Time for Apple to put up or shut up on AI

Jun 10, 2024

Welcome back to Cautious Optimism. Today is June 10th, 2024. Today we have a short note on VCs supporting Trump, what to expect from Apple regarding AI, and a very cool Startup of the Day. Happy Monday, and off we go! — Alex

Amuse Bouche

I’m sure you’ve seen the small wave of folks in venture-startup land endorsing or fundraising for former President Donald Trump. Having read their arguments, I think we can gist them down to this: Many wealthy folks expect to make more money under another Trump administration than another Biden term.

It’s not hard to see why. Trump wants to extend the TCAJAct, which, despite its massive deficit impact, does reduce the tax liability of higher earners. Biden wants to ax the carried interest loophole and introduce a corporate minimum tax.

My working mental model of rich people endorsing Trump is that they would like to pay less in tax, in part because I know a bunch of them and also because I doubt very much that they find our trans brothers and sisters as scary as they claim to.

Anyway, so what? People vote their own interests all the time. Why is this different? Because when it comes to presidents, you get the whole package when you elect someone, not just their policy views on your core conceit. For example, when it comes to former President Trump, the folks building the intellectual and operational foundation for his second term are Christian Nationalists who imagine an unleashed executive who turns normally independent governmental agencies into their personal weapons.

Seems great. If you think that this is better than Biden being old, well, I hope the tax cuts are worth it.

p.s. Not all VCs are lurching to the right. Here’s Vinod Khosla taking the opposite tack.

Apple + AI

At its developer event this week, Apple is expected to show off a host of AI-themed upgrades for its software products. The stock market has high hopes for what it will unveil. Apple’s value has soared by nearly half a trillion dollars in recent weeks, meaning an enormous chunk of stock market worth is at risk. Should the company wow the market, it could add hundreds of billions of dollars more to its market cap; should it underperform market expectations, the opposite could be in store.

Lots of people have thoughts and advice for Cupertino:

TechCrunch: “Apple needs to focus on making AI useful, not flashy,” TC writes, including a focus on reliability, privacy, and updates to Siri.
The Verge: “Apple’s AI opportunity is all about the big picture,” The Verge argues, meaning that during its keynote, “it’ll be Apple’s turn to make the case for AI as our daily assistant.”

So what is Apple expected to unveil? Working with OpenAI, improvements to Siri for one. Siri was once an advanced tool; time has left it behind, thanks to Apple lagging its rivals in announcing and deploying new AI-powered technology products and services.

I presume that Apple has several surprises up its sleeves, but there’s more than just AI supremacy on the line this week. Apple has perfected its current design concept for both the iPhone and iPad, to great effect. The company’s phones and tablets did a bit more than $51 billion of its $90.8 billion in recent quarterly revenue, for example. (Apple shrank 4% in its most recent quarter compared to year-ago results.)

But by having nailed how to make computationally powerful glass-fronted squares with brilliant cameras, Apple is stuck. I see no reason to buy new phones and tablets regularly from the company, as what they put out a few years ago is more than enough to run its current mobile software. What Apple needs is something that makes me want to upgrade my iOS hardware and make its software interesting again in a single move. AI could be just that for Apple, or it could just as easily not be.

That question is the largest hanging over the technology world this week: Can Apple land the AI plane, delighting investors and inspiring consumers to buy more of its hardware and, thus, its software and services? History teaches us never to count Apple out, even when it’s behind in a market segment. More after the keynote.

Earnings: Yext on Monday, Oracle and Rubrik on Tuesday, Broadcom on Wednesday, and Adobe and Autodesk on Thursday.

Startup of the Day

Becca Szkutak at TechCrunch recently covered Human Native AI, a startup that raised £2.8 million to build a marketplace for data that can be used to build and train AI models. The idea is simple: Due to their relative size, not every publisher will get a check from OpenAI or similar. But if lots of content rights holders offer their material in a single place that AI companies can license, more folks can be fairly compensated for their work.

Human Native is not alone in the effort. Venture-backed TollBit is also building something similar. I fully expect to see other entrants into the market, perhaps focused on regional/national/language-specific material. (More on why that matters here.)

I can certainly see there being supply for such startups to offer to potential customers. The question for Human Native, TollBit, and their rivals will be ensuring that after getting lots of words and similar from rights holders, that there are enough AI companies willing to cough up for access. Bear in mind that simply stealing everyone’s copyright-protected content and using it to build AI models has been the de facto model for some time, and it’s hard to beat free.

Startups to the rescue of media companies? I’m here for it.

More tomorrow! Hugs! — Alex

Cautious Optimism

Time for Apple to put up or shut up on AI

Amuse Bouche

Apple + AI

Startup of the Day

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