  misunderstood even because at some point you're gonna get the aha moment that you [TS]

  were wrong and then those who become aware of it through their own discovery [TS]

  of that fact even more deeply and I think you write that is the the sort of [TS]

  the jobs in that those of public relations reserve a distance and you're [TS]

  right I think there's the sensitivity more towards will you know maybe we [TS]

  don't need to be so mysterious after all but but here's where I feel that there's [TS]

  still the mystique which is dead they speak actually plainly of what their [TS]

  intentions are and when you see this in in Cook's statements like the product is [TS]

  our North Star that we are concerned about doing good work rather than being [TS]

  profitable or having a rate of return when he sometimes it very pointedly [TS]

  attacks some Wall Street punditry other times you see this language from johnnie [TS]

  I've about does a product deserved to exist and we you know and and so we see [TS]

  these trained very carefully articulated statements which which I would say 99.9% [TS]

  of listeners throw away as you know in one ear and out the other and it's just [TS]

  as if like these guys are just using some kind of some kind of poetry to [TS]

  bamboozle us but what I i my [TS]

  I think perhaps my favorite thing to do in that plan analysis is this take the [TS]

  lead role [TS]

  word out of the horse's mouth analysis of the framing of the three phases every [TS]

  detail detail but they say something and deconstructing it and saying you know [TS]

  there's a code in here there's actually meaning full communication going on so [TS]

  my take on it is yes there is a more particular there's more articulation [TS]

  using using [TS]

  coding coded phrases in this is Steve Jobs did need to he would speak from the [TS]

  heart and so what he came out his mouth was was deconstructed but but he was [TS]

  there was with the spokesperson and now we have simply a lot of other [TS]

  spokespeople who are doing these types of very interesting raisings and and I [TS]

  take them and I i see from that to me that is what guides by thinking that [TS]

  guides my analysis rather than saying you know what the number see what the [TS]

  Prophet logic might be I always ask given their language how are they going [TS]

  to do next [TS]

  so they give you the example of Ikea people were asking a few months ago what [TS]

  about the car what about the car and I said well here's how it would work that [TS]

  out and I would say what the Johnny I receive about product with the sting [TS]

  cooks a byproduct therefore the product that has to emerge has to comply to [TS]

  these rules they have to have a meaningful contribution they it has to [TS]

  be has to be better in ways that are that which Apple can contribute etc it [TS]

  so I what I would do is simply take those verbatim no communication from [TS]

  Apple and and used those as my lenses to analyze the questions that had so in [TS]

  that sense that's how that's how Apple is it is different in my way in my way [TS]

  of thinking because if you did that without with with Steve Jobs comments he [TS]

  would flip flopping on a lot of them were simply like today I feel this way [TS]

  and that they couldn't really rely on those statements as guiding guiding [TS]

  principles I think Apple remember once reminds me of what Tim Cook was acting [TS]

  CEO he went on a conference call and he almost like stated a poem in the poetic [TS]

  way what we believe in it he was like one of these like speeches buried in the [TS]

  conference call with analysts believe it and I i wrote it up and I said I called [TS]

  it the Tim Cook doctrine and this was before he was full-time CEO hehe you [TS]

  know I wrote those down and I i I broke the lines up in the way that it almost [TS]

  looked like a pole and I said you know there is there's the there's the there's [TS]

  an algorithm right there about how this business works we're going to [TS]

  cross-pollinate I remember he used that phrase I don't remember a lot of it but [TS]

  I can go back and they get up its doctrine in in in still in searchable in [TS]

  the blog so that's the kind of guy he is I think that's been that was way back in [TS]

  what two thousand probably eight or nine so it's it's it's very much a reflection [TS]

  of of what what you think of as to coax awful and so you i think part of went [TS]

  wrong in that keynote was the way that and I don't know if you thought this do [TS]

  I know most people who have spoken to agree that the music segment at the end [TS]

  was was too long and disorganized but in hindsight as we get closer to the launch [TS]

  of of Apple music and I read more and more about it I see that as the picture [TS]

  becomes more clear to me it was there it just wasn't the information was there [TS]

  what I want I think we should understand about it was there but it it it was too [TS]

  disorganized for it to be clear and so part of it is what you said about the [TS]

  humanism and not trusting in the algorithm and its and I know it was [TS]

  there and I know that they mentioned it a few times with the beat one radio how [TS]

  it's going to be human selected you know there's a curated perfect word but there [TS]

  was a New York Times profile today or yesterday earlier this week of Zane Lowe [TS]

  who's coming from BBC one in the UK super highly-regarded deejay and I know [TS]

  at this was mentioned in the Keno but it just kind of lost it because I was just [TS]

  losing focus but they mentioned that their intention with this is not so much [TS]

  that you're going to pick your favorite genre [TS]

  go go to station it's sort of like the antioxidant radio like we've got exxon [TS]

  radio in our car and I think there's like to 200 stations are 300 patients I [TS]

  don't know unbelievable number but you can dial in to have an entire station [TS]

  that just Frank Sinatra and there's a gas station just for elvis presley with [TS]

  this beat won their intention I mean obviously you're gonna be able to stream [TS]

  music based on your preference if that's what you want but if you listen to beat [TS]

  one it's any new music that they think is interesting which is to me a really [TS]

  interesting way to go and it is absolutely not [TS]

  algorithmically generated absolutely that's exactly the thinking that I think [TS]

  this news release about and i think johnnie [TS]

  Jimmy Iovine was one of probably sold on the idea that you can do this to music [TS]

  and let me guess here and no no no no evidence but let me guess that you [TS]

  probably remember back in the days when they were influential DJs in the United [TS]

  States who pretty much drove musical taste who could you know who who who [TS]

  could influence a generation by selecting the right music and playing it [TS]

  and you know over time that became corrupted by by scandalous type of [TS]

  driving driving and so on but but the job of meeting of the radio was for the [TS]

  generation to discover the music that that spoke for them and what what what [TS]

  we're seeing that with the abundance an overabundance of choice is that there is [TS]

  an assumption I think the Internet is that you can select it for yourself I [TS]

  think that's not the case for most people [TS]

  secondly you can use your friends as a as a selection criteria which is [TS]

  somewhat what to order does is you use your heat as a way to select what to [TS]

  read it so there's that notion that you select good friends and your friends are [TS]

  going to select good things for you but that has its pitfalls as well what if [TS]

  you select the wrong friends and and and [TS]

  and finally there's the algorithm which is the idea that the sample what you [TS]

  like and then we'll we'll give you will give you selections and all of these [TS]

  where are the modern version of discovery what Apple is saying is let's [TS]

  go back to this idea no it's an individual that we trust in the [TS]

  individual who who has supreme ability at Taste supreme ability a judge and [TS]

  about things and in this again this is this is a reflection of the logic of of [TS]

  johnnie I've in the logic of Steve Steve Jobs which said you know at the end of [TS]

  the day we're going to decide what products are the ones we're gonna [TS]

  dedicated so much energy to and we're not going to do a portfolio strategy [TS]

  we're not gonna head your bets and we're not gonna do all these things we're [TS]

  gonna hit a home run every time and by the way you know if I were to say well [TS]

  that's that's crazy it's only those two guys can do it it's it's it's it's it's [TS]

  not something that anybody else can do but look at how you would look at the [TS]

  way companies like Pixar able to hit home runs every time because they have a [TS]

  brain trust because they selected people who know how to make great stories and [TS]

  gave them to authority to say yes spent three four hundred million dollars on [TS]

  this project and 34 years to get it done and yet the they do it every time it it [TS]

  you know we we we love him for it in contrast to a company that you know the [TS]

  old Disney who just you know put out a portfolio and say century they're [TS]

  playing with a spreadsheet in order to decide what to make and that's that's [TS]

  the difference [TS]

  instinct vs spreadsheets or the human versus the algorithm and this is what [TS]

  surfaced I think through this through this event is how much more music is [TS]

  going to turn into that for us far as I was concerned that there is a very very [TS]

  different things that we've heard in the past from everyone else ya picture is a [TS]

  good example to because I think that they've been so open about so much of [TS]

  their process it's not really a mystery according to them [TS]

  you know how they are successful in yet nobody else can bring themselves to do [TS]

  it and do it it's like hiding in plain sight or here's the here's the formula [TS]

  but no one can no one has the courage to do that because it requires saying no to [TS]

  things which are nearly proven to work you have to say that portfolio theory is [TS]

  the foundation of finance and and and who would this my it's like if I were an [TS]

  investor and I would say don't forget about buying a basket of securities just [TS]

  by one company in the old at all your life [TS]

  yeah that would be the strategy that Apple suggesting they do as far as their [TS]

  investments or that picture does in terms of their investments [TS]

  you have to have so much faith in that decision that you know you're throwing [TS]

  away the hedge opportunity right you're throwing away the the what if it doesn't [TS]

  go right and and so so remember when Steve Jobs said focuses about saying no [TS]

  and talk about saying no to everything else but the one thing and so that's [TS]

  what's so hard and and here you know when we think about it did so this is [TS]

  very deep into the psyche of Apple many ways but what we're looking at it now [TS]

  through the through this question of products that are launching his services [TS]

  they're essentially tipped at telling I think that you know we asking you to [TS]

  trust us to act to make those choices for you when it comes to services and [TS]

  things were going to give you and and and that means to it saying no to a lot [TS]

  of things and many people will just see how dare you but but those who go ahead [TS]

  you don't have to buy this isn't like you know you're not obligated but it's [TS]

  it's it's the way that I think that is going to appeal to the type of audiences [TS]

  that are probably the the best audiences to have to take a break wanna keep [TS]

  talking about music [TS]

  afterward but we take a break and thank the first of her three sponsors for the [TS]

  episode and it's our good friends I'm so happy to have him back [TS]

  back I love this company it's our good friends at pack place you guys remember [TS]

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  it's a great service Karen fireball [TS]

  music part of the news of the last week was this crazy to me the Taylor Swift [TS]

  story right so recording here on Friday June 26 was last Sunday where Taylor [TS]

  Swift wrote a blog closed post on her Tumblr account more or less [TS]

  calling taking out the task for the fact that in the in the free trial for Apple [TS]

  music the three month free trial Apple wasn't going to pay artists for the [TS]

  music that cuts dreams they were only gonna pay a percentage based on the paid [TS]

  account once the free trial period is over and Taylor Swift's argument was [TS]

  this isn't right [TS]

  you know the free trial is a promotion for your service we should get you know [TS]

  we the artists should get paid no matter what and it not only worked it worked by [TS]

  the end of the day by the end of the day at EQ Apple's senior vice president in [TS]

  charge of music among other things [TS]

  was tweeting that ok I've called Taylor Swift we sorted out and and will be [TS]

  paying artists even during the free trial period I'm kinda blown away by [TS]

  that just by the speed at which it happen [TS]

  and how it kind of in terms of being a longtime Apple observer that it like the [TS]

  public aspect of it that it took place you know from one apple executives [TS]

  Twitter account yeah I was I was watching it and i was i was bemused I i [TS]

  personally I didn't have an opinion on it on one way that I think this is just [TS]

  business terms terms and conditions that are in contracts are often negotiable [TS]

  and sometimes used boilerplate that might not be appropriate for everybody [TS]

  and you know then you change it and and that's that's what we call negotiation [TS]

  and it was to me this is just a matter of business but the I think the [TS]

  noteworthy thing was you know your observation that they were so responsive [TS]

  to it in such a public way and then fact that so they go she Asian took place in [TS]

  public on on on Twitter that that amuses me greatly [TS]

  I'm not outraged you know they refused to be outraged anymore about anything so [TS]

  I [TS]

  I'm a little bit just just reflecting on the age we live in that this is [TS]

  happening in the end it turned out very well for everybody I don't think this [TS]

  was a big deal for Apple to even do it initially but they just probably wasn't [TS]

  something that they thought of this it was just standard practice you know that [TS]

  yes it's our service but it's it's gonna grow your business as well so you know [TS]

  where we think of it as a partnership so we both take ahead but at the end he [TS]

  said they said alright well will absorb that cost up front and pass it on [TS]

  because you're right you know very well off its money we don't need as much as [TS]

  you do but it's it's it's just the way it happened I guess that's was [TS]

  interesting same to me and I feel like it's also further sign that and I think [TS]

  Apple except I don't think there's any other way [TS]

  with the success that they've had the size that they've grown to a lot of the [TS]

  times when something like this happens there's no way that bacon truly win cuz [TS]

  I saw people saying the next day on Monday that this is sort of makes Apple [TS]

  look we makes them you know that they capitulated that they that they gave in [TS]

  you know and it doesn't make apple look good that they scrambled to do this [TS]

  whereas my guess is is that inside out that their take on this is why not make [TS]

  it look like we're paying attention because we are paying attention right i [TS]

  mean it's you know we saw the Taylors what why put it off white why why make [TS]

  it look why wait a week or two and make it look like we're a black box who [TS]

  doesn't respond to stuff like this we called her lawyers and we called are you [TS]

  know consultants or so it's it's it's clear simple as we talked on the phone [TS]

  sunday and said all right we'll just you know during the trial period so by the [TS]

  way they think the reason Apple is in the business of music anyways because [TS]

  they love music as they say many times over and over again and again one of [TS]

  these statements that people just goes right over over consciousness because [TS]

  they say it all the time you we love music by saying we love music they're [TS]

  not just saying hello being the the dancing of edta on stage its point is [TS]

  that they do love music because actually they think that that's a court that's a [TS]

  cornerstone of the business that is they want to be seen as a brand associated [TS]

  with music musicians and artists and creative people going back to think [TS]

  different who did they put up on the think different campaign all people who [TS]

  are creative people fundamentally whether they were scientific artistic [TS]

  cultural social creative people and so the idea is that that's what the brand [TS]

  that rests on and so I don't know anybody who would say that Apple [TS]

  benefits by being a tough guy with artists they come to the story there [TS]

  they're coming to this to the table with music [TS]

  spending all that money on a music [TS]

  the acquisition of beads were spending a ton of billions of dollars in the [TS]

  company founded by musicians or music executive partner with a musician and [TS]

  the whole companies like saying try to tell the world were on the way you want [TS]

  creativity to flourish and and we want our tools to be used by created people's [TS]

  we are on their side we're on your side [TS]

  22 addressing their customer that way and so that that is why if it if they [TS]

  called cave in to them they're just saying look we're just being overly you [TS]

  know the fault is it is that will be actually overly generous when maybe a [TS]

  cynical you would be that we ought to be much more tied tight with money and [TS]

  that's not a good thing to come across as being being being restricted with [TS]

  your with your with you our Terms you can be restricted when you're dealing [TS]

  with another company and I'm sure they drive a hard bargain but when it comes [TS]

  to artists the way you want to project is that you've been very generous and [TS]

  that therefore sluts on also developers ultimately who are part of the ecosystem [TS]

  and so I think it's it turns out well the only people who were gonna be who [TS]

  are going to be critical of the decision I think there are cynics because I don't [TS]

  think Apple's brand is about being being being confrontational with those who who [TS]

  use its tools [TS]

  yeah i i agree with that and I think I saw some of that cynicism in the [TS]

  aftermath of this you know ok we'll you know we'll pay during the free trial [TS]

  thing if it's if that's such a sticking point and I think the truth of it is [TS]

  that it's so little money to Apple I mean there you know the terms of leaked [TS]

  and apparently this is fairly standard across the industry you know Spotify is [TS]

  paying somewhere around the same [TS]

  amount where it's about two-tenths of 1 cent per play for streaming in other [TS]

  words five streams to get one penny in payment which is so little money no [TS]

  matter how popular this thing gets I mean just a little back of the envelope [TS]

  math but if you know a hundred billion plays is times to make sure you get this [TS]

  right hundred hundred billion times in 2002 is only two hundred million dollars [TS]

  which is a long you know it's just that they paid the three billion for beats [TS]

  and you know it would be a long time before they paid three billion in in [TS]

  these just read this is just talking about the free trial period right once [TS]

  people pay for the $10 a month thing the payment will all come out of there is no [TS]

  charity involved there's no you know the cost of anything everything will come [TS]

  out of the percentage of of what people are actually paying so it doesn't matter [TS]

  how popular Apple music is how many people sign up for this free trial and [TS]

  how many songs they play on it just can't add up to an overall meaningful [TS]

  number for Apple in terms of what they would be paying so I think the idea that [TS]

  end and the idea that they were trying to squeeze that minuscule amount of [TS]

  millions of dollars [TS]

  ultimately it's gonna be in the millions if not billions no matter where it falls [TS]

  the idea that they were trying to screw artists and take advantage of them in a [TS]

  free period i think is is it's too cynical I mean it's certainly possible [TS]

  but it just doesn't sound right I think that it's exactly what they said which [TS]

  is that they're hoping that they're gonna get so many people onto paid [TS]

  accounts and therefore have like a real sustainable model for artists to get [TS]

  paid for digital streaming [TS]

  that you know it they just saw that free trial as a way for everybody to sort of [TS]

  benefit from the long term of having people signed up for actual paid account [TS]

  and that's the way it works I mean when you were when the point of free trials [TS]

  is that everybody who's you doing it because you want to gain people's [TS]

  business and you want to get people's attentions and makes a lot of sense 22 [TS]

  in this case because also there is a cost of giving it away remember this is [TS]

  digital media so if they listen to those streams maybe those dreams where I have [TS]

  never gotten listen to its not that they're gonna stop listening in [TS]

  somewhere where they are paying and then start listening on this service or maybe [TS]

  they will but Spotify in some some artists might see a decrease in revenue [TS]

  for this trial period but generally again it these are these are very small [TS]

  amounts and I i I think this is this is one of those things that I felt that I [TS]

  wasn't I wasn't motivated by enough to even make a comment about it so I to me [TS]

  that the news in in in the way it happened what ya think so too I'm [TS]

  definitely curious to see how popular music becomes but it's it's sort of [TS]

  outside my purview I'm just not into popular music so I don't know that's [TS]

  been that that's something I'm embarrassed but they but then again they [TS]

  get to a certain age one thing I have as as as as a theory about the human [TS]

  condition it's that music discovery is that he's a young man young man or young [TS]

  woman's problem would you get to a certain age you know what you like and [TS]

  you've already probably got it and so very few people get are interested in [TS]

  new music at a certain age and and so that's why the genres break into [TS]

  nostalgia and you know you can get a radio station for every decade because [TS]

  people want to go back to that time when they were young and that was a formative [TS]

  years where where that music speaks to them and by the way they think is that [TS]

  there wasn't such a thing in the nineteen sixties because the industry [TS]

  will sell new and there was an idea of popular music was just recently created [TS]

  so the nostalgia would have been for jazz or 444 that sort of music that the [TS]

  nineteen twenties forget the names of some of those types of music bad but it [TS]

  was a recorded and so people weren't gonna go back to to try to relive that [TS]

  time with through music so it's a very much a phenomenon the 20th century I [TS]

  loved one thing about the music events or the music part of the event that that [TS]

  I think didn't maybe rise high enough to consciousness was that video they showed [TS]

  where they they narrated through imagery how music changed over the years and I [TS]

  think they missed a little bit with that video because it was narrated they just [TS]

  had images on me but then there were used to you could read that narration is [TS]

  like if you go back in history ever since music became a recorded product [TS]

  it's changed not just in the form of the medium or the media that was used to [TS]

  capture it from vinyl 22 tape to CD but also because of those attacked time the [TS]

  music in my life was hired for different things [TS]

  the first record players were where higher to play music in the in the [TS]

  living room to the whole family and you probably have very few records and maybe [TS]

  you actually dance to them in the formal way and and so over time you see how [TS]

  music became a different thing and and when it became concentrated enough and [TS]

  portable enough so that you could carry $500 thousand songs in your pocket then [TS]

  it became yet another thing in the morning [TS]

  became something you you you could get on the internet through a stream it [TS]

  became yet another thing so what would you nobody would have thought in [TS]

  nineteen sixties I would have these wearable headphones and I was go running [TS]

  with with with them to to use music as a way to to to motivate myself to my [TS]

  workout or I would use these at work to to to isolate myself from from from the [TS]

  noise in the background or or I would I would wear these are not on the commute [TS]

  that use case those types of uses for music emerged only because of the [TS]

  technology that was available at that time and so in some ways what they're [TS]

  saying is that we as a people we made one of those eras happened and now we're [TS]

  going to move to another era and we're gonna make this happen for the for not [TS]

  just the consumer but also for the musician and so this whole story i think [TS]

  is wonderful because it's about the evolution of music the evolution of how [TS]

  music was assumed that what purpose it had meaning they had in people's lives [TS]

  and to the chagrin of many many people in the industry it seems as if music has [TS]

  been has been devalued over time has once we've had so much of it and it's so [TS]

  easy to obtain and and it can carry so much of it in our pockets that it's you [TS]

  know we traded analog dollars for digital pennies and dimes and then and [TS]

  then streaming pennies but that's that's the sort of the the negative spin on it [TS]

  but the positive spin is actually we consume more music than ever we're [TS]

  surrounded by we have access to it we we can sample we can try new things and so [TS]

  what if you were to take the positive spin on it Apple would say the [TS]

  conversation to the artist is that ok let us help you [TS]

  surface this let us help you actually take advantage of technology that helps [TS]

  helps you continuing your craft and there's a consumer the same to the same [TS]

  thing is let's find music that you wouldn't have ever found before that is [TS]

  that is so inspiring or delightful and really doesn't improve your life so so [TS]

  that's that's why Apple's in the music business they come in [TS]

  and say we're not here to figure out a new monetization strategy we're here to [TS]

  actually make sure that music survives that music is is continuing to be an [TS]

  important part of life I get I sound like like a pitchman for for the four [TS]

  beats but the idea is is is is that I thought about this for years and years [TS]

  when I was thinking about where's your music and i ended up being what what [TS]

  what what what is what is the job to be done music is hard to do and looking [TS]

  through history realize that their drug changes and that you gotta change along [TS]

  with that [TS]

  yeah I think that the idea that Apple should've seen some people speculate you [TS]

  know they say why is Apple AAPL even bothering with this at all they don't [TS]

  need to do music they don't need to be this involved right they they've you [TS]

  know you can you can why not just let Spotify and Pandora handle it all [TS]

  they've got great iOS apps you can play in any of your Apple devices why does [TS]

  Apple even need to do this and I think it's because of what you said is because [TS]

  they want to because they really think music is part of what they want their [TS]

  company to be yeah conversations I had with someone at Pixar and I said you [TS]

  guys go into doing TV because you've got these great storytelling techniques and [TS]

  tools and things like that when they make sure to the movies nothing in [TS]

  between and they were like the answer was because we love movies and I had no [TS]

  way to go I was taken aback I was like oh yeah of course it's here I am [TS]

  thinking like a technician or I'm trying to segment the world by what is possible [TS]

  and and at the end of decision is like no we just love stuff and that's why we [TS]

  do things if we don't we did things that we didn't love it we wouldn't we [TS]

  wouldn't be good at all and so the formula Pixar's and just like we know [TS]

  how to turn the crank it's like we really are passionate in the passion is [TS]

  key and so in this case I think it's the same thing I mean why is Apple in [TS]

  anything why shouldn't they just leave [TS]

  leave payments to someone else why should they be be trying to make better [TS]

  photographs why should they be trying to make better movies with iMovie and even [TS]

  though nobody is using it you know why they doing I work at all that's stupid [TS]

  you know why we get into that and kill it kill it every time I hear is like [TS]

  shut it down [TS]

  shutdown Apple TV it's a failure shut down this is that I always think that [TS]

  get into it just for that purpose to sort of make money order to become a [TS]

  success by your definition of it they probably do too because they think it's [TS]

  part of their fiber and it's it's something that they feel that that will [TS]

  complete them or just wanna make it seem like you know there's some kind of [TS]

  artistic entity but it but it won't even ask artists this question is why did you [TS]

  paint this thing and not show it to anybody so I had to get it out I had to [TS]

  get it out and I don't care if anybody sees it in some ways you ought to think [TS]

  about business this way because this is this is the the this is the antithesis [TS]

  of an analytic approaches actually the one of being entirely empathy based and [TS]

  so the the butt but that empathy allows you to create greatness and it may lead [TS]

  you to that one great business as well but it is doesn't happen through a [TS]

  deliberate acted happens to e-discovery act and so this is this is why when they [TS]

  make choices that are based on these these these in stings it and then people [TS]

  say well it's not economic or it doesn't make sense for the they're stepping on [TS]

  toes and things like that [TS]

  111 had an apple that that's that's the narrative but the other hand on Google [TS]

  nobody complains that they get into all kinds of crazy moon shots and they all [TS]

  applaud you know if Apple's however even slightly off of what is thought to be [TS]

  the well-trodden path then then people you know [TS]

  jump up with criticism and [TS]

  and all this is the end of Apple this is obviously this is not the airport a [TS]

  there should not be in this etcetera etcetera hate it it's it's some people [TS]

  do R&D some people do moon shots in apple just wants to do once to in you [TS]

  know dole judge some ideas about what they think is important or education for [TS]

  example where the education we're getting into health care why they [TS]

  getting into fitness tracking are these old money making opportunities someday [TS]

  but you know i i don't see a way I could put that on the spreadsheet and I don't [TS]

  care either it's about really doing things which they think stitched [TS]

  together into a fiber that holds up the whole thing and that's that's the [TS]

  business of Apple I think that's not it may be that is a new business of Apple [TS]

  because Steve Jobs time you would have been more there would have been a little [TS]

  bit less diversity diversity occasion but it's still it to me this is this is [TS]

  because the fibers are so much broader and in there needs to be so much more to [TS]

  support billions of or potential billions of users I think fundamental to [TS]

  the culture of Apple the corporate culture and I definitely started with [TS]

  jobs without question and it was deliberate and continues to have [TS]

  unforeseen consequences and allows able to do things you may not know ten years [TS]

  from now that we wouldn't have predicted today is the fact that they don't do a [TS]

  P&L for each product or division or however you want to talk about it that [TS]

  they're not set up as a as they don't have divisions within the company [TS]

  they're they're completely functionally organized in fact they're more [TS]

  functionally organized then then even before with Steve Jobs where where [TS]

  Johnny Ives team took over at design of everything not just hardware design but [TS]

  that with forestall ouster and taking over all of soft words that there [TS]

  weren't separate you know there wasn't one team doing iOS design [TS]

  they created a new function and design it's a really deep in exactly right in [TS]

  this is something I'm glad you brought it up because i think is one of the most [TS]

  under under understood aspects of the Apple algorithm which is that they they [TS]

  they they essentially said no to 22 division organization which which as he [TS]

  hears the narrative I have on it which is that that's fine for small companies [TS]

  effective your startup you are by the fault a functional organization it makes [TS]

  sense so you gonna have a somebody you are usually a person is a function and [TS]

  that's it I was not that many of you but as you grow make sense people think it's [TS]

  logical that ok now we have to divide according to where the money comes from [TS]

  so it's if you know if we've got a product to put somebody in charge of [TS]

  that product I'm gonna put somebody in jail if it's in fact geographical [TS]

  because your sales structure is that way the new geographical segments or or [TS]

  something like that in the you organized according to whatever means that you [TS]

  decide the money comes in it and that's the thing is that the money starts to [TS]

  lead your thinking and and and optimization becomes a day like how can [TS]

  I hold that person responsible to do the best thing for that for that particular [TS]

  flow of money that's coming in to optimize it and so so that's how [TS]

  divisional organizations involved in fact General Motors was probably the [TS]

  pioneer in that area back at you know years ago or so so so that this idea of [TS]

  divisional logic is is is pervasive in the world and it it also makes sense [TS]

  when you're managing people thousands and thousands of people you want to be [TS]

  able to create incentives for them to a lot according to certain goals and and [TS]

  so the Pyramid of that division is is set up so that everybody knows what the [TS]

  target is and therefore there is tied to that in some way and so people know what [TS]

  they're what you don't need to tell them every day what to do they'll have that [TS]

  in their incentives built in [TS]

  but that doesn't work for an organization where which is like Apple [TS]

  which is functional because you're not attached to a product you might be one [TS]

  day but not the other end and then you you're sort of you never even part of [TS]

  the P&L logic is that you report some of that data and people know how things are [TS]

  going and and so there's a communication happens through the knowledge of what's [TS]

  happening right and so bottom line is that Apple's lack of a P&L structure [TS]

  means that people within the organization will you have hard time [TS]

  motivating them you'll have a hard time figuring out what their responsibilities [TS]

  are figuring out how they can navigate their own personal careers so that they [TS]

  can they can maybe optimize their own career because the single pricing in the [TS]

  signal low profit was used to guide you and guide you if you were in a [TS]

  visualization old so we have to be impressed by is how actually difficult [TS]

  it is to do what Apple's doing because it actually makes it running the [TS]

  business really really hard and in fact it may cause some people just say I quit [TS]

  this does I can't I can make sense of it I can't progress in my career because of [TS]

  this and so there's a lot of heartache that comes with it and there's a lot of [TS]

  chaos that comes with it and so this is why every company against grows up in [TS]

  the same stage abandons this logic and here's Apple which is no I don't have [TS]

  fifty thousand or more people is is still able to continue in that way to [TS]

  really hard to put a head count on Apple separate their retail think you might be [TS]

  right that it's probably fifty or sixty now it's it's explosively grown eaten on [TS]

  retail has grown tremendously in the last five years it was i think is done [TS]

  melton pointed this out to me is the largest functional organization outside [TS]

  of the USSR me but the ideas that I sold that public he said [TS]

  my head went like pop because I said holy cow that's exactly why are these [TS]

  are the way the army the armies are with the way they are they're actually [TS]

  organized the way they are because they need the they need to be thrown out a [TS]

  target there are thrown out a mission and we have to execute on that mission [TS]

  but they're very inefficient in terms of trying to do a blend of things and often [TS]

  even when you go onto the internet mission it's like it's chaos it's like [TS]

  crazy you know competencies emerged and then you realize that ok that's what we [TS]

  have war games to simulate them in so make sure that things run effectively [TS]

  and so on and so I I got into this whole train of thought about whether what [TS]

  would happen if the USSR me was divisional then you would have the head [TS]

  of you know the head of certain types of missions she would say Air Force Marines [TS]

  and Army we're gonna have we're gonna have a guy had a charge of attacks in [TS]

  the Middle East and we're gonna have a gun charge of maybe Latin America and [TS]

  Latin America would have under him Army Air Force and Marines but the problem is [TS]

  that that person with gained so much power than they would start the Joint [TS]

  Chiefs of Staff we can't have these debates around the table and say you [TS]

  know you know this is much more important to get more resources so so so [TS]

  why are you you know eighty percent of the budget in the Middle East this year [TS]

  mister president and and and you know nobody cares about Latin America all [TS]

  they're doing is is is busting drug gangs you know I got a real fight here [TS]

  to fight so so give me more money so then you get in 2011 general who ran the [TS]

  region's only have so much more power than the other generals [TS]

  he could actually probably run you know do run his own empire on his own [TS]

  make make make make so many decisions that he will become like the king of the [TS]

  Middle East impact because there was like that in Japan they had so much [TS]

  authority in Japan after the war that he broke their constitution for them [TS]

  practically he was a general in so that was a special situation but when you [TS]

  think about it that way that this is this this this idea of people who have [TS]

  have under them an empire this is the politics that this is the type of [TS]

  politics that that drives organizations into all this all this paralysis all of [TS]

  this mismanagement in all of this running off a cliff and stupidity that [TS]

  we observe and and so because someone has that power structure and then you [TS]

  can imagine this in Microsoft's world with those guys are really powerful [TS]

  enough is guys are really powerful and they need all the resources because they [TS]

  burn them and so in so he goes about when you take that away you depoliticize [TS]

  organizations especially with the military gotta be depoliticize a [TS]

  politicized military turns into a object of coup and and this is why you have [TS]

  republican guards and things like that which are politicized military's which [TS]

  often end up really controlling the state and in a democracy that's that's [TS]

  that's unacceptable for that reason the military's in democracies are the way [TS]

  they are and this is let's long narrative but I i sorry well and not and [TS]

  not to go too deep down the history historical rabbit hole but that's why [TS]

  harry truman fired general exactly which very true that's one of those things [TS]

  where I grew up and heard the story and I thought well I guess that's the sort [TS]

  of thing that happens but then like the older I get the more perspective I get [TS]

  on it was sort of a bombshell you know to the us- public who viewed him as you [TS]

  know as I said we have more time here he hit you not only have beaten Japan but [TS]

  also he was in Korea and and so far north of North Korea and it is hehe [TS]

  getting fired I mean there's so many people were upset that he became to [TS]

  politicize political and that was unacceptable in a democracy in that that [TS]

  to me was was a great story to tell and and and i think thats where you gotta [TS]

  watch out this is the day to day [TS]

  fears and worries that a guy like Tim Cook has to deal with it is he's gotta [TS]

  worry about and I think you know the four-star story had a lot to do with [TS]

  whether that general became too political [TS]

  and didn't stick to his functional role in that case he had to be sacrificed [TS]

  even though everybody loved them so you know it's the same story I think of him [TS]

  as the truman yeah more time is gained from that the last 80 exactly but I [TS]

  thought you made cookies cookies the truman end and for so was it was a car [TS]

  right now that's the more I see it though it it's not just at first I [TS]

  viewed it as sort of a penny more of a penny disagreement between a few [TS]

  individuals and I think that there's something to that angle but I feel like [TS]

  long-term strategically it was about making sure that the institution of the [TS]

  whole company was was truly more functional whereas I feel like under [TS]

  Steve Jobs a lot of the functional nature of Apple came down to jobs [TS]

  singular role in the company not not to say that the company depended on it and [TS]

  couldn't you know that he was a cornerstone that the company couldn't do [TS]

  it that I think we're seeing the desert true but I think that the functional [TS]

  nature of the company flew through him and those subtle differences we [TS]

  generalize that will use metaphor it we used to use allegory but the truth is [TS]

  far more complex and so I don't want to die I don't want to make it seem like [TS]

  it's so clear cut that you know this is this tells the story but I think for [TS]

  example just as a as an anomaly as a counterpoint to to the functional think [TS]

  there's any Q's organization because I dq I see it as an empire because he's [TS]

  got under him [TS]

  services now called includes all the stores in includes i work it includes [TS]

  the new Apple TV [TS]

  it includes products that are hardware software and services and that is that [TS]

  is could you know if you could spin off to a DQ you know it would be a huge [TS]

  business would be a business bigger than that was on my opinion I could probably [TS]

  dig up some numbers that would show that that that particular innovation by [TS]

  itself would be valued by the market far with a good chunk of multiple would be [TS]

  would be far in excess than what it is inside out but that of course that's not [TS]

  gonna happen the point is though that is an exception to roll and and there is a [TS]

  good reason for that because there's this kind of like what do you do with [TS]

  these pieces problem and so and so it's always there there there are put under [TS]

  him and so if it happens there's a reorg [TS]

  I would be surprised because something may just get out of control there I [TS]

  don't know I'm not prejudicing hopefully I think what's what's so funny with [TS]

  apple today it would be it would be almost impossible to reorganize the [TS]

  company I think what they could do is is there could be like departures [TS]

  individuals could depart maybe just simply to enjoy their retirement enjoy [TS]

  the you know the well that they've accumulated or it could be another [TS]

  dispute arises where there's a personality conflict between two senior [TS]

  vice president who need to be working together and can get along but I to me [TS]

  it would just be it's almost more like running like sports you know like pick [TS]

  any sport you know you talk about soccer like well we're gonna have to change [TS]

  goalkeepers thats but it's still not really a 25 you're absolutely right i i [TS]

  i just i i literally on the spot thought of them with the reorg idea [TS]

  on reflection I think you're right it's not gonna be what we think of as a [TS]

  recorded by just be that that maybe they'll cars maybe they could do [TS]

  something with with services that's gonna grows to such an extent that they [TS]

  may make create that as a separate thing I don't know I'm just being completely [TS]

  speculative let me take another break here take a deep breath and thank our [TS]

  second sponsor and it's another longtime friend to the show our good friends at [TS]

  fracture it is sad sad I honestly think it is that so many of our photos that we [TS]

  take today people everybody almost everybody I know takes more photographs [TS]

  today than they ever have before in their lives and it's only only becoming [TS]

  more prevalent and it's easy to see why it's because we all have really good [TS]

  cameras with us all the time like two or three seconds away from being ready to [TS]

  snap a photo and yet so many of the photos that we take never really leave [TS]

  the devices that we view them on their just digital things that we see on [TS]

  digital devices when we look for them and I think it's actually true true for [TS]

  me personally as somebody who used a tractor and has fractured Princeton and [TS]

  you know talks about them all the time here that I've actually got let fewer [TS]

  printed photos now when I take more photos than I did ten eleven twelve [TS]

  years ago when I used to shoot on film and had to have printed everything made [TS]

  there's something magical about a printed photographs when it's something [TS]

  that means something to you that's where fractures Epson fracture prints your [TS]

  photos directly on pure glass you pick your favorite photos that you've taken [TS]

  you send them to fracture and the prints come back to you directly on class not a [TS]

  piece of paper attempts to class they just print right on the glass I don't [TS]

  know what kind of food do they used to do it but it looks great [TS]

  the Prince come back to you they've got a foam back right on the glass that's [TS]

  ready to mount on the wall or ready to be used its genius ingenious packaging [TS]

  you can use to mounted on the wall or door propped up on a shelf or your desk [TS]

  or the man told everyone to put it up right out of the box so you don't need [TS]

  to put them in a frame you don't need to buy a separate frame the picture itself [TS]

  is all you need to mounted on the wall hang it up really looks great and it [TS]

  gives your photos the analog beauty that they deserve so go check them out [TS]

  take some photos or take some of your recent photos pick a few that are your [TS]

  favorite go-to fracture fracture that's their website and use the [TS]

  code sharing fireball use that code and you'll get 15% off your first order from [TS]

  practice their prices are already great but you can save 15% using the code [TS]

  during fireballs Mike my text tractor so speaking about not putting everything [TS]

  off and the tone P&L profit loss and looking at things you know functionally [TS]

  you you wrote a recent piece i Simcoe about maps and this sort of well more [TS]

  like one factor how much does it cost to run a top-notch mapping service per year [TS]

  and you came to the conclusion that it costs about two billion dollars a year [TS]

  yeah I think it used to be one but it's closer to two now and I think that when [TS]

  I got that figure by looking the financials then that Nokia was reporting [TS]

  for its here product or product here [TS]

  division which was an acquisition back in 2007 the year the iPhone launched [TS]

  Nokia spend a seven billion dollars are you resort to get on the acquisition of [TS]

  NAVTEQ which was at the time probably the best map service in the world and I [TS]

  mean that because I was using maps in 2005 and six on a mobile device [TS]

  I have flown back to the free iPhone dark ages and I remember using Google [TS]

  Maps back then it was horrifically bad I think Google Google Maps was laughably [TS]

  bad compared to paid services or or things you could purchase by you could [TS]

  download the entire maps like you November over TomTom and Garmin those [TS]

  guys had a dollar or if they had a an embedded mapped in their in their [TS]

  hardware or if you had a car system like like you would have with high-end car [TS]

  back in the day you pay $34,000 for the on-board navigation which was a DVD [TS]

  usually that was you know that was upgradeable that's exactly why I we [TS]

  bought the car we have bought in 2006 still driving it and I think we turned [TS]

  down it was a four thousand dollar upgrade to get onboard navigation which [TS]

  in hindsight it for a couple of years there were my wife gave me a hard time [TS]

  about that and in hindsight really looks like a very good decision and that the [TS]

  time you could get a handheld navigator and you or you could get like very [TS]

  rarely and these were only in some Nokia devices that you could get usually was [TS]

  in sdcard that had mapped data for the region you are in and you could opt out [TS]

  in very few actually I think were directly over the year Google started [TS]

  offering over the air but again it was horrible I remember using it and those [TS]

  years I was in I was in Boston I was actually working at his offices over and [TS]

  by 128 and I remember using it every afternoon going home I would open it up [TS]

  on a Nokia sort of BlackBerry Style phone and I would have this tiny square [TS]

  screen and pop in through the through the online through the story through [TS]

  through the network at the time which would have been probably to G or two and [TS]

  a half G and I would get to see my route home and I would look for the traffic [TS]

  data there was there was there was really only value for me is like how bad [TS]

  was the traffic when I would have when I would drive home but that was it there [TS]

  was no really discovering where to go eat or anything like that that was maps [TS]

  based so at that time at that time [TS]

  Nokia thought we've gotta spend seven billion dollars of maps and the thing [TS]

  about Nokia throughout the years I was there is that they were really really [TS]

  forward-thinking [TS]

  thought about smartphones ten years before anybody else did they start about [TS]

  maps 10 years before they got good enough and if anything they just wear [TS]

  too early on everything and and then focus on the things that needed to be [TS]

  improved the rather they said ok we buy the assets over we commit to the [TS]

  strategy and they they they thought that was enough they didn't have the ability [TS]

  to really really get there get this thing sorted out so so so long story [TS]

  short so so they by nafta 44 billions of dollars and then you they would report [TS]

  their revenues and they would report their costs so that we can work out just [TS]

  how much they were spending to maintain that seven billion dollar asset to [TS]

  maintain the data on it and of course nowadays people would say that here maps [TS]

  is not as good by the way here the maps business did have revenues for them [TS]

  because they were selling these datasets to the car makers they were selling them [TS]

  to Mercedes and Porsche ever to put on those DVDs in their cars and put in the [TS]

  sdcard that you weren't willing to buy that service so that makes business was [TS]

  a real business it was a driven business it wasn't based on on selling devices [TS]

  you was based on selling the actual the hard earned data and they had four [TS]

  hundred people who every day got into cars to go collect data by driving [TS]

  around and they would also source data from satellites source they have [TS]

  satellite companies that outsource data from geo position in though there's [TS]

  there's this huge datasets that mostly were not consumer-based write these were [TS]

  for companies and and so so this was an amazingly valuable idea that [TS]

  after going to be someday very important in mobile and that maps therefore the [TS]

  Nokia Software by owning that acid and there weren't very many others they were [TS]

  coming with the baggage of hardware like to buy Garmin and TomTom and so is that [TS]

  they said those of pure pure said we're gonna buy it we're gonna be the best map [TS]

  service in the world and at that time would argue yes they were [TS]

  Google was a joke and and the funny thing to me was a few years later when [TS]

  finally Apple gets into the match businesspeople say that their joke and I [TS]

  I just remembered Google I didn't think that that was irrelevant argument [TS]

  because I remember that Google did better so the only question in my mind [TS]

  was not are they any good at the launch of course they're not good at the launch [TS]

  just getting started on something that people been doing for twenty years and [TS]

  Google itself had been doing for seventy years or six years and of course Google [TS]

  had a six-year leading of course they gonna be better so let's look at it six [TS]

  years from now it shows and so I knew that they would have to spend a ton of [TS]

  money that that that that just to maintain the here Maps service for nafta [TS]

  cost a billion dollars a year so you know that obtained at that the knowledge [TS]

  that the catch up you'd have to be spending more than that now no one's [TS]

  confirmed or denied the two billion figure but I i you know i i would say [TS]

  that's credible the the amount of effort going in is at that level and so that's [TS]

  all I got the number I I will put a link to to the piece in the show note I know [TS]

  how and say that I never get to but I've already got it in my notes so it'll be [TS]

  there but you make a good case for why it's I think in the ballpark it's got to [TS]

  be pretty close and there is a lot is just a lot of ongoing legwork to run a [TS]

  modern mapping service I mean you need those drivers out on the streets taking [TS]

  the pictures of the stores and I'll give you i'll give you another example and [TS]

  this is from a friend of mine who have made it actually a blast like medals at [TS]

  all [TS]

  talkable show in Ireland and in hebron a service in prague is america he ran a [TS]

  service in prague Germany also Prague Czech Republic search [TS]

  where where she would college students to walk around the city and make notes [TS]

  about the opening times of every restaurant every place you could walk [TS]

  far everything you could walk into so the address the details about you know [TS]

  what was on the door that that that gave you information that was about that [TS]

  establishment and so what he would accurate gate that they don't overlaid [TS]

  on public open source maps and provide that as a tourist Atlas so so he would [TS]

  let you download so you could download this and not pay roaming charges [TS]

  surveyed imagine you're visiting from Italy to prague and you're in the [TS]

  Italian in you you get the papal prague from him and the law gives you this [TS]

  level of detail now the reason he was in business is because Google Maps would [TS]

  have cost you a lot in roaming fees so in europe it made sense that you can do [TS]

  you could do every city this way but then the real amazing story he told me [TS]

  was that Google came to him and said why don't you just license this all this [TS]

  data to us they didn't have a Google didn't have this data so so he did a [TS]

  deal with Google where he's you know and he felt he had he had been wronged in it [TS]

  because they offered him like we'll just put your name down at the bottom of each [TS]

  page we won't pay you anything will put your name down the bottom and so they'll [TS]

  be a link so you gonna get alot of business from from being exposed via [TS]

  Google Maps and it turned out the dollar's worth very much so he felt that [TS]

  you know that there was a bad deal got out of it later but but but you know [TS]

  what ideas did that Google itself in order to to to get this information does [TS]

  all kinds of deals rated either sense people on its own or in this case [TS]

  through another person who did all this work you know has college students do it [TS]

  because college students are fairly cheap and they were going around by foot [TS]

  anyway walking around the city thinking they're they're they're discovering the [TS]

  world and by the way here you gonna be paid a couple of dollars if you if you [TS]

  if you jot down this data for every time he passes a doorway and so this this [TS]

  model of really low level crowdsourcing data is [TS]

  truly labor-intensive and it ends up costing a lot of money the cleaning it [TS]

  up and so it said it all to India to have it to have it [TS]

  rationalized and and and fixed and all that stuff so there's a huge amount of [TS]

  effort there as well and then they then they go off and into 3d then they go off [TS]

  and do the underground internal maps and on and on it goes the demands of these [TS]

  maps are suddenly we want to have every single thing we want flyovers we want [TS]

  you know vector maps we don't have maps right so all that adds a huge amount of [TS]

  cost and and and so if this is the game you wonder then why are they doing it [TS]

  because you've gotta make the money back somehow and get stuff to understand the [TS]

  logic that that that that exists besides the ones we see now which are basically [TS]

  Google Maps advertising based and Apple essentially saying that our devices are [TS]

  worth it and so I asked the question what else can we expect for business [TS]

  models as far as maps are concerned into the future and I lead to you know [TS]

  thinking about transportation and vehicles [TS]

  yeah well that's part of your analysis and I love this I never really thought [TS]

  about it but if you if you know starting with the idea that it takes about two [TS]

  billion dollars per year to maintain a modern mapping service that you can work [TS]

  out rough estimates of how many users the major mapping services have and then [TS]

  you can divide and figure out what is the cost per user per year and your your [TS]

  estimates you come out with a Google Maps is the leading map service in the [TS]

  world [TS]

  cost about cost them about $2 per user per year so to be profitable now I'm [TS]

  reading right near post Google would need to find ad revenues of $2 per user [TS]

  per year with Apple with fewer users but with a majority of iOS users by all [TS]

  accounts their Apple is spending about six seven dollars a year per user per [TS]

  year and [TS]

  to make to justify that they really just need to find six or seven dollars of [TS]

  value in the iPads and iPhone to people are buying which as you said certainly [TS]

  seems reasonable and then you get a 10 Nokia here and it's costing them $66 per [TS]

  year per user because they've only got thirty million users at this point and [TS]

  you can if you were to bundle it with with the old Nokia Microsoft Nokia [TS]

  because I actually know they exist without any users so they are having [TS]

  what they're doing is a licensed that the Microsoft Microsoft is a probably [TS]

  only pay Nokia you know a couple of dollars like they would let safer for [TS]

  more precise a blend between Apple and Google like some let's say five bucks a [TS]

  year for per-user and that just doesn't cover their costs so they'd have to find [TS]

  other revenue they do like I said I always been selling two carmakers but [TS]

  that makes it you know that's why the car in that that's why the car guys are [TS]

  so you're asking $4000 did you know they probably paying the the defender like [TS]

  three four hundred dollars for their markets are huge in their very [TS]

  inefficient but but that that's the that's per vehicle pricing it's probably [TS]

  in the hundreds of dollars but again [TS]

  long now it's up for sale and it's still losing money as it is right and the [TS]

  question of whether this is why people would ask me why there's a way there's [TS]

  an Apple by by Nokia's here and I 80 I would say look at stuff for sale for [TS]

  three billion dollars and then there's like there's no deal yet but what [TS]

  somebody supposedly is bidding three billion dollars on something that a few [TS]

  years ago said seven billion dollars and suddenly we're saying is absolutely [TS]

  hygiene factor as far as platforms are concerned if you don't have this you're [TS]

  you're you're you're not a player and Apple is desperate and so on and so on [TS]

  all of these things make no sense when you look at the you follow the money and [TS]

  you say here's somebody could just buy the third best apples the Thursday [TS]

  mapping system and probably you know having the longest legacy actually and [TS]

  no one wants it why is that why these things don't make sense to to you know [TS]

  when you reconcile the dollars [TS]

  and you reconcile against the supposedly value and in in in that what is it the [TS]

  invaluable nature of maps as a strategic asset and so i i i point out that well [TS]

  the guys were in it already have already decided and committed to this strategy [TS]

  and they're putting their own people to work on it and that this will not help [TS]

  them very much so the only question is will there be a third party that wants [TS]

  to get into this business but they have to discover business model that's the [TS]

  question if you were in the library is one of the candidates that's being put [TS]

  forward maybe it's it's not true but I rumors say that it is interested or the [TS]

  car makers as a group with go and buy this mapping think that's up for grabs [TS]

  but they would have to come up with how do we make sure we're profitable to [TS]

  burning two up to a two billion dollars are you cute this service competitive [TS]

  and and and the answer would have to be that they have to get into some way of [TS]

  monetizing Autonomy's autonomous vehicles and and I both have an interest [TS]

  in that [TS]

  yeah because it kills it can kill a bunch of birds and maybe more than two [TS]

  birds with one stone where the autonomous vehicles and you see you know [TS]

  it's no secret that is getting into package delivery and stuff like that and [TS]

  that Amazon you know it it a whole bunch of different companies are converging on [TS]

  the same idea that Amazon is investigating new ways to deliver [TS]

  packages to people that without going through UPS or something like that [TS]

  actually had an uncomfortable conversation with my UPS guy the other [TS]

  day where there was a package from Amazon that was left at our door and [TS]

  then the UPS guy came and rang the doorbell and had another one and that's [TS]

  very unlike ups ups usually very very efficient at bundling two things you [TS]

  know if you have two different orders coming that they come in at one time [TS]

  and you know and he mentioned you know that he said he thought I wasn't home [TS]

  because you know that Amazon package had already been left there by somebody else [TS]

  at my front door clearly not delivered by UPS but anyway all these things [TS]

  people getting driven around and not only in cars this whole idea that if you [TS]

  live in an urban environment you you can use birth and that of owning a car and [TS]

  you actually save money you can save a lot of money compared to the the monthly [TS]

  cost of owning a car and combine that with the fact that these cars could do [TS]

  the work of taking the pictures and stuff like that as they drive around the [TS]

  area [TS]

  oh yeah that's the thing in the fact that this and why you go away go away [TS]

  great guy and he probably interview him and if you know he points out that [TS]

  hoover's potentially disruptive to terrorism because when you break that [TS]

  down besides having a discovery engine for your website its really a massive [TS]

  operations and distribution center and that's where a lot of their money goes [TS]

  there a lot of their their capex for capital expenses are in setting up [TS]

  distribution centers globally and they're very expensive and they're [TS]

  somewhat even robotic they have about certain stuff in and so that's a that's [TS]

  a that's a high-cost thing and they're doing it because really that's that's [TS]

  how they get the growth thing you know they have to get these packages 22 from [TS]

  a lot of points to a lot of points and the thing is that that's exactly what [TS]

  does now it doesn't have the storefront but it's actually probably easier for [TS]

  them do a storefront and then that it would be to build infrastructure that [TS]

  that they're disrupting so it's it's it's fascinating i think is one of the [TS]

  most disruptive ideas ever so that's why they would come to the maps question [TS]

  with a different set of priorities not so much about monetizing them the way [TS]

  the other two are doing it but rather that saying hey you know this is [TS]

  actually exactly in the direction we want to go we want to be a logistics [TS]

  company we want to be a transportation Co [TS]

  money we want to be a potential even the vehicle company and so and so all of [TS]

  that enables that and of course the car makers are in the same obvious reasons [TS]

  that they've always been yeah it makes a lot of sense to me [TS]

  intuitively that if somebody else we're gonna start you know like let's just say [TS]

  to be a third major maps company that they would have a third different [TS]

  revenue model right so there's Google that doing it with advertising and just [TS]

  sort of well we'll put our maps anywhere and everywhere we can and get the most [TS]

  people we possibly can and we're gonna make that money back by advertising and [TS]

  we really only need to sell a few dollars in ad per user per year to make [TS]

  this to make this work [TS]

  there's the Apple model which is we're gonna use this as a value add to our [TS]

  premium products and I don't feel like anybody is gonna catch Google or Apple [TS]

  in either of those ways soon and so it makes sense to me that if somebody's [TS]

  gonna be a strong number three that it would be with an entirely different [TS]

  model Lee Cooper that's what I'm saying by the time was a weird maps are going [TS]

  is where we're in the sense of value from transportation by the way it's [TS]

  possible that both Apple and Google also have that in mind because they're going [TS]

  to eventually enable vehicles I do their own designer or licensing for that and [TS]

  and the other thing that I felt fascinating and I don't remember where I [TS]

  read it but it was a wonderful expose a which said that really the key to the [TS]

  autonomous vehicle the self-driving cars that Google is is now field testing is [TS]

  not that they have this amazing algorithm that it recognizes the world [TS]

  and is able to to act as if we do in terms of of avoiding avoiding an [TS]

  accident but rather that they compare what they see with what this stored and [TS]

  what this store is essentially hyper hyper high-resolution map of the street [TS]

  so imagine that the vehicles drive over the same spot many times they always [TS]

  take a picture and then they uploaded and that is what stored as [TS]

  this is the world the way it looks now compared with the way the world looks [TS]

  with what you are seeing at this moment if they don't match then there's an [TS]

  obstacle so that's the way they determine whether there's an obstacle in [TS]

  the way because there is this kind of comparison being done rather than say oh [TS]

  I see this blob I'm gonna use my artificial intelligence to determine if [TS]

  the blob is a person or an animal or older it's really about this kind of [TS]

  differential they're able to do is add to its really much more brute force that [TS]

  we think and probably more affected by the wind and less error prone than than [TS]

  than this idea of machine learning about driving and so it's a very data trip in [TS]

  that book the Bulls it boils down to therefore really having super hyper [TS]

  hyper accurate maps like down to the centimeter in terms of resolution rather [TS]

  than what we see now which is down to the meter and and also not just Street [TS]

  you imagine Street you with the ability to to to see every cent per square [TS]

  centimeter of the world as you're moving along at 60 frames a second and and so [TS]

  you doing that comparison [TS]

  you doing that comparison [TS]

  continuously and therefore you're able to really have that autonomous sheen and [TS]

  and this is why also it's very difficult to one of the side effects is that they [TS]

  unless you have a map of the inside of well over the inside of a parking garage [TS]

  that this the car cannot go there [TS]

  the car can only go in places that have been pre Matt and pre visualized it so [TS]

  that's why maps are so important to autonomous vehicles it's because the [TS]

  algorithms depend on having a very hyper accurate view of the world and so if [TS]

  either if either three of these three contenders right Google Apple and Hooper [TS]

  who wanted one to become potentially again there's a lot of hypotheses here [TS]

  potentially suppliers of information of transportation services then you get [TS]

  into this whole question of how good are you maps they have to control the maps [TS]

  and in fact maps are not good enough so they can't just go oh well we'll just [TS]

  get somebody to do it for us know we've got to have to figure this out so so [TS]

  that's why I think part of these vans you see that Apple drives around then we [TS]

  think of them as being well they're just doing street view [TS]

  well Street View is the is the baby version of what was going to be [TS]

  necessary if you're gonna have a great point let's keep going on this but [TS]

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  there that's how confident though they are in the mattress that now when they [TS]

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  mattresses into shockingly small box it's a big box to get delivered is [TS]

  probably the biggest package will get you know if you order one of these [TS]

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  take it to the room where you wanna have a ticket to your bedroom and opened a [TS]

  box there you definitely don't want to open it downstairs and then carried [TS]

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  size mattress really really good stuff I've got one it's really nice to crate [TS]

  mattress could not be more convenient I just found out I did not know this I [TS]

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  same day I believe in actually delivering this is how small the boxes [TS]

  are they get delivered by people on bicycles that so it's a big thing to log [TS]

  on your back on a bike but it actually is that that convenient to shop around [TS]

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  bucks don't know you came from the show and you'll get a great mattress truly [TS]

  unbeatable price casper dot com slash the talk show so we're talking about [TS]

  maps I'm not sure if we have more to go on maps but it has occurred to me one [TS]

  thing I've looked at as I've been thinking about it more and more is that [TS]

  I'm slow to the uptake sometimes on on revolutionary companies and whoever is [TS]

  one of them where whoever is a company where I've been using them for a while [TS]

  ever since this especially since they came to Philadelphia but they've always [TS]

  been you know they started in San Francisco and San Francisco has it [TS]

  gotten better and it's because of Hooper but San Francisco to me is always had [TS]

  some of the worst taxicab service of any any city that I visit simply appalling [TS]

  compared to what I'm used to on the east coast and so I was a big fan of over in [TS]

  San Francisco right from the get-go but I just I thought of them simply as a [TS]

  new-fangled taxi company and that's it and I didn't look past that and I it [TS]

  occurred to me that that's exactly how I used to see Amazon I was a very early [TS]

  adopter of Amazon for buying books but I saw them as a bookstore and then people [TS]

  would say [TS]

  amazon has ambitions to do a lot more than just books and I would just roll my [TS]

  eyes and think whatever but it's a pretty it is a pretty cool bookstore I [TS]

  thought the same thing about hoover until recently but I see now that I [TS]

  think that they they sort of our like the inverse of Amazon and what's [TS]

  interesting when you think about trying to do this type of analysis of where [TS]

  things I always use some kind of you know biological metaphors like it so you [TS]

  don't this is likely to cycle to get a baby and saying that's pretty useless at [TS]

  this is a lot of the criticisms we get when not just one new companies are born [TS]

  but even when you products are born from established companies and we are just [TS]

  like it's like the Apple watcher the first iPhone or the first whatever I [TS]

  mean yes some things Apple does we're much more meaningful but it's like the [TS]

  logic of it is that we're right inside the magic of it is being able to look in [TS]

  the child's eyes and say that their lives you know human being that's gonna [TS]

  live ninety years that's going to have an amazing life that's going to change [TS]

  the world and contribute so much to others and and and and and and yet and [TS]

  yet that's not what comes in the mind of the parent that the stranger may just be [TS]

  ambivalent or you know a lot of young people who haven't you you remember when [TS]

  you were when you were a teenager you think babies were all that great but [TS]

  when you're a parent ages kind of a really get a soft spot and then when [TS]

  it's your kid you're you're you're you're you're completely irrational [TS]

  about children but but the point I'm making is that we don't love children [TS]

  because of what they're gonna be necessarily we don't love our children [TS]

  because they're gonna grow up to be lawyers and doctors they do they're [TS]

  gonna help us in our old age we love because we love them and the thing is [TS]

  that that there's this I'd like to propose that we treat [TS]

  startups in and young things in general with the same contemplation of their [TS]

  potential but also sort of saying well there are valuable just because they [TS]

  exist you know they're they're just valuable because somebody took the [TS]

  effort of making it and and and and you know that's worth a lot and it's coming [TS]

  back to the mixer again remembering and ratatouille and that speech of what was [TS]

  the name of the the critics at the end he said you know nothing I think we do [TS]

  its critics is worth the crappiest product we've ever visited [TS]

  promise restaurant we've ever eaten that because these people work to make it [TS]

  happen in all we do is consumed the result in and and market so we don't you [TS]

  know they deserve a lot more than we do but he said you know the value of the [TS]

  critically continues in discovering the new and that's that that was a beautiful [TS]

  speech and I wish I could remember who wrote it but it was almost as if they [TS]

  were speaking to the characters portrayed as I remember that hitting [TS]

  home for me too because I clearly was self-aware enough to recognize the debt [TS]

  that the career that I've carved out for myself is you know effectively a critic [TS]

  a pundit on these things and then I do a lot more telling tell you know thinking [TS]

  about whether the work of other people is good or bad or how it could be [TS]

  improved then I do creating it myself and that you know I should remember that [TS]

  and keep that perspective and not [TS]

  never lose sight of the fact that what I say is not more important than the [TS]

  actual work itself having said that so I wanna make sure that we do we give a lot [TS]

  of credit to those who stick their necks out but it's it's also important when [TS]

  you when you look at something and you ask yourself what can I become that [TS]

  there are helpful hands one thing you can study with a baby is the case study [TS]

  its parents are often that's a great indicator of whether gonna end up doing [TS]

  or how how well not always I mean maybe even if you have 20% chance it's better [TS]

  than 0 though so so there's there's that and also something you study the child [TS]

  and you see how whether they struggle through life and that usually tells you [TS]

  that they will do better than average because they they actually are learning [TS]

  through experience and and so when you see something like you know you measure [TS]

  things like Rd flexible are the driven are they are they do they have an [TS]

  ambition and fundamentally I think that disrupted theory that I I'm a big fan of [TS]

  big supporter and advocate all is that it gives you these hands about where [TS]

  things can go into thinking around the analysis around an object like to work [TS]

  is that you know they're solving a job and that is to get people for [TS]

  point-to-point and that job today as an alternate call the car and it's really [TS]

  the butt of the Standing the substitution power that they have versus [TS]

  something that doesn't necessarily is not seen in the same category and this [TS]

  is when when you start to jump across markets and across categories in so you [TS]

  know actually this thing has the potential to be a threat to something [TS]

  that's completely unrelated and that's that that this skill understanding what [TS]

  it's really what it's really trying to do and what the customer we use the [TS]

  phrase with what the customer hires the product to do [TS]

  and that this is in the way of saying this is the jobs to be done [TS]

  methodologies like saying well you don't buy a drill you buy a hole in the wall [TS]

  and so if if and and this has been an observation for many many decades ago [TS]

  that that which companies sell is what what their buyers for their customers [TS]

  are buying so this distinction is important because of those the [TS]

  capabilities that the that the seller have the capability that they say well [TS]

  we can make this but then the other person on the other side will receive [TS]

  the product is saying what I really need is something else but thanks I'll take [TS]

  this all make it work that's where the combination of those two things plus the [TS]

  opportunity to shake hands and change money that's how we make business and so [TS]

  often these these are separate things too many times we end up in a situation [TS]

  where r by-product not exactly what we want but but then you ask yourself that [TS]

  that product and evolve get better because it's getting information from [TS]

  the from the buyer about what's wrong with it and then and then you know they [TS]

  get pricing signals so very very much like a buzzword but the idea is simply [TS]

  that look i cant charge much for this thing like today I can't charged $400 [TS]

  for your office anymore and that's a signal to Microsoft to say go do [TS]

  something else and if you don't have that signal you just keep doing it so so [TS]

  if you sell to enterprises were like Oh whatever I'll keep pain that then you [TS]

  you get dumber you get done as if you have to consumers a customer then [TS]

  they're going to eventually say that anymore I'm gonna go off by a tablet [TS]

  that is good enough for considerable PC etcetera etcetera and so and so this is [TS]

  that this is why the conversation happens with the customer so there's a [TS]

  lot of these things we can talk about but bottom line is that when I think [TS]

  about it who were always think about what [TS]

  hard to do it I think what they're hired to do is saying I want a car outside my [TS]

  door whenever I'm ready to go and and if I have that that option [TS]

  every time every day everywhere there are only two car anymore and that means [TS]

  I can get rid of my car and its if I can do a deal with you by and say hey guys I [TS]

  don't want to pay for this trip every every time I get in the car but can I [TS]

  just picked up from $300 and you guys always show up and it works it out and [TS]

  says okay you know they probably will have some customers there will use a [TS]

  lesson some customers will use it more but on average maybe $300 a month is a [TS]

  good price has all you can eat then suddenly that you know you'll have like [TS]

  Amazon Amazon Prime in so you'll you'll be saying you know I want to be prime [TS]

  crime is $350 a month maybe in the beginning they're gonna charge $500 a [TS]

  month with some people will pay that and probably don't have few where you were [TS]

  so far so users etcetera etcetera so over time that's going to change but [TS]

  anyway they'll do that and someday you know and then what [TS]

  and then pulling out all this money $500 and they're saying that they have to [TS]

  turn around and hire people to to serve as your first or or whatever and and [TS]

  they'll say you know maybe we ought to finance their car buying and maybe we [TS]

  ought to put them on the payroll maybe we're gonna [TS]

  get some autonomous vehicles will have their algorithms for dispatch because [TS]

  we'll know where these people live etcetera etcetera etcetera [TS]

  so a lot of these things are going to be information driven and at that point [TS]

  though did you know the the machine just takes over and it just goes goes and [TS]

  goes rolling and rolling in and as far as entrepreneurs concerned at every [TS]

  stage of that journey there just following in their instincts are saying [TS]

  well obviously we gonna do this right people are asking for it or hey I just [TS]

  some guy you know intern runs in the room is a haven however we thought of [TS]

  doing this it makes a lot of sense just read these numbers look at this and so [TS]

  they'll do it without any kind of greed strategy or any kind of big vision or [TS]

  any McKinsey consultant telling them that's what the future is going to be so [TS]

  they'll do it intuitively and lo and behold ten years later they'll they'll [TS]

  they'll have millions of customers paying them billions of dollars a year [TS]

  to provide transportation services in all those millions of customers will [TS]

  have abandoned only a car and there will be commissioning more Priuses than [TS]

  anybody else on the planet probably you know enough to fill a factory production [TS]

  so stay in that case why shouldn't make its own cars and maybe we'll maybe maybe [TS]

  I'll just simply do a great deal with and and we would I was actually be [TS]

  having one giant customer millions of small ones and and so maybe that will [TS]

  work for the both of them but maybe not maybe the liberals say you know prices [TS]

  and the best configuration we can do a lot better if we if we made our own [TS]

  design and then they'll hire the best designer out of GMR Toyota BMW and [TS]

  they'll say we go to it and by the way we got manufacturing guys can help as [TS]

  well and on it goes right to this is why you go from a baby to a mature adult [TS]

  that certainly is but I think that's occurred to me and I realize that it's [TS]

  very different if you live in a relatively your or like I live in a real [TS]

  urban environment [TS]

  in center city philadelphia go to New York to San Francisco but if you live [TS]

  anywhere is even relatively sober where it can be a practical service I mean [TS]

  obviously there's and especially in the United States as many people who live in [TS]

  rural areas where he isn't gonna make sense or at least isn't gonna make sense [TS]

  for a long time but it just take a look at it typical city where r most of the [TS]

  cars by far and away most of the cars at any moment in any city or part right [TS]

  which is incredibly inefficient and it's an enormous part of the pain in the ass [TS]

  of owning a car or even visiting a city with a car is the pain of parking so I [TS]

  but I can but that's actually good for the auto industry where there's a lot [TS]

  more cars being sold there are cars being driven at any moment and the [TS]

  disruption of uber is let's keep these cars moving and it's almost like the [TS]

  airline metaphor you know when you hear that like one of the reasons that [TS]

  Southwest is is more successful than most other airlines is that the [TS]

  employees buy into the mantra you can't make money with planes that are in here [TS]

  and that's why they they're southwest has a significantly like like [TS]

  contributes to their profitability that they there take that takes them less [TS]

  time to keep disembarking embarked on a flight and they keep most of their [TS]

  planes in the air [TS]

  well and Hooper car that isn't being driven isn't making money and but that [TS]

  if people stop buying cars and just leaving them in their garage parked on [TS]

  they I don't know that could do me be terribly disruptive to the auto industry [TS]

  in terms of the number of cars being but he is also yes oh yes indeed and that's [TS]

  the dream that you have a better utilization of cars is exactly also [TS]

  Google's dream when it came to their motivation for driverless cars because [TS]

  they they but here's the interesting thing this is where the theory comes [TS]

  into play again is that let's say you follow the logic of Google [TS]

  and their their algorithmic approach to 20 autonomy and then you fold wilbur's [TS]

  logic and yes here's a good question let's say you see both of them pointing [TS]

  in the direction of of the the deep populating cities with automobiles and [TS]

  and and increasing its always Asian automobiles and so who wins because this [TS]

  is where they were you have to have another way of thinking and theorizing [TS]

  about it because the problem i think is that in the case of Google they're just [TS]

  saying we understand we're going we're gonna get there through a process of [TS]

  research and we're gonna ship the product when it's ready and that's where [TS]

  where I think that's kind of a deliberate approach roads overseas gonna [TS]

  fall it snows and go down that path and maybe you'll get there maybe it won't [TS]

  but all the time with does it it learns in all the time it does it it's [TS]

  profitable and so if that's the my my bed would be there to get there faster [TS]

  so that's that's that's how I would I would analyze that but it's it's a great [TS]

  story it's a wonderful do you think here's my question about is how does [TS]

  cooper protect their lead what keeps other companies from saying oh I see [TS]

  what they're doing let's all do that too and then all of a sudden the whole idea [TS]

  of anything you can use it before his commoditized as some of it is just plain [TS]

  just plain running as fast as you can see one thing obviously is that they're [TS]

  they're they're recruiting drivers as quickly as possible that there are [TS]

  recruiting users as quickly as possible [TS]

  establishing as many cities as possible so they're running a socially in the [TS]

  land grab scenario where you identify the resources that you need drivers cars [TS]

  passengers [TS]

  and and regulation and you just like sweeping the land with that and then you [TS]

  you'd assume there's a first-mover advantage of course others can come in [TS]

  but he realizes heavy lifting similarly coulda said well we stumbled upon [TS]

  searches the answer why did everybody else I mean yes their algorithms are [TS]

  better but there were other search engines the party was like Google [TS]

  doubled and tripled and quadrupled down on servers and other infrastructure and [TS]

  that was basically that was there that was our secret sauce it was brute force [TS]

  it was just running really fast and so the early years that they were upset and [TS]

  on response times like like to add other search engines through measuring [TS]

  response times in second and Google was already measuring and tenths of a second [TS]

  and and so experience was important and but ultimately it was like they did the [TS]

  heavy you know they design their own data centers to design their own servers [TS]

  at a time what all those things you could buy or even even rent and and so [TS]

  why do they need to go so deep in the guts of their of their operations [TS]

  because they realize that the thing that they needed to tweak the most was that [TS]

  performance metric in the scaling metric and so that let them essentially run [TS]

  like wildfire and capture share and again same thing with Microsoft by the [TS]

  way and others who came before it's this this driving driving force that you just [TS]

  gonna go as fast as you can because you know you know where you going you know [TS]

  you know what what you're doing and the other guys are just not sure if that's [TS]

  worth committing how many billions you know and especially the big guys are [TS]

  like I don't get [TS]

  yeah I thought I had about it was sort of the way that as long as they as a lot [TS]

  you know the the first mover advantage is is real but you have to kind of stay [TS]

  focused on still being the best even if it's in small ways and I think that made [TS]

  me think about it was a tweet from our friend the guy who stole my shirt and [TS]

  Thompson this week where he he mentioned that he was in San Francisco obviously [TS]

  for WBC too and had a couple of coupons or [TS]

  codes or something to get free rides in left and he had been meaning to try it [TS]

  never tried the service in here he'd gone back home to Taipei and forgot to [TS]

  use them and had taken an uber every time he got in a car in San Francisco [TS]

  simply out of habit and that the habit matter that without even thinking about [TS]

  it he forgotten to try and lift even though he was going to be able to try it [TS]

  for free [TS]

  to me that just speaks to the power of the first mover advantage of our first [TS]

  before power of defaults power of being the go-to thing that people hire right [TS]

  away and so there's something but that's again that's earned its not something [TS]

  that that you can get to before you actually do great work it's has it comes [TS]

  as a as a as a byproduct of building the brand building their experience and all [TS]

  those other things so you know going to focus on the right thing at the right [TS]

  time knowing to put all the chips on the table when you know you have a good hand [TS]

  that's really but first you gotta get the chips but that's the thing is that [TS]

  the the the magic of the entrepreneurs the one that is it that is able to [TS]

  parlay every advantage into another one and in the bed again and again and again [TS]

  doubling down every time and shifting their strategy all along the way and [TS]

  pivoting as they call it these days that's that's the magic of it I couldn't [TS]

  agree more [TS]

  so let's wrap it up here in a two hour mark forested you thank you [TS]

  ordinarily for your time what a fascinating conversation here's where [TS]

  people people can find out more at first your website a Simcoe asy MCO dot com [TS]

  you've got your own podcast the critical path over with five by five to five by [TS]

  five TV and find your podcast the critical path and what else where are [TS]

  you on twitter twitter it's just a taste very good Twitter account [TS]

  anything else before we go No thank you thank you very much for this opportunity [TS]

  it's a long time and likewise getting stuff thankyou for us [TS]

  and we'll talk to you soon [TS]