Managing Editor’s Note: The media have been questioning if Elon Musk will really be able to launch his Robotaxis in June…
But whether it happens June 1 or June 15, the launch is happening, and it’s happening soon. And it’s going to transform the transportation industry.
It’s not too late to get ahead of the rollout. Jeff’s identified a handful of small companies with exponential potential that are supporting the autonomous system behind the Robotaxis.
You can go here to learn more about it.
When I first saw the picture, I couldn’t help but think of a funeral.
It’s the kind of enlarged photo we’d see presented near a coffin… reminding us of those we lost.
R.I.P…. May 21, 2025.
How morbid.
Jony Ive and Sam Altman.
Fortunately, in this case, no person has died.
Oddly enough, the picture shown above represents a corporate matri… er – acquisition. No offense intended…
That being OpenAI’s $6.5 billion acquisition of Jony Ive’s IO Products, announced last week.
For those that don’t recognize the man on the left, that’s Jony Ive, Apple’s Chief Design Officer until 2019.
Ive’s career spanned nearly three decades at Apple, and he was responsible for the design of some of the most iconic consumer electronics products in history, like the iPhone, the iPod, the MacBook, the iPad, and the most successful-selling watch in history… the Apple Watch.
The influence of these designs not only impacted Apple and its ascent to a multitrillion-dollar company, but they also impacted how the modern world interacts with consumer electronic devices, as Apple’s user interface was replicated by hundreds of other companies.
IO Products was Ive’s “next big thing” after leaving Apple. Its mission was to design AI-powered smart gadgets.
Sounded cool – with potential! – when IO Products was announced in 2023…
But since then, it has never launched a single product, and there is no indication that it generated any revenue.
OpenAI’s Startup Fund invested in IO Products early on, as did Thrive Capital, which has been a key investor in OpenAI. Sutter Hill Ventures, Maverick Ventures, and Steve Jobs’ wife also invested.
And in two years, IO Products is suddenly worth $6.5 billion.
Again, no products, no revenue. Interesting.
We don’t know at what valuations those original investments took place at, but I’d be confident in estimating them at well below $1 billion – probably less than $500 million.
OpenAI stepped up last year with a large, nine-figure investment that netted a 23% stake in IO Products at a much higher valuation.
OpenAI’s acquisition of IO Products is reportedly an all-stock deal, so equity holders in IO Products end up with equity in OpenAI. Early investors in IO Products will be sitting on very large paper gains in less than two years, and even OpenAI’s own stake will have increased in value.
It’s estimated that Jony Ive owns 11% of IO Products, which will make his stake in OpenAI worth $715 million, less any additional incentives he may receive in his new role. Ironically, that is a lot more than Ive earned at Apple. Quite the windfall.
It’s easy for a company like OpenAI to throw equity like this around at grossly inflated valuations, given OpenAI’s meteoric rise to a $300 billion valuation, 75 times higher than its $4 billion valuation in January 2023.
Setting the deal terms aside, the purpose of the combination of these two companies is what might produce something interesting…
A sign of both great potential and great failure.
The combined mission will be to invent new consumer electronics products designed to leverage OpenAI’s multi-modal agentic AI models.
And Altman and Ive went further to say these new products will not be smartphones.
Smart move.
There’s not much purpose in entering that well-trodden ground. The far more interesting problem to solve is to rethink the user interface for computing systems in a world pervasive with powerful agentic AI and, ultimately, artificial general intelligence (AGI).
After all, when we can converse naturally, in any language, with our personalized AI assistant that knows us better than we know ourselves, there’s no reason for us to be pecking away at virtual keyboards anymore. Which means that we don’t need to be humped over, with bent necks, and cramped fingers, searching for information or catching up on news or texts.
Maybe we can just live our lives, free of handheld devices, while agentic AI happens around us… enhancing so many aspects of our lives.
What we need in these new devices are two things:
The most obvious product to develop would be smart glasses, or augmented reality glasses. This is a topic that I’ve written about extensively over the years.
The technology exists today, it just needs to be integrated into a simple-to-use consumer product with incredible utility.
More easily said than done. But Ive has the street cred to pull something like that off.
Another, more out-of-the-box idea is an AI-powered headset.
AirPods Max | Source: Apple
Think about something like Apple’s AirPods Max (shown below) but supplemented with a suite of cameras that provide 360 degrees of view, enabled with a personalized AI agent, capable of natural conversation, and has the agency to get work done for you when you’re looking cool and enjoying life.
Altman and Ive aren’t wrong.
We’re overdue for a change.
It has been almost 20 years since the first Apple iPhone came out, a historically pivotal moment in so many ways.
In an obvious effort to “sell” and signal the “monumental” importance of the $6.5 billion price tag for IO Products, Ive proclaimed, “I have a growing sense that everything I’ve learned over the last 30 years has led me to this place and to this moment.”
We are at that moment in time, and we’re past the point of no return.
And the failure of one company in particular made this multibillion-dollar deal possible…
Apple.
Apple’s failure to lean into AI is as significant as Intel’s failure to produce semiconductors for smartphones or artificial intelligence.
Apple is in a pickle right now:
We don’t know yet, but Apple has to do something…
Otherwise, it will be Apple’s funeral we’ll be reading about.
And that won’t be a pretty picture.
Jeff
The Bleeding Edge is the only free newsletter that delivers daily insights and information from the high-tech world as well as topics and trends relevant to investments.
The Bleeding Edge is the only free newsletter that delivers daily insights and information from the high-tech world as well as topics and trends relevant to investments.
