What’s powering Apple’s $2T valuation


August 24, 2020

Plus: A new service helps individual creators branch out on their own.
August 24, 2020
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Yesterday, Nike dropped a beautiful video for what would have been Kobe’s 42nd birthday. And, today is 08/24 (Kobe’s two jersey numbers). No better way to start Monday than with some #MambaMentality.

The Big Idea

What’s powering Apple’s $2T valuation, and where it’s headed next

On July 1, one of the world’s top Apple analysts, Neil Cybart, wrote an article titled “Apple is pulling away from the competition.”

Since then, Apple has gained $500B+ in market cap and — on the road to becoming the world’s first $2T company — smoked its Big Tech frenemies. 

Apple has built its advantage for years

Each of its new products is designed to handle tasks once managed by sibling devices — and in “an increasingly personal way,” Cybart told us yesterday.

Computing tasks are moving from the Mac to the iPhone to the Apple Watch — while all of Apple’s products work seamlessly together (except the charger cables).

In comparison, Apple’s top tech competitors are all over the place:

  • Samsung is aimlessly launching products just to be “first” (i.e., foldable screens)
  • Amazon bet big on the Echo instead of wearables
  • Microsoft’s Surface has failed to break through with consumers

iPhone sales are slowing but other products are picking up the slack

Apple has built a sticky ecosystem around its flagship product with services and non-iPhone revenues accelerating in recent quarters.

Cybart estimates that of Apple customers, 50% own only one product (iPhone). Once these people go deeper into the ecosystem, watch out. 

Expect millions of users to add additional items like the AirPods, Watch, subscription or — as Cybart predicts — a face wearable in the years to come. 

The biggest risk to Apple? 

To be sure, Apple has significant supply chain and business exposure to China (~17% — or $40B+ of its 2019 revenue) as well as antitrust concerns (e.g., Epic Games).

However, Cybart tells us the biggest risk to the Cupertino giant is a lack of focus.

Customers are embracing Apple’s current strategy, he says — but “if you see Apple stretch itself into areas where it doesn’t have the same user experience, that could start the gradual unwind of its ecosystem gains.” 

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Snippets
  • One of tech’s next big IPOs could come from defense contractor Palantir — but the company is not as large or as profitable as experts had thought.
  • Apple backed off from demands that WordPress monetize its free app.
  • Russell Crowe is bringing back the box office. The actor’s new film ‘Unhinged’ raked in $4m this weekend — the first big release since the pandemic hit the US. 
  • Meet the anonymous lawyer who spends his days calling out typos in The New York Times.
  • Remember Italy’s wine windows?Cocktail windows” are taking over the US, too. 
Presubscribe Me

This company wants to empower creatives to branch off on their own

Ever consider ditching your job to start a newsletter or podcast? Was your next thought, Wait… will anyone actually care about what I make?

A new product called Presubscribe aims to alleviate the self-doubt.

It’s a free way to test the waters for demand

Through the platform, fans can “presubscribe” to your hypothetical publication by dropping in their email and the amount they’d be willing to pay to support you, were you to start something.

The company keeps your subscriber list locked away until you ask for it.  The total cost to you: $0. 

Among the creators with the most pre-subscriptions:

  • Matt Levine (Bloomberg)
  • Taylor Lorenz (The New York Times)
  • Mike Issac (The New York Times)

The media biz can’t get enough of newsletters

Over the past few years, we’ve seen a trend of creators leaving cushy staff jobs to start their own newsletters:

  • Former Buzzfeed writer Alex Kantrowitz launched Big Technology.
  • Ex-Fortune writer Polina Marinova founded The Profile.
  • One-time engineer Ben Thompson now runs Stratechery, which brings in millions of dollars a year.

As media jobs dry up, an increasing number of journalists and creators are building out their own newsletters using platforms like Substack — a company that claims 100k+ of its users pay for newsletters.

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#2 > #1

Who are the most baller No. 2s in corporate America?

One of Amazon’s top executives, Jeff Wilke (AKA the “other Jeff”), announced last week that he planned to retire from the tech giant.

In a note to the company, Amazon’s CEO Jeff Bezos (AKA the “richest guy in the world Jeff”) writes of Wilke: “He is simply one of those people without whom Amazon would be completely unrecognizable.”

Wilke was considered by many to be Amazon’s No. 2, running the company’s global consumer arm, including Prime and Whole Foods.

With his retirement, we updated our power rankings for corporate No. 2s:

  1. Gwynne Shotwell (right hand to Elon Musk, SpaceX & Tesla)
  2. Charlie Munger (chief legend officer, Berkshire Hathaway)
  3. Ted Sarandos (chief content officer, Neftlix) NOW CO-CEO
  4. Ruth Porat (chief financial officer, Google)
  5. Jeff Wilkes (the “other Jeff”, Amazon)  RETIRING
  6. Sheryl Sandberg (chief operating officer, Facebook) 
  7. Dr. Nefario (GRU’s No. 2, Minions)
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Going Postal

CIA BBQ sauce and DEA baby bottles: The business of government merch

The most-hyped fashion house of 2020 might be the US Postal Service gift shop.

In a show of solidarity for the beleaguered government agency, people are snapping up USPS-themed crop-tops, tote bags, and dog costumes. So many have nabbed their own Earth Day tee that orders are backlogged into September.

The USPS isn’t the only federal agency in the merch game

Dozens of agencies sell their own “branded” wares: 

But splurging on a DEA baby bib is not going to fund a drug bust 

Profits from most government merch stores are funneled into agencies’ employee associations. 

At the CIA, the Employee Activity Association — a group that funds perks like gym memberships and concert tickets — gets that sweet, sweet barbecue sauce money.

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Today’s email was brought to you by Michael Waters, Trung Phan, Caroline Dohack, and Bobby Durben.
Editing by: Zachary “Presubscribe Me” Crockett, Adeline Moore (Staff Copy Editor).

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