Tech Deciphered

We discuss whether you can figure out if your idea is worth 1 Bn or not in advance (spoiler alert: NO), analyse several frameworks that are still useful in that analyses, why not being a lemming makes sense in the investment space, and why founders and CEOs shouldn’t waste time arguing with VCs. We go into the more nit gritty elements of product management and product portfolio management, including what one can learn from dead Google projects. Finally, we go into the new Mac Pro, including its $400 (!!!) wheels, why YouTubers like MKBHD (Fanboy alert) and iJustine matter so much, and finally we nerd out on Graphics APIs… because, well, why not.Navigation:How much is your start-up idea worth? (02:23)Pain vs frequency of use framework (03:26)Howard Marks framework (06:35)Lemming mentality in venture capital (10:27)The case for critical thinking in VC (11:11)Introducing feedback loops in VC (15:28)Pitching VCs - do’s and dont’s (18:01)Product management: agile vs waterfall (24:19)A decade of dead Google projects (32:43)Mac Pro (39:48)Marketing through Youtube celebrities (42:44)Apple’s Metal graphics API (45:05)Resources:Ali Zahid, How to know if your startup idea is worth $1 or $1B - http://bit.ly/2U7UhKLTren Griffin, Andy Rachleff, 2×2 matrix If you’re wrong, you don’t generate attractive returns. If you’re right and consensus returns get arbitraged away. The goal is to be in the lower right quadrant - http://bit.ly/3d1Aoh6Eric Paley, Don't Waste a VC Pitch Arguing - http://bit.ly/2xGvllWHBR, The Kind of Creative Thinking That Fueled WeChat’s Success - http://bit.ly/2QgvTVYThe Verge, What we can learn from a decade of dead Google projects - http://bit.ly/2WgpBcEBloomberg, Apple’s New Mac Pro Can Cost $52,000. That’s Without the $400 Wheels - https://bloom.bg/2QjlcSvFortune, Why YouTubers MKBHD and iJustine Got the First Sneak Peek at the New Mac Pro - http://bit.ly/2WffmFCApple Insider, Editorial: Mac Pro puts the pedal to Metal in Apple's race with Nvidia - http://bit.ly/2U9PtEpOur co-hosts:Bertrand Schmitt, Tech Entrepreneur, co-founder and Chairman at App Annie, @bschmittNuno Goncalves Pedro, Investor, co-Founder and Managing Partner of Strive Capital, @ngpedro Our show: Tech DECIPHERED brings you the Entrepreneur and Investor views on Big Tech, VC and Start-up news, opinion pieces and research. We decipher their meaning, and add inside knowledge and context. Being nerds, we also discuss the latest gadgets and pop culture news. 

Subscribe To Our Podcast

Full transcription: may contain unintentionally confusing, inaccurate and/or amusing transcription errors

Bertrand: Episode 6 of "Tech Deciphered." 

How are you, Nuno, today?

Nuno: I'm well, although today I'll be very grumpy throughout most of the episode. There's a couple of articles that we'll be discussing that I have some objections to. But overall I'm doing very well. How about yourself, Bertrand?

Bertrand: I'm doing good, it's a good day. I'm not sure if I'm as grumpy as you on some of these articles, but we will see, we will see.

Nuno: Maybe we'll get to get grumpy at each other as well?

Bertrand: Oh, I hope not. So, we have a few articles today we will be talking about: 3 main topics. 

One around, how to help you in term of start-up idea: how to evaluate it, how to get a good sense as an entrepreneur, does it make sense? 

Talking as well about, product management - high level: what are different types of product management. 

And finally, we will talk as usual, we'll have a section around gadgets, and this time we'll have a focus, of course, on the new Mac Pro.

How much is your startup idea worth? (02:23)

Nuno: Yes. So let's start with VC and startups and we're going to be discussing two articles to start with: one is actually, how to know if your startup ideas worth a dollar or $1 billion.

Bertrand: And I prefer a billion, personally.

Nuno: I think most people do, but maybe it's difficult to get to a billion, and then we'll talk about, threads from Twitter from Tren Griffin who summarized the podcast with Andy Rachleff, who obviously is a former GP at Benchmark, who I believe is still the CEO of Wealthfront, and he's sort of synthesizing some of the findings from there.

So, let's start with the positive things. There's a lot of two by twos in particular, two "two by twos" that are used by Ali. 

The "pain versus frequency of use", two by two, and then the other one, the "Howard Marks consensus versus right or wrong", two by two, which Andy actually also mentioned in the podcast, apparently.

I think frameworks are really useful for a couple of things. They're really useful to highly simplify very complex decisions, and certainly for people to put into perspective, what are the analogies in that specific space? =

Pain vs Frequency of use Framework (03:26)

Nuno: The first framework is a framework that has on the x-axis pain, and on the y frequency of use. And so the different quadrants as he categorizes them are: 

The top-right quadrant so high frequency frequency of use / high pain - sort of the holy grail in start-up. 

Bertrand: Yes, usually we're all excited when we see something like this.

Nuno: That's the one we love.

 Then the low pain / high frequency of use is "step forward" "innovation /inventions" "Schlep blindness" as he categorizes.

Bertrand: Maybe some example: we would categorize a Zoom or a Slack in that category. 

Nuno: Yes, because they're coming into a market where there was no perceived pain for messaging for communications in groups, etcetera, and still they were innovators, and they need to step forward, and they are high frequency use tools and services. 

Bertrand: And to be clear it's always a question of perception: myself being a big user of video call, of email, I could feel it was not right, something was not right, I remember myself looking for solution for video call for our needs, at App Annie, and I was not satisfied with anything on the market. So it's really a question of perceived pain. 

Nuno: Yes. 

And then the high pain / low frequency of use: we have the "Rich Barton Playbook", Rich Barton the founder of Zillow, Expedia, and Glassdoor. And that playbook is the "Power to the People" playbook where users generate information that create data loops, which later help aggregate the consumer demand quickly and match it with suppliers, and I'm here directly quoting Ali on his article. So interesting also that a lot of plays here are highly transactional plays, so they are high-value transactions.  

Bertrand: Rare transactions, but high value transaction.

Nuno: And then the last quadrant so, low pain / low frequency of use: are brands and luxury goods as defined by him, I'm not sure I totally agree with that categorization, but that's the low pain low frequency side of the quadrant  .

So talking about the positiveness of these frameworks. Again, it allows you to distill something that's very complex into something that's very simple. If you're an entrepreneur, or an investor, or venture capitalist that allows you to sort of put things in perspective and create what I call the analogizer mindset, which is, where would this fit in our realm of decisions?

For example, as a venture capitalist, the fact that we need to come back to the decisions that we've made over time and also frame future decisions, it's very important that somehow we can put these decisions in perspective. So all of that is very, very valuable. 

I think the problem of these "two by twos" is they're obviously overly simplistic.

So in time they're snapshots. They're helpful in looking at the past, sometimes. They're rarely very helpful in looking at the future. So at least you can distill a simplified analysis of a market, et cetera. But I don't know, personally any venture capitalist that makes their decisions on "two by twos".

And so, my issue with this type of analysis is: there's always going to be exceptions. Also, there's always be going to be companies that maybe there's a misunderstanding of what consensus, for example, in the "Howard Marks" framework, what this consensus actually mean. 

Howard Marks framework (06:35)

Bertrand: Let's talk about what is the Howard Marks framework? 

Nuno: The Howard Marks framework, the 2x2 is on let's call it the y-axis consensus or non-consensus, and then on the x-axis wrong or right. 

And obviously everyone likes to be right and non-consensus and that seems to be the venture returns quadrant, where's there's at least two to three years head start. 

The right and consensus is is the quadrant that normally has a lot of competition, he calls it relentless competition. 

The wrong and consensus is not fun, and then the wrong and non-consensus "sucks to be here". So they're both really bad because obviously you're wrong. 

Bertrand: Yes, you're wrong, consensus or not...  

Nuno: ...you're wrong, so that's not good. 

Bertrand: Actually people might make even more fun of you if you are wrong in the non-consensus situation, so I guess there is some political risk in some ways being in this quadrant.

Nuno: Of credibility almost. 

Bertrand: Yeah. At some point, if it sounded too crazy, maybe it really was too crazy.

Nuno: I don't think there's anything fundamentally wrong with this framework. Again, what I don't think it does, is helps you make critical decisions like, for example, will I invest in this company or not over time? I don't think it's particularly helpful to most entrepreneurs either because you might be looking at something that you think is not consensus, but you might be missing a lot of data points to figure out if it is consensus or not.

For example, one space where there's a lot of stealth companies emerging in the market is the area on artificial intelligence . So sometimes it's very difficult to know what's consensus and non consensus driven. You can look at papers, you can look at the academic papers in what's been published.

You can look at IP,...

We go in-depth on the ongoing media streaming wars touching upon Apple, Disney, Netflix, AT&T… and well, we spend a lot of time talking about Disney, our new Media overlord. We discuss whether we are at “Peak TV”, audio streaming and the Marvel Universe and how it changed the global movie landscape for all of us. Throughout this episode, we must warn our listeners that we will also share some strong opinions on specific movies and tv shows… don’t tell us we didn’t warn you!

Navigation:

Apple TV Plus: why it’s not about what you think it is (01:59)

Are we at “Peak TV”? (09:34)

AT&T’s new media strategy (16:10)

Disney Plus: a new giant of streaming emerges? (21:40)

How the Marvel Universe changed the movie arena (33:05)

Peak TV and peak Media (41:40)

Resources:

Bloomberg, Apple TV+ launch - https://bloom.bg/3cZHQsU

Hollywood Reporter, Apple TV+ shows getting 2nd season - http://bit.ly/3aZ0W0x

Cult of Mac, Apple TV+ pulls in ‘millions of users’ in its first week - http://bit.ly/3b9uVTJ

iMore, Apple TV+ analysis predicts initial demand falls behind Netflix's top offerings - http://bit.ly/3d1ds1c

Ars Technica, As DirecTV tanks, AT&T says it will “re-bundle” TV with HBO Max - http://bit.ly/2U7oJVg

App Annie, Mobile Minute: Disney+ Poised to Shake Up Mobile Streaming Market - http://bit.ly/3b2elVp

Seattle Times, Disney Plus hits 10M subscribers in 1 day - http://bit.ly/2QcVjUz

What is the Endgame for Disney+ - https://econ.st/2We6rnW

Matthew Ball, Marveliad, Cinematic Universes Aren't New; They're the Oldest Stories on Earth - http://bit.ly/3b1piXE

Matthew Ball, Disney, IP and returns to "Marginal Affinity" - http://bit.ly/2Wi96wH

WSJ, Roku Getting Splashed by Streaming Wars - https://on.wsj.com/2WeOuFH

Hollywood Reporter, Studio Chief Summit: All 7 Top Film Executives, One Room, Nothing Off-Limits (and No Easy Answers) - http://bit.ly/3dbG5Jo

Hollywood Reporter, Liberty Media CEO Forecasts "Circular Firing Squad" for Hollywood's Streaming Wars - http://bit.ly/3d3j7Ec

Matthew Ball, The Mining of Media (or The "Streaming Wars" are Just a Battle) - http://bit.ly/2UdnYtE

WSJ, Expect Fewer Big Media Deals Next Decade - https://on.wsj.com/2Qi9lEp

Bloomberg, TV Industry Suffers Steepest Drop in Ad Sales Since Recession - https://bloom.bg/2QkucXL

Our co-hosts:

Bertrand Schmitt, Tech Entrepreneur, co-founder and Chairman at App Annie, @bschmitt

Nuno Goncalves Pedro, Investor, co-Founder and Managing Partner of Strive Capital, @ngpedro 

Our show:

 

Tech DECIPHERED brings you the Entrepreneur and Investor views on Big Tech, VC and Start-up news, opinion pieces and research. We decipher their meaning, and add inside knowledge and context. Being nerds, we also discuss the latest gadgets and pop culture news.

 

Subscribe To Our Podcast

Full transcription: may contain unintentionally confusing, inaccurate and/or amusing transcription errors

Nuno: Welcome to episode 5. 

Today we'll spend most of our time talking about media: the launch of Apple TV, Disney Plus, and a few other in-depth articles that we've had a chance to take a look at 

Bertrand: Hello Nuno, how are you?

Nuno: I'm well, how about you Bertrand?

Bertrand: I'm doing good, thank you. I'm pretty excited to talk about the media space today. A lot of action in that space in the few months, so glad we find the time to talk about what's happening and what is all this media streaming war all about. 

Apple TV Plus: why it's not about what you think it is (01:59)

Nuno: So let's start with Apple TV. 

So, Apple TV Plus launched November 1st, we have a bunch of articles that we've been talking about for the last few weeks around and interesting. So what are your thoughts early on, on Apple TV Plus? 

Bertrand: If you look at Apple TV Plus alone by itself it's not a very interesting service  would be my take, in the sense that what's coming and what's unique from this service in term of unique shows you cannot get anywhere else, right now you just have a few of them, and at least from my perspective as a consumer, I have not been keen to see any of their shows. 

I tried actually, I tried, it was kind of disappointing: what you can see is that a lot of money has been spent on any one of them, that's for sure, it's extremely polished, extremely polished, but for me the story is not there, it's disapointing in term of story basically on all these shows. 

But when you look at the bigger picture of what they're trying to achieve it's probably better . The bigger picture is a few things, at least from my perspective: these  new shows are more a magnet to bring you to Apple TV Plus in general, to the overall Apple ecosystem. And why would they want to do that? On Apple TV Plus you can get access to other TV channels, so it's not just Apple content you get , it's other TV content you can get access to: from HBO to a lot of others who you can pick. And they are, as usual, getting some significant margins playing with that. 

Nuno: It's interesting because in some ways it seems like they are seeding what I would call a meta-play, right? They are trying to serve all the different experiences that you have with different streaming services onto one banner which is Apple TV, and the way for them to seed this, is to do Apple TV Plus, have all these different shows that are originals, and push people into it, so that people start consuming more and more. It's a really interesting thing because if we're right about this, what Apple is doing is they're seeding a service that in effect, just wants to aggregate your user experience at the end of the day by just creating some content.

So our view is that Apple, to be clear, doesn't want to be a content owner,  they don't want to be Netflix. 

Bertrand: Yes, I think that's really the take here, is that there is some bigger strategic reason at play, and we talk about now aggregating these different services, and by the way this is very very similar to how Prime is working. Amazon Video, part of the prime service: it's the same playbook. They make a few shows, they make a few movies, but at the end of the day it's a magnet, so is that you use Prime as your destination to subscribe to other TV channels. Surprisingly enough very similar business model on that part, where they are trying to attract you so they become the main place where you will find and play your shows, your movies, but ultimately and we'll talk more about that, at a service of a bigger business model which in the case of Apple is to sell devices, in the case of Amazon is to sell you everything. 

Nuno: Yes, but with Amazon Prime there are still some significant differences. They are not making the user experience totally seamless for you to see Hulu and other types of services that you might have. And they are building their content inventory, right? 

They've been winning a lot of awards, they actually have great shows. I've been part of all their pilots seasons and voting, and their first pilot season was a little bit iffy, but they've been really doing well and they have great shows with actually pretty impressive ratings, and as I said they've won awards. So I buy the whole generation of traffic piece that Prime is doing, that Apple is doing with the TV Plus, but I think the TV Plus play might be actually very different in the sense that it will aggregate other streaming services under one banner, whereas with Amazon that's not really the play. I think with Amazon they do want to pull you into their ecosystem and into the whole Prime ecosystem overall. So I do think they'll continue developing content, and they'll continue wanting to own your time with them, in effect. 

Bertrand: Yes but again, interestingly enough Amazon really pioneered this model to attract to that center location of looking for TV shows, movies, and letting you very easily subscribe to 3rd parties TV channels, basically that's what it is. So in a way Apple TV has copied part of the approach of Amazon. I was myself surprised. 

Nuno: But it feels, Bertrand, it feels more, the Prime play I know it's a broader play within sort of the realm and the world of Amazon, but it does seem to me that what Amazon is doing with Prime TV and Video is closer to Netflix than what Apple TV Plus is doing right now, and we'll see where Apple TV Plus goes.

They have plenty of cash to just go and develop content. So it's not like they can't develop content, It just seems as you said earlier on, that they are anchoring around this sort of unified user experience with all your streaming services, which makes sense because that's how Apple TV started in the first place, as a software service. 

Bertrand: Yes and obviously interestingly enough you cannot browse from Apple TV, Netflix. So Netflix is not opening its content to Apple TV, or to any other service by the way. So Netflix is pushing you to go to Netflix and then you discover content and obviously only Netflix content. 

When the other providers from Roku, to Apple, to Prime, absolutely tried to get every other service available from outside, and be visible from their own system. 

But as you say, I'm expecting that, over time, Apple's offering will improve, will expand, but will it go really big beyond just being a "Magnet" it's not clear. Another interesting point is right now you get it for free in many cases: basically if you buy an iPhone or an iPad or a Mac or an Apple TV, you get a one year free. 

So I also think there is some realism on Apple side that the offer by itself, it's not truly standing on its own: a few TV shows with no back catalog for $5 a month, and we will talk later about the Disney offering for instance at $6/month basically it would be a pretty bad deal to pay for Apple TV Plus subscription right now. 

Nuno: So a couple of interesting things. 

One, we were talking about the quality, or you were talking about the quality of the Apple TV Plus shows, I guess we're talking about SEE, For all mankind,...

We really get into a discussion on Apple’s, Google’s, Nike’s, Fitbit’s and Garmin’s strategies. We talk about the evolution of Direct-to-Consumer (DTC 2.0), the “Google Squeeze”, and we end up disagreeing a couple of times, although no co-hosts were harmed in the making of this episode. Finally, we talk about the new Macbook Pro (Bertrand is a real fan), Apple’s foray into AR and VR, the new Moto RAZR and the “General Magic” movie.

Navigation:

Apple’s Vertical integration strategy (01:57)

Peak Google or the Google Squeeze (08:49)

Nike (really) goes Direct-to-Consumer (15:35)

Cracks in Amazon’s Armor (16:06)

Fitbit & Garmin in opposite directions (25:37)

Macbook Pro (34:30)

Apple going into AR/VR (41:17)

New foldable Moto RAZR (44:46)

General Magic - The Movie (46:47)

Resources:

Apple Insider, A6: How Apple's custom silicon and iOS optimized each other - http://bit.ly/2Um4bsn

WSJ, Nike to Stop Selling Directly to Amazon - https://on.wsj.com/3d76W9x

Stratechery, The Google Squeeze - http://bit.ly/2xGnGUJ 

Business Insider, Google offer to buy Fitbit - http://bit.ly/2U9FMGg

Fortune, Why Garmin’s Shares Are Hitting Record Highs As Rival Fitbit Sinks From View - http://bit.ly/2QeyiAw

Daring Fireball, New MacBook Pro 16 - http://bit.ly/3d3qfjZ 

Monday Note, Apple AR/VR: Reality Bites Virtual Reality - http://bit.ly/2U1TTgw

Yanko Design, 2019 MOTO RAZR foldable phone - http://bit.ly/2UdkZ4q

General Magic, The Movie - http://bit.ly/2WcFocF  

Our co-hosts:

Bertrand Schmitt, Tech Entrepreneur, co-founder and Chairman at App Annie, @bschmitt

Nuno Goncalves Pedro, Investor, co-Founder and Managing Partner of Strive Capital, @ngpedro 

Our show:

 

Tech DECIPHERED brings you the Entrepreneur and Investor views on Big Tech, VC and Start-up news, opinion pieces and research. We decipher their meaning, and add inside knowledge and context. Being nerds, we also discuss the latest gadgets and pop culture news.

 

Subscribe To Our Podcast

Full transcription: may contain unintentionally confusing, inaccurate and/or amusing transcription errors

Bertrand: Hello Nuno, how are you today? 

Nuno: I am. Well, how are you Bertrand? 

Bertrand: Pretty good, pretty good. 

Nuno: Today we're going to talk quite a bit about strategy, and how some very significant players Apple, Nike, and Google are thinking through their integration in terms of business model. Also in terms of tech, we're going to leave some of the content discussion to another episode.

In particular around some of the movements that Google, Apple, Facebook and others are doing around content, around gaming, et cetera. 

Apple Vertical Integration Strategy (01:57)

But maybe just start with a really fascinating article around the A6, and on how Apple has really innovated around the system on chip space, and how that really is linked to it's almost dominant position around the operating system stack as well. 

Bertrand: Yes, I think there was this fantastic article on Apple Insider talking about how the A6, the Apple CPU that was launched  in 2012 is representative of how Apple works differently from other tech companies. And myself, I remember one of the first time I was surprised by how Apple was working, is when I heard that story about how they cornered, the aluminum  market for laptops: they will buy in advance most of the sources of aluminum to make sure nobody else could make a MacBook . And apparently that story was not just a wake up call for me, but a wake up call for execs at other tech companies, including Microsoft, when suddenly they fully realized what they were up against in term of vertical integration. 

I think that the traditional PC space was not about this vertical integration. That's for sure. That was about Intel and Microsoft creating that ecosystem where everyone compete pretty aggressively and the profit goes to Microsoft and Intel at the end of the day.

Apple has a different approach. Apple is Apple, so they don't have an ecosystem as wide, and they focus very clearly about keeping the profits for them, not sharing with another one big strategic partner, or on another ecosystem - you could argue that actually there is some profit sharing with the app ecosystem. And that's probably new for Apple. 

But going back to this A6 story, and that's interesting because it's bringing us back to memory lane in a way, years ago. And that's where you see Apple has been very fast understanding and from there strategizing what to do, from that initial leadership position in the smartphone space, because to launch that in 2012, you had to prepare that a few years ago.

So it was relatively early  in the iPhone history that they started preparing a much bigger play around a much fuller vertical integration, that nearly no one, even today, maybe barely Samsung has truly deployed. 

Nuno: Yes, and I think there was a couple of interesting elements here that the article does mention, which is how Android became effectively unbundled because obviously Google is trying to bring as many OEMs to the table as possible.

And in some ways, Android has become the dominant operating system globally, but the experience of Android in some ways has historically lagged some of the aspects of iOS. I would argue maybe today it's less visible, but certainly if we go back 2012, 2014, 2015, that's certainly visible.

It also manifests itself in the quality of the apps, and the quality and the revenue that's made in the app store space. But for me, there was  a more fundamental issue here, and I go back maybe to 2005 / 2004, when I was still with the GSM association. We're having all these fascinating discussions with MIT professors and a few early stage startups that were really saying the future is going to be system on chip.

We're going to have more and more integration down stack, and it does make sense if you have a really, really well framed stack around the hardware pieces, around the operating system and then around , basically the processing power, to actually do and pass more and more stuff to system on chips.

So in some ways, I think what Apple is doing is really the playbook that we've been discussing probably now for a decade and a half, even longer, that you're going to have more and more integration downstream, on the one hand, but also basically you're going to have a lot more integration into the chip, right?

And that will get you performance, that will get you a level of customization linked to operating system that basically was unheard of, even in the times of Microsoft and Intel. 

Bertrand: Yes, and for me, what's really impressive is that this article is sharing a window in a sub-part of the full Apple vertical integration.

Because again, it goes from having a near controlling side on some output from some mines in some specific type of minerals, to an integration of hardware. And at the time, let's remember in 2012 they had not yet integrated the GPU, the GPU for the iPhone designed and manufactured by Apple was a few years after, around 2016 if I remember well, that's when they drop  their partner. But it goes beyond that, it goes not just to the app store that everybody knows, but it goes even to the programming tools and ecosystem. They have X-Code, very good programming tool, but they also have launched their own programming language.

They always have had Objective C, but then they move to Swift, we're at Swift five now, and the latest one , the one I got actually very, very excited was  Swift UI. That was announced at WWDC in June, and has been released as part of iOS 13, the new MacOS Catalina, and this Swift UI is very impressive in term of how it lets you develop easily across all the Apple ecosystem in a way that puts shame, honestly shame to everybody else in the industry because no one has such an efficient set of tools, from A to Z. And not just that: all of their tools are fully optimized to their CPUs, their GPUs. Metal, Apple's own 3D engine truly leverage their GPUs and CPUs combined, and their machine learning libraries and developer tools are also fully integrated with their hardware.

And now obviously the talk of everyone is around Apple services: the last layer, from mining aluminum to providing you TV shows, you have the full stack coming from Apple. 

Nuno: And if you look at the Android devices, for me the realization is in effect, the best Android devices are not really the Google flagship devices anymore.

We've heard some mixed feelings around the Pixel 4 and the Pixel 4 XL, even with the Pixel 3 XL, which was actually a really good device, it was clear to me at that point that there were better devices in the market. I think One Plus has done an incredible job of being ahead of the curve in many of these trends and almost keeping up to par with some of the things that we're now seeing with Apple. Right. Like the nightscape on the One Plus 7 Pro has been around since March, obviously now with the iPhone 11 Pro we have that as well in the Apple ecosystem. So I think that there's a lot of interesting things around how they've attached to the devices, and how the devices have provided this incredible experience to end users.

Where Android is seems to be playing catch up and certainly Google doesn't seem to be sort of the clear innovator anymore. Maybe it was early on with the Nexus series, but certainly, probably not with the Pixel series in the last few years. 

Peak Google or the "Google Squeeze"? (08:49)

Maybe changing to Google and talking a little bit about Google, this fascinating Stratechery article on "the Google squeeze", where there's this admission, you know, I called it peak Google. It's not peak Google, apparently they're still doing really well. 

And it just sort of illustrates this really interesting thing that people have sort of been noticing, which is you really are getting a lot of stuff now to just searching Google. You're getting flights,...

We do an in-depth episode on our “saviour generation” (as Nuno calls them), gen Z: who are they, what do they stand for, what are their aspirations and hopes, why does it matter so much, how entrepreneurial will they be, how will they engage, what products and services will they use - in commerce, social, entertainment, gaming, finance, how to reach and appeal to them. 

Navigation:

Definition of Gen Z (1:31)

Aspirations & Hopes (4:13)

Why should we care? (08:57)

Openness & Consciousness (10:31) 

More or less entrepreneurial? (12:33)

Growing up ‘mobile-first’ (16:55)

Institutions and political engagement (20:49)

What apps do gen Zers use? (23:26)

How do they play mobile games? (28:00)

What social apps do they use and how? (30:27)

What entertainment apps do they consume and how? (32:59)

How do they use shopping and financial service apps? (34:25)

Gen Z at work and their career development (39:33)

How to reach and appeal to Gen Z (47:13)

Gen Z - Conclusion (48:37)

Resources:

App Annie, How To Win Gen Z on Mobile - http://bit.ly/2w8TvVJ

Criteo, Gen Z Report Based on the Criteo Shopper Story - http://bit.ly/2IOv0Qr 

McKinsey, True Gen: Generation Z and its implications for companies - https://mck.co/39W0noe

Morning Consult, Understanding Gen Z  - http://bit.ly/33pbeV1

IBM, What brands should know about Generation Z shoppers - https://ibm.co/33qWXXZ

Imagen, Switched on Superfans - http://bit.ly/3aRZahA

Deloitte, Understanding Generation Z in the workplace - http://bit.ly/38TT6nx 

Google, Gen Z: A Look Inside Its Mobile-First Mindset - http://bit.ly/2TT65BK

Our co-hosts:

Bertrand Schmitt, Tech Entrepreneur, co-founder and Chairman at App Annie, @bschmitt

Nuno Goncalves Pedro, Investor, co-Founder and Managing Partner of Strive Capital, @ngpedro 

Our show:

 

Tech DECIPHERED brings you the Entrepreneur and Investor views on Big Tech, VC and Start-up news, opinion pieces and research. We decipher their meaning, and add inside knowledge and context. Being nerds, we also discuss the latest gadgets and pop culture news.

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Full transcription: may contain unintentionally confusing, inaccurate and/or amusing transcription errors

We discuss the future of direct to consumer brands and the long awaited reclaiming of end-consumer relationships by the L’Oreals and Philips of the world, and why Nuno won’t do “automatic toothbrush head re-ordering” any time soon. We talk about the importance of chicken (yes, CHICKEN!), why CostCo is locking in its production and the future of food delivery, including dark and cloud kitchens. In gadgets, we talk about the Apple Watch and Amazon Alexa.

Navigation:

Digitally Native Brands - from Direct to Consumer 1.0 to DTC 2.0 (01:51)

The case for product differentiation in DTC (04:11)

Innovations in packaging (10:13)

Gaining direct relationships with consumers (13:22)

Theses in food delivery (16:38)

Emergence of dark and cloud kitchens (17:45)

Take-out still key in the US (21:52)

The importance of the Costco $4.99 Chicken (24:46)

Apple leader in smart watch (31:02)

After 5 years, why is Alexa barely better? (37:47)

Resources: 

Frederic Fernandez, FMCG CEOs: 10 Thoughts About The Future Of DTC - http://bit.ly/3cWe88a  

Times of India, Cooking food to become as rare as making own clothes - http://bit.ly/2WdndU9,

CNN Business, It's only $4.99. But Costco's rotisserie chicken comes at a huge price - https://cnn.it/3aXuls4

9to5Mac, Strategy Analytics: Apple Watch sales grew 51% in Q3, still the ‘clear industry leader’ - http://bit.ly/2QiAmr8 

The Verge, After 5 years of Alexa, why isn’it it better - http://bit.ly/2WacdqJ

Our co-hosts:

Bertrand Schmitt, Tech Entrepreneur, co-founder and Chairman at App Annie, @bschmitt

Nuno Goncalves Pedro, Investor, co-Founder and Managing Partner of Strive Capital, @ngpedro 

Our show:

 

Tech DECIPHERED brings you the Entrepreneur and Investor views on Big Tech, VC and Start-up news, opinion pieces and research. We decipher their meaning, and add inside knowledge and context. Being nerds, we also discuss the latest gadgets and pop culture news.

 FMCG CEOs: 10 Thoughts About The Future Of DTC

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Full transcription: may contain unintentionally confusing, inaccurate and/or amusing transcription errors

Bertrand: Hi Nuno, how are you today? 

Nuno: I am well, and how are you Bertrand ? 

Bertrand: I'm doing pretty good, so today we are going to talk about consumer, consumer goods, consumer tech and we have a few topics from consumer goods to food tech.

Nuno: Yes, and that will make us hungry. So this is going to be an interesting show at the end of the day. 

Digitally native brands - from DTC 1.0 to DTC 2.0 (01:51)

Shall we go in? And to the direct to consumer analysis on digitally native brands. This really interesting article, by Frederick Fernandez, which really puts together a lot of research from ABI and a few other sources on the future of DTC, and he has 10 specific thoughts around it. And , to start with a non-controversial part, I think we will find it difficult to disagree tremendously with any of the 10 points. But maybe let's start at the beginning, right? So , let's start with definitions and what it is and what it's not.

We're talking about, effectively the direct to consumer or, what we call digitally native brands. So brands that are F in the FMCG space, that are reaching out to consumers in their first instance, through mostly a digitally enabled value chain and also digitally enabled front office in front of the house.

So, a lot of interesting analysis around it. I think let's start with sort of the obvious ones, and maybe go to the less obvious ones. 

The point that he makes pretty early on is that, what got some of these digitally native brands to be so unique and so advanced, and really to take significant market shares is probably not going to work for the next wave of DTC 2.0. So DTC 1.0 was really focused on price arbitrage, on optimization of marketing, on paid traffic, and effectively there weren't a lot of barriers created there.

And , if we're looking at the future of DTC and, some of these FMCG digitally native brands, effectively that will look very different going forward. You need to have a structure that defends you. You need to be back to this point where there are some barriers to entry, et cetera.

I'll start with one thing that comes to mind quite a bit. Well, I look quite a lot at digitally native brands, on my day to day role, in VC, and we always see these companies, which is like, "we're going to be the new brand of salt of olive oil, of whatever" that's going to deliver to customers and we're going to be the new brand that will allow customers to have, for example , "spices in their home", and one of the few things, and it all seems a little bit idiotic, but it's not , because in some ways, the access that people want to have to specific brands because of convenience and a few other things is very well suited for direct to consumer, digitally native brands.

The case for product differentiation in DTC (04:11)

But at the end of the day, one of the questions I always ask, so I'll start with one pet peeve I have is: what's unique about your product, right? Are you doing anything around product? If you're just sourcing it from an existing player in the market, that can actually at some point go direct to consumer.

If you're not doing anything around product besides packaging and just distribution afterwards, what is unique about your angle? And, shockingly enough, what I've come to the conclusion of is most of these new players are still playing by what Frederick would call this sort of 1.0 playbook, right?

They really haven't thought through what are the attributes of their brand beyond marketing. What are they doing around product? Right? And, in consumer goods, we have to go back to that basic knowledge that the development of a brand, the development of a product, are not the same thing.

The development of a product is actually a complex thing. If you're doing something that requires certain types of approvals, from the food and drug administration, or that actually is going to be in the hands of consumers, how are you going to innovate around that? So that's my first pet peeve, which is really, how do these DTC 2.0 plays actually distinguish themselves on product, besides marketing, potentially business model, et cetera.

Bertrand: Yes, I think, interestingly enough, it's not clear. He talks a lot about differentiating in product, but it's quite a lot around how do you create some unique advantage. And some of your unique advantages might be around distribution. You have created an insane content and brands that make people want to buy from you because , you will present some specific brand attributes or because your product is part of a bigger system, is part of a bigger whole, and that's that "whole" that has a true strong business model. So in a way, it has to even go beyond that product.

I think the one product, however unique it is, might be a very difficult game in the first place. You're right to say it has to go beyond, a non-differentiated product. But I think his point is that it has to go beyond any single product. 

Nuno: Yes. And I think there are a couple of different dimensions here.

One is the notion of traffic and how do you attract traffic to you and how do you build brand? And if we go back, to some of the core tenants of this article, it does make sense that you have content, that you have media, that you basically induce it into this really overall digitally native platform, and you generate a lot of traffic out of it, but in some ways, that's not a very different playbook from an FMCG brand in general, even one that sells offline and that has other types of presence. So you have advertising that basically grew and spread awareness and other things. 

Bertrand: I would actually disagree a bit, because when you think about Glossier, it's a great example where: it's as if they owned the typical beauty magazines and typically the FMCG companies don't own these beauty magazine, they don't own the content. Here, Glossier owns the content that people are looking for in the first place, and then is building a brand from there.

So, I think there is a bit more vertical integration he is talking about, that actually is quite interesting and a big change from the old ways of doing business. 

Nuno: Yes, I agree with that. I agree that there is a different angle on the integration and the stack of content. They go into a more fully integrated model.

I do think the next generation of people that we're seeing, and we've started seeing that already with some gen Z brands that are coming to market is  going to come from actually a very different angle. Which he does mention quite a bit as well around forums and social interactivity and social connection and community building.

I think we're going to go even one step further than that, where the social community, actually is embedded in the product development life cycle. We've started seeing a few people and a few brands playing with that, we started seeing a few brands actually use the community also as influencers and social media presence, which is interesting.

And there's a lot of interesting, companies out there doing some experiments. I think for the time being, nobody's really scaled dramatically on it, but there's clearly something around that. So all of that I agree with. I think the social aspect, the community aspects, probably more distinctive, than just generating content.

Because at some point, I do think the classic brands will catch up, and they can generate their own content and they have huge marketing budgets, right? So they do have access to distribution in many different channels in any case. I don't want to hamper on the product point because , I agree in some details that there is a uniqueness to building a brand and having a multi-product portfolio that is unique.

My point here is not so much that you have unique product, but even in your multifamily of products,...

We get Tech DECIPHERED started by discussing the lessons learnt from the grandfather of Silicon Valley Venture Capital and founder of Sequoia Capital, Don Valentine… learn what the Don Valentine jacket was all about. 

We go behind the curtain on how the Venture Capital landscape has systematically changed in terms of stages of investment, risk taking and across consumer vs enterprise and software vs hardware … and why VCs have actually benefited from angel investors. 

We discuss common pitfalls in pricing your products & services and the importance of gross margin or “If you truly mispriced [your product or service] by 10X, you are probably a dead company or soon to be dead”. 

We share our “no bs” views on obvious and less obvious lessons on pitching to a VC firm and, in gadgets, we discuss the death of the Red Phone and the new Airpods Pro.

Navigation:

Don Valentine’s Passing and his Jacket (01:29)

The importance of targeting Big Markets (02:41)

Example of a big market: the app Industry (04:16)

How big is your market? (06:00)

When Silicon Valley gets markets wrong (08:02)

The new early stage landscape - from pre-seed to series A (09:31)

The Gross Margin Problem (19:47)

Non-obvious lessons on pitching (27:34) 

Airpods Pro (34:06)

Resources:

Jeff Morris Jr., Don Valentine, target big markets: http://bit.ly/2Q8cnL9

Pear VC, Navigating The New Seed Landscape: http://bit.ly/2TMoz6G 

Craft Ventures, The Gross margin Problem: Lessons for Tech-Enabled Startups: http://bit.ly/2vlLQ6a

James Currier, Fundraising is not natural: http://bit.ly/2TMp14S

The Verge, Airpods Pro launch: http://bit.ly/39OvOjY 

Inverse, Red Phone getting killed: http://bit.ly/2wVEh6k  

Our co-hosts:

Bertrand Schmitt, Tech Entrepreneur, co-founder and Chairman at App Annie, @bschmitt

Nuno Goncalves Pedro, Investor, co-Founder and Managing Partner of Strive Capital, @ngpedro 

Our show:

 

Tech DECIPHERED brings you the Entrepreneur and Investor views on Big Tech, VC and Start-up news, opinion pieces and research. We decipher their meaning, and add inside knowledge and context. Being nerds, we also discuss the latest gadgets and pop culture news.

Subscribe To Our Podcast

Full transcription: may contain unintentionally confusing, inaccurate and/or amusing transcription errors

Bertrand: Hi Nuno, how are you? 

Nuno: I'm well. 

Don Valentine's passing and his jacket (01:29)

So today we're going to start with some news, some sad news around venture capital with the passing of Don Valentine, the founder of Sequoia capital, obviously one of the household names in the venture capital community here in the Bay area and around the world.

Sequoia capital having become one of the most significant players in the venture capital space.  And Bertrand you actually met Don and Sequoia was an investor in your company? Some words around Don and around Sequoia?

Bertrand: Yes, I met him a few years back  at a private Sequoia event where he was, giving his jacket, the Don Valentine jacket to one exec who did a lot for  a Sequoia family portfolio company.

Nuno: And what is the Don Valentine jacket? 

Bertrand: It's a nice looking colorful jacket, if I remember well .

Nuno: Does it have a specific meaning attached to it? Is it like someone that's helped Sequoia or the portfolio company? 

Bertrand: I think it's about someone who not only helped a portfolio company, but if I remember well, this person also helped quite a few other Sequoia portfolio companies, was available and open to meet with other fellow entrepreneurs, and that seemed to have been a tradition at Sequoia. 

The importance of targeting big markets (02:41)

Nuno: In the news we're sharing this week is obviously, one of, his speeches at Stanford graduate school of business, around targeting big markets.

You know, obviously there's a lot to be said about big markets. And I think in some ways there's been a lot of emphasis in recent times in particular, in the seed stage, we will talk about, some news around seed in a bit, there's a lot of focus on teams. Everyone talks about teams, we select teams, et cetera.

And obviously Sequoia does mention that. And , if you go to Sequoia's website, there's a huge focus on the founders that they back. But at the same time, there is this notion that markets are pretty important and pretty pervasive in what we're looking at. So, how important was it, for example, for you, when you started thinking about markets, to really go after something that was untapped that was taking you to the next level.

How important is markets? I think there's not enough discussion around it these days, strangely enough, certainly not in very early stage, which is a bit shocking to me. 

Bertrand: Yes. I guess that maybe really early on at the idea stage, maybe there is also a belief that founders are going to tweak the business, pivot the company.

That's why market might not seem as important because they're going to change markets pretty quickly. That's true that I've seen that: a few entrepreneurs doing that. They talk about A, and one year, two after they are working on B. 

So it might make sense to be less focused on the market super early on.

But I think very quickly, market is a key part of the game at two levels. One that it's big, but also that it's growing. You want to have the wind in your back. 

Example of a big market: the App industry (04:16)

And, when I started App Annie, that was early on during the app revolution in 2010. So, just two years after the launch of the app store, for quite a lot of people, it was not clear if it would get, ever big. For me it was clear. 

Nuno: Well, I remember talking about it myself as the mobile app economy in 2009. And people laughed at me. 

And then a year later people were saying HTML 5 was going to win the day, and mobile web was going to take over it. 

And you know, at that point I was just an idiot and silly. And, obviously we met around that time and started working together around the mobile space. So apparently we weren't wrong. 

Bertrand: Yes. That HTML 5 stuff going to take over apps. Actually Steve jobs started like this in 2007 when he launched the first iPhone.

There was no apps. It was "hey", you want an app? Do your Web stuff, we'll call it a web app. That worked for a year, and then they changed their mind at Apple. And I guess the rest is history. Truly no change there, actually, when the web keep falling down, mobile web is at best a stepping stone, to an app.

A few industries, e-commerce, news, probably still see it more than a stepping stone, but beyond that, it 's truly a stepping stone. So,  for me it was just that feature phones were going to be replaced by smartphones and having been in that space for a really long time, it was very clear that the way to deliver content was not working previously: from either mobile web, or the old apps that you could get from a Nokia phone.

That's why it got me excited. That's why I saw a future where every phone will be a smartphone and every smartphone will mostly work with apps. 

So when you are building your business on top of such a huge fast growing market, life is good, or certainly better than a smaller market or a market that is decreasing in size.

How big is your market? (06:00)

Nuno: I found the same, as a venture capitalist and looking at investments you really can't second guess markets, right? So sometimes you go into a market that seems like a growing market, a big market, but once you do the basic math on it, once you do your total addressable market analysis, your SAM and SOM, right, where you get to a share of market. Sometimes you realize actually it's not that big.

And even if you did incredibly well, you wouldn't be a $1 billion company in that market. At any rate. And it's really interesting when you probe some entrepreneurs around their analysis on total addressable market and serviceable market and share of market.

Even if they are actually quite conscious and do a bottom up. Sometimes they don't even realize what the numbers actually mean and the attainment of them.

In my experience, I think to your point, if you have a huge amount of wind to take you forward, then there's huge momentum on a platform. You win. 

And if you don't, then effectively you're out of the market or you really need to survive for a very long time. I think for me, one interesting counter market to, for example, the mobile app platform would have been the AR VR discussion where the attach rates of AR and VR devices very early on were very, very small. And still still to this day, they are. We'll see what happens in the next one or two years. But certainly the issue is then if you are riding on that as a platform and as as your sort of market play, you really are going to have to wait a really long time to have any traction whatsoever, right?

You're not going to have the wind on your side. It's going to be against you all the time. 

Bertrand: And it's very tough because if you try as a company to be successful with no wind in your back for 5 to 10 years, you're not going to make it. So guess who are going to make it, if your market ultimately work out, would be some new guys who are still fresh, but have time starting their business one or two years before this stuff start to scale and go big.

So that's the even worst story. Is that if you are really too early from a decade or five years, you will probably not make it, even if you have done all your very best for many years. So I think that's something to be very careful.

When Silicon Valley gets markets wrong (08:02)

And I love your example about VR and AR because you can see, especially here in the Silicon Valley bubble, VCs specially, but also entrepreneurs always like to try to find out that new platform, that new stuff after PC, after web, after mobile. There must be something else. So is it VR, is it AR? Is it voice? The problem is that, as you say, if you take VR,...

A short primer on what to expect of the new Tech Deciphered Show and why you should tune in.Learn more about what Tech Deciphered’s origin story, its format and tone, as well as an introduction and background of the 2 co-hosts: Nuno Goncalves Pedro, investor, co-founder and managing partner of Strive Capital, and Bertrand Schmitt, tech entrepreneur, co-founder & chairman at App Annie.Navigation:Origin Story (1:26)Format (2:55)Tone (3:16)Nuno Bio (3:39)Bertrand Bio (5:14)Our co-hosts:Bertrand Schmitt, Tech Entrepreneur, co-founder and Chairman at App Annie, @bschmittNuno Goncalves Pedro, Investor, co-Founder and Managing Partner of Strive Capital, @ngpedro Our show: Tech DECIPHERED brings you the Entrepreneur and Investor views on Big Tech, VC and Start-up news, opinion pieces and research. We decipher their meaning, and add inside knowledge and context. Being nerds, we also discuss the latest gadgets and pop culture news. 

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Full transcription: may contain unintentionally confusing, inaccurate and/or amusing transcription errors

Welcome to Episode 0

Origin story  (1:26)

Nuno: As it is always the case, there is an origin story to Tech Deciphered. Bertrand and I have had weekly discussions in different forms around the latest news, opinion pieces, and research for some time.

We've also taken it to Twitter. As part of those discussions, in many cases, we've gone underneath the surface. And while doing that, we really tried to understand what goes beyond the snapshots that the journalists are portraying.

What we are trying to bring is an entrepreneur, an investor view of big tech, VCs and startups, to help understand what's truly happening behind the surface.

And it's usually pretty far from the caricatural view you can sometimes get, and both Nuno and I, we have spent quite some time living in Asia, living in the US, we are coming from Europe, and we believe we can have a more global best perspective versus what you usually get here in Silicon Valley.

So our objective is to decipher the meaning of these news, to decipher the meanings of these announcements, opinion pieces, and to really bring the no BS view of what's really happening in the world, while adding our own inside knowledge and context that is, we think, very valuable.

And also, also being both nerds, we couldn't resist discussing gadgets and sometimes pop culture news.

Format (2:55)

Bertrand: This is our first season.

Typically, every episode will be split into two to four main segments on big tech VCs, and startups, and usually we're ending with gadgets because we love gadgets. 

Once in a while we will bring amazing guests on topics they are experts.

Tone (3:16)

Nuno: Our tone will be a little bit like us. Passionate, irreverent, nerdy. We will be strong, but convey informed opinions. We will always be trying to aim for the truth and that means there will be no BS allowed.

We won't be afraid to disagree, but we will be having quite a lot of fun in the process.

Nuno Bio (3:39)

Nuno: I am your co-host, Nuno Goncalves Pedro, investor, co-founder and managing partner of Strive Capital.

I have been in Tech for almost 25 years as a computer engineer, product manager, operator and investor. I have worked in over 35 countries spanning Europe, Asia and North America and have lived in Lisbon, London, Beijing and the San Francisco Bay area. 

I am an ex McKinsey senior expert and member of the Asia-Pacific Technology, Media and Telecom leadership team, as well as an operator , including senior roles with the GSM Association. I developed and product managed software products and custom systems at the beginning of my career and some of them are shockingly still in use today. 

More importantly, I have been an entrepreneur in Venture Capital, having co-founded Strive Capital and having had senior roles with other VC firms in Silicon Valley. I have been an executive, independent and investor board member on start-ups in the US, Asia and Europe, having worked with other investors in the 3 continents. I am passionate about entrepreneurs and have been an advisor, mentor and coach consultant to several companies and individuals. I am an alum of Stanford and London Business School, and studied Computer Engineering at IST at the University of Lisbon. 

Last, but not least, I am a nerd…the kind that goes to Comic-Con in San Diego; I consume mass amounts of tv and movies, am a gamer and I collect gadgets. In a nutshell, Silicon Valley is my candy store.

Bertrand Bio (5:14)

Bertrand: I am your co-host, Bertrand Schmitt, Tech Entrepreneur, co-Founder & Chairman at App Annie.

I have more than 20 years exec experience in Tech across US, Europe and Asia, and I have lived in Paris, my hometown, Philadelphia, Beijing, Shanghai and now the San Francisco Bay area. 

I co-founded App Annie in Beijing in 2010, and as CEO during 8 years, I led its huge growth to become a global company now headquartered in San Francisco. As Chairman, I am now focused on the long term view of the business.

App Annie is the mobile performance standard, our mobile market data and analytics platform is used by industry leaders all over the world as we now reached more than $100M in Annual Recurring Revenues. We have over 450 employees across 12 offices worldwide, and we raised $150M in VC-backed financing from: IDG Capital, Greycroft, e-Ventures, Infinity Ventures, Strive Capital, Sequoia Capital, IVP, Greenspring and others. 

I am also an active business angel, and advisor to multiple startups and VC funds.

Previously, I was VP Mobile for Gomez, a web analytics company, acquired by Compuware in 2009 for around $300M. Before that I was COO and VP Marketing at the French mobile analytics company Zandan, acquired by Keynote Systems. I started my career as co-founder and CEO/CTO of the French startup “Arkadia Netsystems”. 

I have an MBA from The Wharton School, and a Masters in Computer Networks from ISEP in France. 

Outside of my work in tech, I am usually playing with all the latest gadgets, from 3d printing, cameras, robots, to consoles, phones and headsets. And I guess one day I will be a pure mind living on the Internet - but that will be for another episode of the show ;-)