Even Lionel Messi couldn't help Apple score this week. Image created with Midjourney.
Not even Lionel Messi could help Apple this week. The week began happily when it was announced that the Argentine ball wizard's arrival in the MLS has resulted in one hundred and ten thousand new subscribers to Apple TV+, but that news was quickly forgotten when the Chinese government banned officials from using iPhones. Apple promptly lost $200 billion in stock market value and although it is comparing American apples to Chinese pear tea; that number is comparable to the gross national product of a medium-sized country. What is going on?
Apple v. Huawei is FC USA v. China United
To better understand the Chinese intervention in officials' phone use, we need to look a little further than an iPhone is long. At the Asean summit this week, China warned of the emergence of a new cold war, which was received by the delegations in attendance from Japan, South Korea and the Philippines, among others, as if someone walked in on a birthday, turned the heater up to the highest setting and then sighed, "hot huh guys, why always us?".
The Chinese government has long been displeased with the measures taken mainly by the US but also the Netherlands to deny China access to the latest technology to make chips. It was recently announced that the Chinese market is now the largest market in the world for Apple; 24% of all iPhones, i.e. 1 in 4 iPhones, are sold in China.
This week, therefore, was the perfect time for the Chinese government to strike back: Huawei launched the new Mate 60 Pro, the intended Chinese-made iPhone killer, not entirely coincidentally just before Apple introduces the new iPhone 15 in a few days at its ostentatiously titled Wonderlust event. What could be more fun for the Chinese government than to disrupt that American party with a ban on iPhone use by Chinese officials?
Apple runs into the Great Wall of China. Image created with Midjourney.
Apple lost 6% of its stock market value, a whopping $200 billion. The message China is sending with this is clear; block our access to Western markets and we will block the Chinese market for your products. If China can so easily ban the most sought-after product in the world, from the largest company in the world, from the most powerful country in the world, then obviously the same applies to any product from any company from any country. That's why most tech stocks fell this week, but more on that later.
China shines in ... Bavaria?
Traditionally, southern Germany is the beating technological heart of the German automobile industry. Stuttgart has been crowned with the Mercedes star, and Audi and BMW are as Bavarian as mugs of beer and drunk guys at Oktoberfest. But September became the month of the Chinese car in German automotive land: as many as 50 Chinese car brands presented themselves at the leading IAA Mobility car show in Munich.
In August, as many as 37% of all cars sold in China were electric, and those huge volumes and low-cost production capacity give Chinese automakers an unbeatable competitive advantage. According to a UBS estimate, Chinese automakers will double their global market share from 17% to 33% by 2030, with European companies suffering the biggest loss of market share.
It is numbers like these that the Chinese government dreams of in other advanced markets, such as the market for smartphones.
Midjourney turns down investors, Imbue raises $200 million
In the great geopolitical battle, it is nice to come across a company in Midjourney that is trying to find its own way in a completely organic way. Wonderful examples of what experts can create with Midjourney's photo creation tool are the Instagram accounts of Chaos Dreamland and David Szauder.
Some critics think their work is not art, but it reminds me of the rise of hip hop, when samples were first used to create new work. Venture capitalist Ben Evans wrote an excellent analysis on intellectual property and AI.
Like all AI companies, Imbue has a wonderful mission: 'At Imbue, we develop AI systems that can reason and code, giving computers intelligence and human values, so they can help us achieve greater goals in the world.' History teaches us that you have to critically follow people who clamor to achieve greater goals in the world.
Claude v. Chat
Meanwhile, the better-known AI companies OpenAI and Anthropic have found themselves in direct competition. OpenAI is making $80 million in revenue per month with ChatGPT Plus, though growth in reach has been faltering for several months. Anthropic can't be left behind and launched Claude Pro, for $20 a month. I haven't been able to test Claude yet because the service is only available to users from the U.S., UK, Gibraltar and, seriously, St. Helena and the Falkland Islands (also called the Malvinas by world champions). With this, Claude proves that being intelligent and being smart are two different things. Why not Guernsey? And what about Claude in the Lofoten Islands?
Last post this week on funding and AI companies: the world's best-known business incubator, Y Combinator, held its famed Demo Days last week (where Airbnb, Dropbox and Coinbase once debuted), and over 65% of the chosen startups engaged in AI. The majority of Y Combinator's summer cohort, a total of 134 startups, build tools around AI, enabling healthcare claims automation, customer service automation, sales operations, coding and game design.
With any other incubator, you might think it's blindly riding on the hype, but Y Combinator's track record is too impressive for that: nearly 5% of their companies achieve acclaimed unicorn status (company value of more than $1 billion) and the total revenue of Y Combinator companies in 2022 was over $50 billion.
Spotlight 9: Apple's Chinese problem depresses tech sector
Apple took a hit, but Nvidia also lost after its extreme rise this year.
It was interesting to see how different Wall Street analysts assessed Apple's problems in China. The prevailing opinion was that the Chinese moves show that even a company with a good relationship with the Chinese government, such as Apple, and a large presence in the world's second-largest economy is not immune to rising tensions between the two countries. And that depressed the share prices of leading tech companies.
However, there is also a current that believes Apple's share price drop was an overreaction by the markets. "We believe Apple's two-day -6% share price indicates that the market thinks the recent Chinese headlines will evolve into something broader," wrote an analyst at Morgen Stanley on Friday. "We think this is unlikely ... The share movement has been exaggerated." The entire tech world is hoping he is right.
In conclusion
At the end, one link to a topic that has nothing to do with technology, yet is relevant to every reader: 'My 95-year-old Japanese grandfather is a former cardiologist - his 8 'non-negotiables' for a long, happy life.' He blogs, uses social media to keep in touch with his family and takes naps - what a role model!
This week a couple of human interest stories stood out. The richest Welshman, Sir Michael Moritz, who as a journalist at Time was once blacklisted by Steve Jobs, left Sequoia Capital after nearly 40 years. And while CEO Sam Altman traveled the earth meeting world leaders, OpenAI turned out to be led by Mira Murati, a virtually unknown 35-year-old Albanian woman.
Image: Midjourney. Prompt: man with gray hair walks away, San Francisco skyline in background.
The little kingdom
The first time I came across the name Michael Moritz was in 1992 when Frans Straver, with whom I would later found Planet Internet, and I were graduating together from the University of Amsterdam on the sexy subject of "success and failure factors of interactive media in the consumer market. At that time, only mustachioed accountants had computers and only the bigger drug dealers used cell phones.
If you were looking for a serious book about the computer industry, there was nowhere to turn but the American Book Center in Amsterdam. There we found the fantastic book, which by then was almost a decade old, by Moritz, entitled "The Little Kingdom," about how Steve Jobs developed the Mac at Apple in the early 1980s.
"So much of what has happened is connected to Apple and the story of this extraordinary company that I find that Apple's breadcrumbs have been strewn across my life's path," said Moritz, who regrets that he never settled his spat with Jobs before his death. The book planted the seed in Frans and me that it was possible for two young guys to set up a successful company in the technology world, something we had never considered until reading Moritz's book.
Of course, when I moved to America in the late 1990s for my next startup after Planet Internet, Moritz was the first investor on whose door I knocked. Tried to knock on the door actually, because I never got beyond the inbox of the intern of the assistant of the junior associate at Sequoia who kindly declined me. Later I understood that Sequoia, and Moritz in particular, received thousands of business plans a year during that dotcom boom but made only a few dozen investments.
From Airbnb to Zoom
Michael Moritz was born in Wales to Jewish parents who had fled the rise of the Nazis in Germany. He was stationed in San Francisco for many years as a Time journalist and wrote widely about the world of technology. Don Valentine, the founder of Sequoia and the man who invested in Apple, Atari, Cisco, Oracle and Electronic Arts, among others, saw something in the British journalist and offered him the chance to work as an investor.
Over the next 38 years Moritz worked for Sequoia, the investment company strung together successes. Under his reign, Sequoia invested in virtually every company whose apps we have on our phones or computers today, or which we use for work directly or indirectly, including Google, Dropbox, Linkedin, Yahoo, Airbnb, PayPal, Instagram, YouTube, Whatsapp, Nvidia, Zoom and OpenAI.
"One of the things that is undervalued in our industry is how much you can learn from someone decades younger than you. Those are the people who might go on to do unusual things; they understand something very well, are independent thinkers and obviously smart and gifted."
Early this century, Moritz also initiated Sequoia's lucrative expansion into China. He was chairman of Sequoia from the mid-1990s until 2012, when he relinquished day-to-day management of the company due to "a rare medical condition that is treatable but incurable." Still, he remained a partner of Sequoia until his announced departure this week.
In recent years, Moritz apparently focused more on e-commerce and led Sequoia's investments in Stripe (estimated valuation $50 billion), Klarna ($6.7 billion), Instacart ($12 billion) and Getir ($6.5 billion). He will gradually transfer positions on the supervisory boards of those companies.
A hefty crank start
Forbes estimates Moritz's wealth at $5.2 billion, thanks largely to his holdings in Internet companies. Moritz and his wife donate most of it to charities, mainly through their own foundation, Crankstart. They are in quite a hurry to do so, judging by the report on the website:
"In 2022, we awarded $200 million in grants, 60 percent of which were to nonprofit organizations in the San Francisco Bay Area. The grants ranged in size from $1,000 to $18,500,000 and went to 363 organizations."
Other eye-catching donations included $20 million to the American civil rights movement ACLU, $50 million to his alma mater the University of Oxford, and no less than £75 million to the same university to spend on scholarships for children from low-income families. Moritz had not lost sight of the fact that he himself had once enjoyed a scholarship.
What I personally found remarkable was that Moritz is funding the famed literary Booker Prize through Crankstart for at least five years, after the previous sponsor pulled out. But unlike that sponsor, Moritz did not want to attach any name recognition to his donation because he and his wife believe that the Booker Prize is a prestigious award that should be associated with the name of the prize, not the name of the sponsor.
The similarities between Steve Jobs and Sir Alex Ferguson
In 2009, Moritz released a revised version of his book on Apple entitled "The Return to the Little Kingdom: Steve Jobs, the Creation of Apple and How It Changed the World. The book remains highly recommended for anyone interested in innovation and creativity.
To my surprise, Moritz, still a die-hard Manchester United fan despite having lived in San Francisco for nearly half a century, wrote a book on leadership with legendary manager Sir Alex Ferguson in 2015.
In an interview about that book, Moritz shared some observations about the similarities between Steve Jobs and Sir Alex:
"When it comes to leadership, I think there are similarities. In their own way, they are both perfectionists. With Sir Alex, I was looking for a way to explain what I think are the basic principles of good leadership. I don't think they are very different between Silicon Valley and the soccer field, and they are universally applicable. The problem with the principles of leadership is that they are pretty easy to list, but very difficult to apply.
Sir Alex, Steve, they both had the energy to consistently push, urge, persuade others toward a goal that they themselves envisioned. I think the big difference between management and leadership is that the leader can persuade people to do the impossible."
Time for a new book?
Things get even more interesting when Moritz shares his own investment criteria. "When I want to invest I start with a market opportunity, because if a company starts in a market that looks unchanging and doesn't look like it's going to grow, it's not going to be a great company. Furthermore, we are looking for people who are completely obsessed. People who love nothing more than to work on the product or service they have come up with."
In the Netherlands, many investors employ the archaic cliché "it's about the guy, not the tent"; but Moritz cites as the first criterion precisely a large market, prone to change. That's an interesting angle. A top entrepreneur in a small market is not so interesting in this view.
And that begs the question of whether Moritz, time and health permitting, would like to write a book for the first time sharing his own views on entrepreneurship, innovation and leadership, rather than writing about people like Jobs and Ferguson.
My favorite book for tech entrepreneurs is "The Hard Thing About Hard Things: Building a business when there are no easy answers' by former entrepreneur Ben Horowitz, now best known as co-founder of venture capital firm Andreessen Horowitz.
Horowitz is an exception, because just as many former top athletes turn out to be bad coaches, few successful entrepreneurs manage to develop into good investors. Let me stick to myself: when people ask me for advice on investing, I always reply that although I worked as an investor for many years, I never said I was good at it. That's why I became an entrepreneur again.
Moritz, now knighted Sir Michael, has no entrepreneurial experience whatsoever. Apparently, that was no impediment to achieving extreme success as an investor. It is high time someone with his amazing track record, huge network and sharp pen, shared his knowledge and experience in the form of a new book.
The driving force behind OpenAI is a 35-year-old Albanian woman
Founder and CEO of OpenAI Sam Altman visited as many as 22 countries in recent weeks including Israel, Jordan, Qatar, the United Arab Emirates, India, South Korea, Japan, Singapore, Indonesia and Australia. Altman met with students, venture capitalists and leaders including Indian Prime Minister Modi, South Korean President Yoon Suk Yeol and Israeli President Herzog. Earlier in his trip, Altman met with British Prime Minister Sunak, German Chancellor Scholz and French President Macron. (Remember, with dark brown shoes?)
The subject of all the conversations was the question: can AI be trusted, or are government measures needed? So it was instant news when Reuters saw Friday on the LinkedIn page of OpenAI's "Trust & Safety Leader" Dave Willner that he had left quietly after a year and a half. Willner talked about family reasons, which of course is possible.
But I also note that according to his LinkedIn profile, with 18 months of employment, Willner has already secured a sizable number of options in OpenAI, which at the estimated company valuation of $27 to $29 billion for OpenAI are worth enough that the Willner family's life would not be significantly improved if he stayed with the company for another year or so. After all, the difference in quality of life between earning 10,000 Euros or 20,000 Euros is far greater, than the difference between 10 million or 20 million in the bank.
Until a successor is found, Willner's team (apparently there is a Trust & Safety team at OpenAI) is managed by the CTO, Mira Murati. Who is this woman, who is still completely unknown on ChatGPT itself?
Mira Murati? Doesn't ring a bell, ChatGPT says of its own boss.
Although Murati is unknown on her own ChatGPT, the competitor, Google Bard, does have some information about her:
"Mira Murati is the Chief Technology Officer of OpenAI. She is a brilliant engineer who has worked on several AI projects, including ChatGPT, Dall-E and Codex. She is also an advocate for the regulation of AI because she believes it is important to take precautions to prevent the misuse of AI.
Murati was born in Albania and studied mechanical engineering at Dartmouth College. She then worked as an intern at Goldman Sachs and Zodiac Aerospace before joining Tesla as Senior Product Manager of the Model X. In 2016, she joined Leap Motion. In 2018, she joined OpenAI and was promoted to CTO in 2021."
There are several things remarkable about this. First, Murati's description on Bard is almost literally identical to the one in the CEO Magazine article. That raises the question of which source had the original information and which source clumsily copied it? It's fodder for lawyers in the AI world, where real and fake or original and copy seem completely interchangeable.
Second, Murati must be something of a prodigy, because it is rare for someone with the study of mechanical engineering to make a career in software so quickly. One study is about how, for example, the Tesla X is put together, the other about the software that makes the car self-driving.
Third, it appears that Murati moved to Canada from Albania at the age of 16. I asked Bard if Murati moved alone, or with her parents. Bard replied that 'Murati and her husband Sokol fled to Canada with their two children in 1993.' But in 1993, Mira Murati was five years old, which is also on the early side in Albania to have already started a family. In short; there is still a lot to improve on Google's AI activities.
Murati and Moritz: America first
There is a striking parallel in the lives of Mira Murati and Michael Moritz. Both came to America from a small European country, where they had the opportunity to expand their knowledge at excellent universities and then to exploit their potential in top companies.
I am not saying that every Ethiopian is a potential top entrepreneur or that there is a brain surgeon hiding in every refugee from Aleppo, but in the month when a cabinet falls in the Netherlands over a few thousand additional immigrants a year, I do argue for a rational immigration policy. Europe is old, so is Asia; several continents are aging rapidly. At the same time, there are people in previously unexpected places who can contribute much to the world, if only they are given the chance.
Of course, my perspective is colored, because I too once came through an exchange and scholarship from Amsterdam to a university in San Francisco, where I first saw the Internet. Moritz and Murati came to the San Francisco Bay Area from Wales and Albania. But where in Europe or Asia would they have been as welcome as there? And where would their origins play such a minor role? What European or Asian venture capitalist would give a journalist a chance as an investor, or a young Albanian woman the technical leadership of a billion-dollar company like OpenAI? That should make entrepreneurs, voters and policymakers think.
Spotlight 9: Ripple continues to amaze, but for how long?
The chart is not upside down; there were only declines among the leading investments in the tech sector except for Ripple.
It was a week full of sadness and gloom in the tech corner of the stock markets. But where I expected a correction to Ripple's huge price jump after last week's court ruling, XRP remained fairly stable while the other major crypto currencies, Bitcoin and Ethereum, both fell.
So I downloaded from Coinmarketcap the XRP price data for the last 30 days and asked OpenAI's Code Interpreter to plot the price against trading volume. From there, this interesting graph rolled out:
The red line indicates the trading volume, the blue line the price.
Trading volume in XRP has declined dramatically over the last week, following a huge spike in the days immediately following the court ruling. The falling blue line representing the price now parallels the red line of falling trading volume.
That means the price can no longer be driven by increasing demand. Investors who believe in XRP are holding on. But not enough new buyers are entering the market at the current price to offset the number of sell orders. A further correction of XRP seems inevitable.
And bad news for crypto enthusiasts: anyone who bought XRP a year ago should certainly be happy with a 105% rise. But that's still a lot less than the 160% price jump Nvidia made in the last year, driven by the AI hype that requires strong processors.
The White House on Friday invited representatives of seven leading companies in the AI field and announced a covenant of sorts with them, in which the companies pledged, among other things, to add digital watermarks to their systems. (So if all goes well, we'll soon know who had copied the text from whom about Mira Murati: Bard or CEO Magazine?)
The participating companies have been regular topics in this spot in recent weeks, namely Microsoft (with Bing), Google(Bard), OpenAI(ChatGPT), Anthropic(Claude), Inflection(Pi), Amazon and Meta(LLaMA).
In effect, Meta is thereby acknowledging OpenAI's lead and, by making its technology open source, hopes to attract so many developers from outside the company that it can still catch up with LLaMA 2. A smart strategy by Meta, which is distinctive from the closed AI platforms of OpenAI and Google.
It continues to be amazing how quickly AI applications are improving. After text and photos, now it's video's turn, and Twitter user Nathan Lands shared a nice overview.
Two weeks ago, I described my doubts about Mark Zuckerberg's jubilation about his new app Threads, the AliExpress version of Twitter. Granted, because of Instagram's installed base, hundreds of millions of people will try Threads. But the app is too sloppy, boring and predictable to generate much repeated use unless improvements are made to the app quickly.
This journalist explains in great detail all the shortcomings of Threads. A good point: why is there only an app for cell phones and Threads cannot be used on a computer, if the platform is about text messages? I wonder how long it will be before the first significant updates are released by Meta, because it would be good if a serious competitor to Twitter emerges.
Christopher Nolan and Hoyte van Hoytema literally and figuratively make great films
In all the digital opulence, film writer and director Christopher Nolan is a blessing. He filmed the masterpiece Oppenheimer on 70 millimeter IMAX film and does not use Computer Generated Images (CGI) in his films. This video shows how the film is literally pasted together from fifty-three rolls of film of three minutes and twenty-four seconds each. In total, the film, which has a duration of three hours and nine seconds, is 17.7 kilometers long and weighs 272 kilograms. That's another entertainment experience than watching Love Island on your iPhone.
Nolan finds CGI "too safe, the image does not seem to contain the threat of, say, a real explosion, however small.' He shoots on film because it most closely resembles the image the human eye perceives. That and more can be seen in this video in which Robert Downey Jr and Christopher Nolan answer the most frequently asked questions on the web about them.
For those of you who are going to see Oppenheimer in theaters next week; go to the IMAX and I'd love to hear how you liked it.
