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Apple headset Reality Pro expected to be announced today at 1 PM

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Top stories today:
1. Apple headset Reality Pro expected to be announced today at 1 PM
2. Stability AI denies report of exaggerated claims of partnerships
3. Saudis announce 1M barrel/day voluntary cut after OPEC+ meeting

0. Data and calendar

All values as of 6 AM ET / 3 AM PT, other than S&P500 close (4 PM ET / 1 PM PT).

All times are ET.

1. Apple headset Reality Pro expected to be announced today at 1 PM

Watch the live presentation here:

Rumors we have accumulated over the past months:

  • Reality Pro is its likely name.

  • Release: “months later”.

  • Apple estimates 1M units sold in Y1, vs 200M+ iPhones.

  • Price: ~$3,000, roughly at cost.

  • External battery pack, similar to the MagSafe.

  • 4K eye displays, 2x the Quest Pro.

  • Core iPad apps: gaming, fitness, sports.

The WWDC keynote should also feature other announcements, including of a 15-inch Macbook Air, updates to the iOS, iPadOS, and MacOS, and a mental health journaling iPhone app. - The Verge

More broadly, investment in AR/VR venture capital has declined sharply since 2022

  • Apple's new headset could reverse this trend. Or, at least, that's what startups in the space hope.

Our view: Apple should have last-mover advantage, with this product booming once AR is fully achieved

  • Like Apple did with the iPhone, iPad, and Watch, it wasn't the first to market, but it learned from the others and released a product that completely dominated its segment.

    • Tim Cook in 2016: “It doesn't bother us that we are second, third, fourth or fifth if we still have the best. We don't feel embarrassed because it took us longer to get it right. For Apple, being the best is the most important and trumps the other two by far.

  • These headsets will become hyper-popular in the future, once they are super light (like sunglasses) and with perfect passthrough, aka, when they reach Augmented Reality.

    • The initial model should “only” see ~1M units sold a year, around Apple's internal estimate. This would mean $3B in revenue, around 1% of total sales for the company.

2. Stability AI denies report of exaggerated claims of partnerships

Forbes reported on alleged exaggerated claims, all of which were denied in some way by CEO Emad Mostaque:

  • Mostaque does not have an Oxford MA, rather, he has a bachelor's degree.

  • Fake “strategic partnership” with Amazon, and fake “partners” in UNESCO, OECD, WHO, World Bank.

  • Stable Diffusion was actually created by a different group of European academics. Stability offered them to rerun the model at higher compute, and then renamed the model to Stable Diffusion. The lead professor complains that the hasn't gotten enough credit: “One thing you learned from that is if you have a company with a huge press department, you can rebrand history in your interest.” - Forbes, Emad Mostaque's response

Stability raised $100M in 6 days, now struggling to raise $400M

  • They raised $100M in 6 days from Coatue and Lightsteep, 8x the amount of money Mostaque set out to raise, after Stable Diffusion was a big hit.

  • Now he is struggling to raise his next round, although he is pushing for $400M at a $4B valuation, which is a massive valuation for a startup with around $10M in revenue.

    • 3 venture capitalists said that Mostaque has been trying to raise for “several months.”

Our view: this is likely an example of excess hype in the AI wave, led by VC firms with less tech experience

  • Just like Tiger malinvested in late-stage tech in 2021, we are bound to see some firms malinvest in AI in 2023.

    • We suspect the main losers will be cross-over firms with less tech experience, while the main winners should be those that are not chasing AI for AI's sake, but rather making long-term bets on founders and theses — firms such as Founders Fund and Benchmark.

3. Munch uses AI to generate short clips*

Munch uses AI to help you maximize ROI on your long-video content, by generating short, media-optimal clips for social media.

  • Matches each clip with marketing and trend insights.

  • Provides you with pre-written social posts based on video content.

  • Instantly generate accurate subtitles, currently supporting 8 languages. - Munch

  • Sponsored.

4. Saudis announce 1M barrel/day voluntary cut after OPEC+ meeting

Their production will drop from 10M to 9M barrels a day, starting in July:

  • “Saudi lollipop”: the nickname of the move by Saudi Arabia's Energy Minister Prince Abdulaziz bin Salman.

    • Voluntary price cut aimed at increasing oil prices.

    • $80.90 per barrel is needed to balance the Saudi budget, according to the IMF. - OilPrice.com

This represents only around 1% of global production

Brent oil was +2% to $78 on the news, but still -38% from $125 one year ago

Our view: the obvious solution is for the West to increase its production

  • These price manipulations are only possible because Western governments discourage domestic production, leading to the dominance of the Saudi-led OPEC+ cartel.

    • End the shackles on oil and gas companies, and production will naturally rise to meet demand.

5. Germany's Rocket Internet cuts back on venture and invests in public equities

Their average VC investments are around -50% YoY in 2023

Meanwhile, Rocket has invested ~$1B in public equities over the last few years

  • Dramatic shift to tech downturn: “These moves, according to people close to Samwer, reflect a dramatic shift in response to a tech downturn that has hammered the valuation of start-ups around the world.” - FT

6. Other headlines

Tech

  • Quora reaches 400M monthly readers as it pivots to AI bot aggregator Poe.

  • Canva's private valuation adjusted from $40B to $13B.

  • Google's AI search is too slow: The Verge review.

  • TSMC struggling to hire 4.5K workers for Arizona fab, culture seen as tough.

  • Grab: a profile of the Asian super-app, $2.2B revenue, break-even.

  • DEF CON to see hackers attempt live hijacking of government satellites.

Biotech

Business

  • Large banks could see a 20% increase in capital requirements.

  • Treasury expected to sell $1T of new debt, we expect no issues.

  • Nuclear Aramco: Riyadh proposing joint U.S.-Saudi project on nuclear.

  • Jobs added vs. unemployment rate: Noah Smith on why they differ.

  • Twitter hiring another NBCU exec to help with advertisers.

  • Private equity firms deemphasize MBAs as costs increase.

  • Buzzfeed stock could be delisted if it remains at <$1.

  • CNN lost trust over liberal bias, Chris Cuomo, Covid: internal report.

  • Chuck Todd leaving Meet the Press freely, Kristen Welker to replace him.

  • Jeff Zucker seeks to buy Air Mail or return as CNN's CEO, talking to Bezos.

Crypto

  • FTX pushes for Genesis bankruptcy, claiming to be $3.9B creditor.

  • Atomic Wallet users hacked for $35M worth of crypto.

  • Binance: Richard Teng in line to succeed CZ as CEO.

  • Tornado Cash sanctions “unprecedented and unlawful”: Blockchain Association.

U.S. politics

  • Biden leverages debt deal for campaign, touting bipartisanship.

  • Trump again praises Kim Jong Un; DeSantis, others criticize.

  • Nikki Haley fails to differentiate at CNN show, seems to be pitching as VP.

  • Showtime pulls out Vice's “Gitmo” episode on DeSantis.

  • Kennedy Jr. reinstated on Instagram after banned for Covid claims in 2021.

  • Jack Dorsey endorsed Kennedy Jr.

World

  • Ukraine counteroffensive thwarted in Donetsk: Russia.

  • Zelensky says he is ready for a counteroffensive, little sign of peace.

  • Pro-Navalny protests occur worldwide, 100+ arrested in Russia.

  • Poland: large protests as state aims to disqualify opposition candidates.

7. Interesting tweets, memes, and videos

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Disclaimer: The Bay Area Times is a news publisher. All statements and expressions herein are the sole opinions of the author. The information, tools, and material presented are provided for informational purposes only, are not financial advice, and are not to be used or considered as an offer to buy or sell securities; and the publisher does not guarantee their accuracy or reliability. You should do your own research and consult an independent financial adviser before making any investments. Assets mentioned may be owned by members of the Bay Area Times team.

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