The Vision Pro and Being Early

I hope you had a wonderful week!

The market had a bit of an up-and-down week as investors reacted to the Fed saying more explicitly that it isn’t going to cut rates soon offset by strong earnings reports from most companies reporting. The next two weeks will be very busy as the pace of earnings reports picks up and moves from big banks and big tech to the broader market.

In Case You Missed It

Here’s some of the content I put out this week. Enjoy!

• Peloton’s Customer Acquisition Treadmill: Peloton’s problem isn’t selling bikes, it’s that app customers are canceling faster than hoped.

• What I’m Buying Today: The February buys were sent to premium members this week.

• Earnings Update and Spotify’s Joe Rogan Experience: A review of earnings from GM and Alphabet with some context on why Spotify signed up for more Joe Rogan.

• The Problem With Apple Stock: Apple isn’t a growth stock, so why is it trading for 30x earnings?

The Vision Pro and Tech Disruption

I’ve been alive for three major technology disruptions: the PC, the internet, and the smartphone.

I was young when PCs became commonplace in offices and eventually homes. Most of my memories of elementary school are of the small computer room where I could play Number Munchers and Oregon Trail if got there early enough.

When the internet arrived there was a magic and excitement to something as simple as looking up the weather on Prodigy. Yes, this is what the weather looked like back then. 👇️ 

These tech products were cool, but they were also useful. Suddenly, information that was only available to a small number of people and was only shared on the evening news was at your fingertips. Very, very slow fingertips, but fingertips nonetheless.

The next disruption was the smartphone, which was a massive step up in convenience and suddenly all of your communication tools and a world of knowledge were just sitting in your pocket.

Media, tech companies, and investors have been telling us all week the Apple Vision Pro is the start of the next phase of disruption. Color me skeptical…for now.

Cue the Hype Machine

New York and Silicon Valley must be obnoxious this week. People like Casey Neistat are walking around with Apple Vision Pros on to grab attention.

This video is even more ridiculous because the Vision Pro won’t work as a VR device if you’re walking or driving. Details no one cares about on social media.

It’s cool that the Vision Pro’s pass-thru technology is so good you can ride a skateboard or go skiing in it, but the test for any new technology is how it’s used to make our lives or work easier. Without that, it’s a cool gadget that won’t reach the mass market.

This is where VR stands today.

I’m not saying this as a tech hater. I started a VR business in 2018 that’s still operational today. I’ve introduced thousands of people to VR headsets. I’ve tried every headset and hundreds of pieces of software. The use cases for VR are incredible.

But the high-value use cases aren’t for consumers. They’re construction reviews with a global team, practicing a medical procedure virtually before doing it in reality, or experiencing a new place/time instead of reading about it.

These are extremely high-value applications, but they’re also very niche and expensive to build. And that makes the economics of development that much harder.

Building a niche business for a niche device is…challenging.

Developers won’t care about the Vision Pro or any VR device if there are a few hundred thousand users who put the headset on a few times a week. They’ll care when there are 10 million users with a headset on for hours a day. And we’re probably a decade from that point.

It’s great to see Apple push VR tech forward and I’ve appreciated reviewers being awed by timers floating over a stove or watching TV on a massive virtual screen.

But these applications make sense for a much smaller, less expensive device than a $3,500 headset. And until we get to the point where buying an AR/VR headset is like buying a pair of glasses with a $300 price point, this will be a niche product on the edge of viability.

Amit Gupta summed it up well. Apple Vision Pro is the modern Apple Newton. That’s a compliment…and a warning.

Maybe AI and VR are in the early 1990s-era internet phase. Nerds are geeking out and lots of experimenting is taking place, but we’re still a decade from real businesses being formed.

Asymmetric Investing is about finding investing opportunities in new technologies and frontiers. Believe me, I’ve thought about how to make money in VR more than most people in the world and we aren’t “there” yet.

AR/VR is coming. But we are seeing early prototypes today, not devices that will change the world.

There were 14 years between Apple’s release of the Newton and the iPhone. Based on that timeline, the real AR/VR revolution may be more than a decade away.

Patience is of the essence.

Disclaimer: Asymmetric Investing provides analysis and research but DOES NOT provide individual financial advice. Travis Hoium may have a position in some of the stocks mentioned. All content is for informational purposes only. Asymmetric Investing is not a registered investment, legal, or tax advisor or a broker/dealer. Trading any asset involves risk and could result in significant capital losses. Please, do your own research before acquiring stocks.