Investors cheer Apple's AI progress, and we're going to need a new capitalism
Welcome back to Cautious Optimism. Today is June 11, 2024. In the newsletter this morning we have Apple’s AI push, the latest startup bubble, the allure of tax cuts, and the need for a reformed capitalism. Let’s have some fun! — Alex
Trending Up: Apple’s perch in the AI race … shares of Raspberry Pi after listing on the LSE … the German far-right … heat-related deaths around the world … women’s sports … venture investments into AI startups … EV charging investment … IPOs in India … Apple’s stock after its blockbuster series of AI announcements …
Trending Down: European stocks … GM’s share count … chances that Elon gets invited to the next WWDC … Orbán … Lacework’s worth … non-AI software budgets … forced labor …
Three Things
Apple’s AI announcements were enough. After lagging its rivals, the American tech giant detailed its own AI models, OS-level updates to give users new AI-powered capabilities, and an improved Siri to tie it all together yesterday. Apple still suffers from having too many operating systems, each built for screen sizes that overlap, but at least in the AI race, it has set the tone for what mass-market, consumer-tuned intelligent systems may look like from desktop to the mobile market. Microsoft, your move. (More about this with Jason on This Week in Startups here.)
AI startups are (often) overvalued: After reaching $10 million worth of ARR at the end of 2023, legal AI startup Harvey is looking to boost its valuation to as much as $2 billion. Presuming that it doubled in size in the last half year, the company is targeting a 100x ARR multiple. Perplexity, in turn, could be hunting up a valuation in the 150x ARR range. Yowza.
Yeah, it’s about tax cuts: I argued yesterday that the surge in support for former President Donald Trump by many powerbrokers in technology circles was predicated on tax cuts, not fear of LGBTQ folks. Politico reported this week that “high-dollar donors at banks, hedge funds and other financial firms” have put aside their “qualms about [Trump’s] personality and willingness to bulldoze institutional norms and focusing instead on issues closer to the heart: how he might ease regulations, cut their taxes or flex U.S. power on the global stage.” Yep.
We’re going to need a new capitalism
Capitalism has done a stellar job lifting folks out of poverty worldwide. Many economies have expanded quickly in recent decades, leading to rising living standards for billions. The results are easy to spot: Life expectancy has risen, global GDP per capita has skyrocketed, more girls worldwide are allowed to attend school, and infant mortality is falling.