00:00hi and welcome to the a 16z podcast
00:03today's episode follows Benedict Evans
00:05and Steven Sinofsky annual visit to the
00:07Consumer Electronics Show in Vegas to
00:10figure out what's hype and what's not
00:11the episode covers everything from smart
00:14homes to the future of entertainment
00:15please note that the content here is for
00:17informational purposes only and should
00:19not be taken as legal business tax or
00:21investment advice it does not constitute
00:24an offer or solicitation to purchase any
00:26investment or a recommendation to buy or
00:28sell a security in fact the content is
00:31not directed to any investor or
00:32potential investor and may not be used
00:34to evaluate or make any investment for
00:37more details please also see a 16 Z calm
00:40forward slash disclosures well it's
00:42great to be here thanks very much I'm
00:44Steven Sinofsky on I'm Benedict Evans
00:46and we just got back from combined
00:49excess of probably a hundred and twenty
00:51thousand steps or two marathons yeah I
00:54was just I always think that the person
00:56who has the lowest step count at the end
00:57of the day has to buy the drinks right
00:59well the funny part is just to tell
01:01people we actually don't see each other
01:02at all during the show like III think we
01:04were within a hundred yards of each
01:06other at some point based on what
01:07pictures we were tweeting at the same
01:09right we were tweeting and then also we
01:10send stuff to each other just to keep
01:12track like we both discovered some booth
01:14of a company that didn't exist before
01:15and we were really close by at that
01:18moment but you can't find anybody you
01:19know it CES anyway so the big thing
01:22about the Consumer Electronics Show is
01:23like so many people like oh yeah I don't
01:26want to go this year or oh it's gonna be
01:28boring or they're there and there's like
01:30there's nothing new but like why do you
01:32even go in the first place so I think
01:34there's kind of three or four things you
01:36see here one of them is there will be
01:38flagship announcements of new products
01:40that you want to see and you want to
01:42have held it and looked at it and said
01:43well what does this thing actually look
01:44like this thing I think the second thing
01:46is you see like a sense of like oh wow
01:50Google's having a really big push in
01:52everything has got Google Assistant in
01:54this year or everything has a lecture in
01:56or oh wow everyone's doing curved
01:58screens I've never seen a curved screen
02:00before let me go and look at some curved
02:02screens and see if I think this is
02:03interesting or not oh wow
02:04last year there were loads of curved
02:06screens this year there are no curved
02:07screens that also that didn't work right
02:09and so that that whole notion of
02:12the big companies you know they there is
02:14like it's not a group think it's they
02:16all are dealing with the next parts of
02:18why you go to see us which is these
02:19ingredients sort of bubble up and then
02:22they take about the same amount of time
02:24for a big company to act and they all
02:25show up with the same sort of what
02:27you're seeing is the supply chain so
02:28whether that the screen manufacturers
02:30the chip companies the mobile
02:33manufacturers all the kind of the
02:34underlying building blocks all the Lego
02:36blocks and what you're seeing here is
02:38like somebody took a shipping container
02:39of Lego blocks and dumped them on the
02:41floor and people are picking those Lego
02:43blocks up and putting to get them
02:44together and thinking well what could we
02:46make Howard its work how could this get
02:48manifested in different ways and you see
02:50that at the big companies with like cars
02:52or curved screens or flat screens or
02:54tablets you also see this when you go
02:57kind of into the backhauls and you get
02:58away from the vast booths and you see
03:00hundreds and hundreds or even thousands
03:02of relatively small companies who are
03:04just out there pushing and hustling and
03:06that's actually the bit kind of I
03:08personally enjoy most is just walking
03:11past and looking at hundreds and
03:13hundreds of people who are trying to
03:14make a business and you know you're kind
03:16of seeing the grassroots kind of the raw
03:19creativity of the tech industry bubbling
03:21up there yeah it's there it's really
03:23fascinating for you really have to
03:24understand like CES is really three
03:26shows like it's these big companies and
03:28that's worth way too much focus goes cuz
03:30they have all the PR people they hold
03:32all the events they gather all the press
03:34they have like a big fiber cloth mock-up
03:36of a car right right or a helicopter or
03:38a boat or whatever but that actually
03:40turns out to not be the interesting like
03:42the big companies are not super
03:43motivated to do announcements at the
03:45show I mean a lot was made of Apple
03:47didn't even show up and they just put up
03:49a sign but apples never been there
03:50Microsoft's not really there HP doesn't
03:53really have a big booth even though
03:54they're printers and computers fill all
03:56of the electronic stores Lenovo has just
03:59a restaurant Dell has like a restaurant
04:01where they rent it out and put up mostly
04:03food so the big companies are sort of
04:05there and they occupy half the space and
04:08the biggest crowd but they're not the
04:10most interesting and then there's really
04:11two kinds of smaller companies there's
04:13the ones Benny talked about which is
04:15where all the energy is like the hustle
04:17and the excitement and like you walk
04:19past a booth and they literally just
04:21drag you back to it I would love to see
04:23like a small French or Taiwanese indie
04:26set entirely in the backhauls of trade
04:28fairs oh yeah and like all the small
04:30dramas of all these little stands like
04:32all the kind of you can just see the
04:34kind of actual real people they're
04:35trying to build companies like I walk by
04:37one and this it was very clear it was
04:39the owner CEO of the company which I
04:41could tell because the business cards
04:43had his picture on them and like the
04:45booth it was 10 a.m. and the booth
04:46wasn't up and operating yet and he was
04:49giving what appeared to be his son a
04:50really hard time and and like they were
04:53like really tense and fighting and then
04:55later I Linton went to the website and
04:57it really was his whole family like his
04:59wife is accounting his son is biz dev
05:02and operations and like this is it like
05:04this is the big bet that there that are
05:07making and then there's a third kind of
05:08booth which is this year they
05:11concentrated them all in this thing that
05:13looked to be like a mile long everybody
05:15is it's a tent and it's like all of the
05:18parts it's like do you need a hinge do
05:21you need a key or keyboard do you need a
05:24piece of wire or a connector or a strain
05:26reliever and those have always been part
05:28of the show and they're there to do real
05:31deals like they and if you see like I
05:34actually saw a couple Apple people
05:35spending a bunch of time with one of
05:37these people and it's interesting to see
05:39what the new things are in that tent
05:40absolutely so like this year I had
05:42noticed like six or seven people doing
05:45little small electric motors which
05:46weren't there last year yeah yeah and I
05:48noticed half a dozen people doing kind
05:50of well made an interesting cardboard
05:52packaging like cardboard boxes to put
05:54your stuff in which wasn't there lost
05:55but packaging is a really interesting
05:56one like for years they would there
05:58would be different kinds of packaging
06:00and so what you see is the evolution
06:02where they're they're finally looking at
06:03like what Apple does with packaging and
06:06what Amazon does with packaging to bring
06:08it to sort of everyone else and like if
06:10you're this family doing a business this
06:12is where you'll end up getting your
06:13packaging from I mean I actually did it
06:15- I took somebody from a consumer goods
06:18company around that hall and I was
06:20saying okay so you go you buy your
06:22screens there you've got an injection
06:24molding company here you've got a PCB
06:26company there you've got a motor company
06:28here here with six battery companies
06:30there's a packaging company here's a
06:31testing company that will get you
06:33certification like you can start at one
06:34in a walk out at the other end with a
06:36complete small speaker and
06:39yet there is no one selling the speaker
06:41there and there's no interest in and
06:43that late like you mentioned batteries
06:44that's like a really interesting thing
06:45because batteries you can come in almost
06:47an infinite variety of sizes so you'll
06:49walk up to one of these booths and
06:50basically there's a giant wall with like
06:53every size and shape and amperage of
06:55battery you can imagine with wire
06:58sticking out and then two people just
07:00sitting there and they're just gonna
07:01take your order and and you could listen
07:03to the conversations and guy will show
07:05up and say like can I just get a sample
07:08and they're like no you can have 10,000
07:10you can order 10,000 or not and the fest
07:13is when you see somebody with like a
07:14really creative like phone charger like
07:16you're not the whole thing just like a
07:17plug yes and then somebody really wants
07:20like one for themselves and it's like
07:22usually like just a person checking out
07:24and the guy's like no really you can
07:26have a hundred thousand and I'll give
07:28you a good deal but that's the best this
07:30is the thing it's not for there's a tech
07:33correspondent from a mainstream
07:35newspaper to go and look at the new
07:37thing that a consumer would buy which is
07:38actually the funny thing it's called the
07:40Consumer Electronics Show you're
07:41actually not seeing the consumer bit
07:43you're mostly mostly what you're seeing
07:46is everything that sits behind the point
07:48of the spirit right and of course that's
07:49part of the reason for the show
07:51happening when it does in January
07:53because the the bulk of sales of
07:55consumer electronics happen in in the
07:58quarter that just ended and so by having
08:00it now you're really gearing up for a
08:02year from now yes like at best or maybe
08:04two years from fascinating looking at
08:06the badges of the people you see
08:07wandering around and you see somebody
08:08from like a chain of auto dealers in
08:10Milwaukee he's there by phone covers and
08:13battery charges and audio for audio
08:16upgrades for cars right right and maybe
08:19he's interested in what the future of a
08:21smart car is gonna look like and what
08:23his business canal is gonna look like in
08:24five years time he's there to go and
08:26like spend fifty or hundred thousand
08:27dollars buying stuff to put in his
08:29stores in nine months right but what we
08:31could do now is just sort of let's go
08:33through like some categories of devices
08:35and or areas that people really had a
08:37lot of a lot of focus on I don't why
08:40don't we start with TV because that was
08:41a really big one well we've said this so
08:43this is part of the this is part of the
08:44trend so there were 3d TVs 3d TVs as we
08:46all know failed completely two three
08:48years ago every sound had lots of curved
08:49TVs now curved TVs have totally
08:52except for a vast display on the outside
08:55of LG stand and gaming monitors
08:58gaming monitors are a huge YES on the a
09:00but no curved TVs no video mwah that
09:02tells you is nobody on earth bored a
09:03curved TV on the other hand or a 3d one
09:06or was really one yeah on the other hand
09:08what we saw really kind of a big surge
09:10this year is sort of flexible OLED
09:13screens that can be cut to any shape and
09:16so at one extreme you have LG showing
09:19this fantastically cool thing which is
09:21you've kind of got up low a small low
09:22box that's like a quarter of the size of
09:24a sideboard it almost looks like a big
09:27big version of a speaker yeah a speaker
09:29bar a speaker bar exactly it looks like
09:30a speaker bar and there is a super high
09:32quality OLED screen that simply rolls up
09:35from it and turns into a bait into an
09:37it's like Jeanne levitating rug yeah
09:40it's like it's like a projection screen
09:42loan from the ceiling but in what and
09:43actually one of the things I thought was
09:44funny is they didn't show it hanging
09:45from the ceiling and it would have been
09:47like a natural flesh and say what you
09:49know what this means is you will not you
09:51know this is gonna be I don't know how
09:52many thousands of dollars but you know
09:54in two and three years time you will be
09:55able to buy something that's three foot
09:57long you put it on a shelf when you want
09:59open with TV you press a button and a TV
10:01is there five seconds later and the the
10:03box is about say 12 inches square which
10:06is clearly going to shrink over time as
10:08they get the the screen gets thinner and
10:10they can roll it tighter exactly so you
10:12look at this and you think what a
10:12fantastic piece basic primary science
10:15that you can roll a load and then the
10:16kind of the engineering of making it
10:18well making it work and everything else
10:19on the other hand what this thing we
10:22talked about with the screen that the
10:23stand we were both at like five minutes
10:25apart what if you can just have that cut
10:27to an arbitrary shape Apple is doing
10:29this with rounded corners on the phone
10:30but you can have it in all sorts of
10:32rounded shapes and then just place that
10:33on a product so you could have a speaker
10:35that has a round speaker and it has a
10:37round screen wrapped around the edge of
10:39it so squeeze don't have to be a flat
10:41black rectangle embedded in whatever
10:42product you want so if you're a product
10:44designer you're making speakers you're
10:45making a fridge you're making cars
10:47you're making a washing machine anything
10:49where you want to have some screen on it
10:51now that screen doesn't have to be a boy
10:54rectangle it can be any arbitrary shape
10:56it can be wrapped around and you form
10:58that you want and it can still play
10:59video just as good as a high-definition
11:01screen and so you know five years time I
11:04have no problem imagining that this will
11:06right this this is clearly a step
11:08function in the manufacturing of screens
11:10which for years was based on we make a
11:13size of a big giant piece of glass and
11:15it's a super crazy expensive so we're
11:17gonna cut it up in the most maximally
11:19efficient way you know sort of the
11:22a-four a-five before kind of paper thing
11:24and now you're just gonna be able to
11:25sort of custom make screens and then of
11:27course the most extreme of that were
11:29these little 12 inch squares of TV that
11:32Samsung did called the wall yes which
11:34were Ola like it basically everybody
11:36gets like a giant sports screen yes
11:38edgeless OLED blocks and you can just
11:40add them indefinitely to make a screen
11:42as big as you want and in any aspect
11:43ratio or the other well the interesting
11:46thing about going back to the component
11:48Hall was I saw a stand that was selling
11:50not OLED just LCD screens in arbitrary
11:54reiji's exactly your point about
11:55optimization it used to be you could
11:56only get them in certain sizes now you
11:58can just have LCD in whatever shape and
12:00size you want it can not look it has to
12:02be rectilinear OLED can be in curves
12:04right but LCD has to be right to linear
12:05but you can have it long and thin you
12:07can have it you can have it any shape
12:08you want which is also very close it's
12:10almost a Moore's law is kind of thing
12:12but as they built out all the factories
12:13for for LCD like those are they could
12:16either idle the factory or start to use
12:18them for like other stuff and just get
12:21more amortization and depreciation out
12:22of that invest yeah so you want a
12:24letterbox you've got a product where you
12:25want a letterbox sized screen okay now
12:27you can have a letter box eye screen
12:28it's just like a very long skinny one to
12:30go in front of us that was impossible I
12:32mean you know you want something that's
12:3415 inches by 3 inches okay and in the
12:36past you just couldn't have that because
12:37it was no it wasn't economical now it's
12:39possible this was all the discussion
12:41about like you know watches and can they
12:43have round faces and well no they
12:45couldn't and next year year after they
12:47could all be round and it well it won't
12:48matter to man you know this kind of
12:51firehose of stuff coming out of the
12:53supply chain and we're seeing the
12:54iteration out of that I think pretty the
12:57other interesting to think thing to
12:58think about is like kind of a higher
13:00level of how people are trying to put
13:01those components together and create
13:03kind of organizing layers for that yeah
13:05you know TV the most interesting
13:08question for me is like what is TV to
13:10begin with like if you're an extreme
13:12audio person you think of TV as the
13:14picture and then you separate that from
13:18the content but if you're just like a
13:20person you turn on the TV to watch stuff
13:23yeah and what's really happening is this
13:25sort of unraveling rebonding unbundling
13:28to use cliche words of the industry in
13:30terms of the content side of TV while
13:32the TV people think that we should we as
13:35TV people should be part of that TV
13:37manufacturing people did like the
13:39Samsungs and the Sony's and the LG's of
13:41the world want to be part of that yeah
13:42which is sort of a rerun of what
13:44happened with smartphones where their
13:45smartphone physical her manufactures a
13:47smartphone thought that they should have
13:48a role in creating content and services
13:49right so we're kind of we're in this
13:51kind of interesting like intermediate
13:54point where like clearly we know
13:55everything is going to be on demand and
13:57clearly more most everything is now
14:00available on demand in some way but you
14:03have to have 15 different apps and you
14:04have to pay for all of those 15
14:06different apps and we're actually having
14:08more reconfiguration now because the
14:10content companies are pulling their
14:11stuff out of Netflix and they're pulling
14:13their stuff out all fudou or wherever it
14:15is and had doing creating their own kind
14:17of direct to consumer propositions and
14:19so Disney's gonna have its own thing and
14:21NBC is gonna have its own thing and
14:22you're going to end up with like 45 apps
14:25on your device right that also seems
14:28it seems remarkably unstable and this is
14:31one where again like the tech crowd I
14:33don't think is always in touch with this
14:35because the idea of like you have all of
14:37this knowledge you're immersed in all of
14:39this discussion all day long and
14:41certainly in Hollywood they will be like
14:42people in Hollywood will know what
14:44streaming service a program is on
14:46because they were part of negotiating
14:48the deal and they know about studios but
14:50like everywhere else people know some
14:52brands like I want to watch CNN well it
14:54turns out in this world today that means
14:56another app like there's not another
14:58place you can get CNN and if there's a
15:00special on CNN how you get there and
15:02find it and then forget the like oh
15:05everybody is talking about home
15:06organization and condo now like how
15:09would you know where to find that if you
15:12were just at home and someone said have
15:13you seen that home organization show
15:15like there's just there's no guide in
15:18this world and so people had hoped that
15:20you know like an Apple TV would do that
15:23or a Roku would do that or a TiVo would
15:25do that what's happening is all of these
15:27station all of these are the incentive
15:29the incentives don't work for that the
15:30incentives don't work but it's even
15:32deeper than just the incentives I would
15:34like the incentives are just like who's
15:35paying but then there's this thing where
15:37like netflix has invested a massive
15:39amount in Discovery so if you don't know
15:42what you want to watch they want to help
15:43you find something on Netflix to watch
15:45they're not interested in like helping
15:48you browse what might be on Hulu and the
15:50same go like Disney is just gonna want
15:52to keep feeding you more of more Disney
15:54more Disney like you know more
15:55superheroes and more old characters and
15:58stuff and so that I just don't see this
16:00as like a viable consumer or offer well
16:02it's it's interesting as well because
16:04you have this challenge in the half of
16:07these questions are kind of Northern
16:08California Silicon Valley questions the
16:11other half are Southern California la
16:14Hollywood kind of question is about what
16:16is the right structure look like and who
16:17owns that and why are they doing this
16:19rather than doing that which is kind of
16:21question is it people and people in
16:23Northern California tend not to
16:24understand the Southern California
16:25questions and people in Southern
16:26California tend not to understand the
16:27Northern California question right and
16:29but you don't have like what happened
16:31with smartphone is was kind of the fame
16:33people didn't understand Apple and Apple
16:34kind of didn't understand the fame
16:36people but it does matter because there
16:37was California versus like Texas and
16:39Seattle yeah well the point is Apple
16:40just rolled over the phone people right
16:42right and what you don't yet have is
16:45kind of a critical mass in either
16:46direction where any one of these people
16:47can roll over the other people and so
16:50you kind of got this kind of
16:51fragmentation and confusion in the
16:53proposition and importantly at least now
16:55none of these none of the companies with
16:57the content cited it which would sort of
16:59maybe have an opportunity to play that
17:00role of Apple feels any external has
17:04voiced any external commentary on like
17:07wanting to own programming that isn't
17:09there is like nobody wants to do sports
17:11nobody wants to do news and those are
17:13like big sources of programming and and
17:16so I I feel like we're in the this very
17:19uncertain period and the thing that's
17:22making it like less than even
17:24satisfactory a little bit is that the TV
17:27people are playing the role of the old
17:28phone makers and they just keep thinking
17:31that they're gonna make their TVs
17:32smarter and smarter and a TV people a
17:35feature find makers send on small phone
17:36and all small TV set feature TVs right
17:38and and they and so then I like God you
17:40know you're never gonna have all the
17:41apps on the TV that you want the apps
17:43that are there are gonna be the old ones
17:45or the outdated one all the j2me apps
17:47they're they're controlled by a TV
17:49remote not your phone like they're
17:51they're weird and so everybody made a
17:53huge deal out of Samsung watching kept
17:56showing iTunes stuff and like really it
17:59was the worst way to watch iTunes that
18:01you could imagine with a Samsung
18:03yeah it's with the Samsung remote and
18:05then like they're basically telling you
18:06like the features that they may have
18:09like if you pause a show and you return
18:12later it may say it may say come here I
18:14mean to me this was I'm it's funny some
18:16people look to this insult oh my god
18:17fundamental two-seat strategic shift by
18:19Apple they're going to D cup the
18:21services from hardware you will now be
18:22able to have Apple all of Apple services
18:24without buying any Apple hardware and it
18:26will be a separate standalone business
18:27that will have some overlap with
18:28hardware I look to this and I thought
18:30this is just Apple doing airplay to
18:32third-party hardware yes is Apple
18:34putting QuickTime on Windows our example
18:36putting iTunes on Windows you know it's
18:38BD people doing what BD people do an
18:40extent extending kind of the halo around
18:42the core products of the hardware and
18:44the experience is around being an Apple
18:46customer so I didn't look at that and
18:48get excited at all I just thought well
18:50yeah that's just kind of Apple do BD
18:51people doing BT stuff I actually looked
18:53at it and got less than excited because
18:55I like negative excited if I could
18:57because I felt like it was definitely
18:59what you said about BD people just doing
19:01these kind of deals that happen 100
19:03times a year in the industry but the it
19:05was this idea that it would be good on
19:06the TV and that would encourage the TV
19:10people to do more of this stuff and I
19:12really think you think actually this is
19:14like the Motorola iTunes phone yeah I
19:16think it's like that's a good analogy I
19:18just think like if people would stop
19:19doing these deals with the TV people
19:21maybe the TV people would build TVs that
19:23are less in my way of using my phone but
19:27the challenge is that is asking the TV
19:29people to retreat to being manufacturers
19:31have generic black rectangles a guy can
19:33dream it's you're basically asking the
19:35TV BD people to give up and go home
19:36right well the thing is is that they
19:38need people to talk to yeah like it's a
19:40I had this like a quick combo
19:42conversation like five or six years ago
19:44do I want to go and work in a strategy
19:46at a big mobile operator and I kind of
19:48looked to this and I saw what it looked
19:49to their strategy and I said if I went
19:50there my I would tell them to disband
19:52the strategy team and just not do any of
19:53that was like that's not gonna happen
19:55and it's the PC industry with like
19:57there's just no way you could get the PC
19:59makers to stop putting extra software on
20:01like it's just not there's not an option
20:04for that to exist like you could try and
20:06try I tried it just not say so TV is
20:08unresolved the other thing that's
20:09unresolved is smart home yeah the smart
20:12home thing is it I would say actually
20:14that one is one where it it resolved
20:16some of it in spectacularly amazing ways
20:19yeah some of those questions go down
20:21certain like two of them like one alarms
20:23like the perimeter alarm for four homes
20:26now if you want one a need one like I
20:28can't think of an easier product to get
20:31then you pick from the half-dozen
20:33vendors where like for free or for a
20:35very small amount of money because they
20:37make it on the annuity will sell you
20:39will send you you know four door sensors
20:41you know smoke alarm fire alarm glass
20:44break detector and in an hour you put
20:46with sticky tape you put up all these
20:48things turn on the 3G modem you know
20:51base station this is my experience in
20:53London like seven years ago you except
20:54none of it used I Triple E standard oh
20:56right the same thing some we're x10
20:57level but you know I called up ATT in
21:00the ATT guy comes and he spends an hour
21:02walking around my house putting stuff up
21:04and he plug something into the wall and
21:06that's it it's done right so this is an
21:07example of very specifically where there
21:09are a bunch of proprietary things that
21:11alarm companies had that we're all
21:12basically not based any standards and
21:14we're just like electrical wires routed
21:16to your power source then they got this
21:19technology to use you know low energy
21:22Bluetooth and things like that and then
21:24people came along and said why is that
21:25secret to these expensive companies with
21:28human beings and they made a direct
21:29consumer play and then two years later
21:31it's everywhere and everyone can do it
21:33and it's it's just truly amazing like
21:36and and then but then it falls off a
21:38cliff yeah cuz it's like oh I want to
21:40get a doorbell with a video camera and
21:42then the company you have it from
21:43doesn't have that or I just want cameras
21:45and the company doesn't offer it or the
21:47cameras are really hokey and they they
21:49all have Prower bricks there's a bunch
21:51of kind of dynamics in this stuff I mean
21:53one of them is the analogy I talked
21:54about earlier which is kind of the
21:55discovery question so you have all of
21:58these components you basically all of
21:59this stuff is using smartphone
22:00components a smartphone camera
22:02smartphone Wi-Fi chip smartphone CPUs at
22:04smartphone radios at smartphone
22:06Bluetooth etc etc so all this stuff is
22:08there so if you want to make a smart
22:10connected camera now a smart connected
22:12camera that can do people recognition or
22:14that stuff is just there off the shelf
22:16you can buy the bits anyone can do this
22:17and so now you're one of 15 on the shelf
22:19in Home Depot or you're one of five on
22:21the shelf doing the alarm if you want to
22:22do the whole alarm it's a bit more work
22:24but you know it's basically all
22:25commodity components so there's no kind
22:26of moat around it then like the the
22:29evolution you've seen over the last like
22:31maybe three years at CES has been to
22:33look at door locks right and so the
22:35question was do the door lock people
22:37learn smart for one of a better term
22:40quicker than people making software door
22:43locks learn how to get the thing to
22:44market and make it at the right price
22:45and make it durable and waterproof and
22:47all this kind of stuff and so it's
22:49really interesting like three years ago
22:51on one side of the hall you'd see the
22:52startup and on the other side of the
22:53hall you'd see the guys from Yale and
22:55gosh leg and they'd reach you know in
22:57uniforms so one server they were kind of
23:00in the hoodies and the oversized jeans
23:01in the other side there in the polyester
23:02slacks and the black polish show with
23:04the logo embroidered on it and what
23:06seems to have happened is that the locks
23:09guys won because there's not really a
23:11network effect there's not actually very
23:14much software to the lock by itself it
23:17just has to lock and unlock based on
23:19something you do on your smartphone and
23:20they can buy that from a chip
23:22manufacturer or a third party and just
23:23integrate it and they know how to make
23:25locks and they know the route to market
23:27and they can make forty five of them in
23:29different shapes and sizes and styles
23:30for different holes in the door and do
23:32you want it classic or modern no do you
23:33want buttons or do you want this or do
23:35you want that like they have the whole
23:36like supply chain manufacturing process
23:39route to market thing ready and for them
23:42to use like the clay Christensen analogy
23:44this is sustaining innovation right they
23:46just put a chip in the in the lock and
23:48they put a chip and a motor in the lock
23:49and they're kind of done as opposed to
23:52they and you could see something similar
23:55in like is the or oven gonna be smart
23:57will your oven turn off if it smells
23:58burning yes is that an opportunity for
24:01no that's whirlpool and Samsung and LG
24:04and that's oven companies as opposed to
24:06like the broader question of how does
24:08all of this stuff talk together and how
24:10do I say turn off my oven and lock the
24:13door and tell me if there's anybody in a
24:15cigar door shut and that's where we're
24:18seeing like the connective tissue
24:19emerging which is the Alexa Google
24:22assistant Apple relaunching home kit
24:25like is there connective tissue you want
24:29be what are the aggregating layers here
24:32and that's where we're still sort of
24:35stuff is still sort of emerging yeah so
24:37the key is is that that the lock people
24:39just completely didn't get disrupted
24:41like it was it's actually quite
24:43phenomenal and and just a harp on this a
24:46little bit like because we startups tend
24:48to really underestimate the route to
24:50market in the go-to market for like
24:52existing sort of heavy industry but like
24:54locks are complicated you can't change
24:56the door of a house like that's really
24:59expensive so like to get a lock you need
25:03to have what size hole is it and how
25:05thick is the door and is it one or two
25:06and if then it has to fit in with the
25:08decor and so just the SKU proliferation
25:11alone to enter the lock market it is
25:13quite a bit now you you think Oh we'll
25:16just go do new homes and it's like well
25:18if you want to do new homes it turns out
25:19then the route to market is you have to
25:21know all the architects and you have to
25:23know Home Depot and you have to know all
25:25the general contractor and you have to
25:26know all the developers and and like
25:29that's really hard it's fragmented it's
25:31Geographic it's very very tricky so the
25:34lock people really did use all of their
25:36strengths very very effectively so I
25:38just I'm so impressed with that I wanted
25:40it's all about like you go to quick-set
25:42and they have like from dumb locks all
25:45the way through to you know like the
25:47connected smart lock that I can add
25:49codes and modify it from you know Europe
25:52while I'm on vacation but they they did
25:54a very clever thing which is not only do
25:56they have the dimensions of like brass
25:58and chrome and stainless steel and four
26:00different doors and thicknesses but they
26:02also have different levels of
26:03connectivity which is a start up making
26:05connected locks would never do if you
26:07want to keep at do you just want to keep
26:09add with a 9-volt battery that lasts ten
26:11years yeah do you want a keypad with a
26:139-volt battery but also can do Bluetooth
26:15and be programmable like have the COEs
26:17programmable from your phone all the way
26:20through to varying stages of
26:21connectivity like will it work with
26:23other systems or it will work with only
26:25other locks in your house so you can
26:26coordinate the front door in the back
26:28door I mean like very impressive like in
26:30the product lines and a lot of that as
26:33well is back to our component thing
26:35because of course they didn't build this
26:37already built roughly half of it the
26:39other half is chip companies and
26:41middleware software company
26:42when two gold on a plane and men went to
26:44these companies right so before we get
26:46to Alexa like let me give an example of
26:48a company that did that since we now I
26:50know the data now cuz they told me was
26:52like was First Alert smoke alarms and
26:54they went out and an acquired mesh Wi-Fi
26:58they went and found like mesh Wi-Fi and
27:01like duh they're just gonna put it in
27:04the smoke alarm because your smoke alarm
27:06is hardwired a US code it depends on
27:08where you live and stuff whether or not
27:09your smoke alarms have to be hardwired
27:11or not to electricity or battery but if
27:14you live in a place where the smoke
27:15alarms has to have electrical wiring
27:16well what better place than a five
27:19dollar Wi-Fi chip in it and then to put
27:21mesh Wi-Fi in it and and so all of a
27:24sudden they're like oh my god this is
27:26crazy cuz it turns out they were all
27:27along putting Wi-Fi in their smoke
27:28alarms anyway so that that you could get
27:31alerted on your phone like you know
27:33smoke alarm went off and so they very
27:36comfort because it's like really nobody
27:38wants to make smoke alarms cuz that's
27:39like super easy and massive liability
27:42well like it's it's like a scary
27:44business to enter and plus you have to
27:47know all the fire codes all around the
27:49dates to the lower point it's hard
27:51there's a lot of them it's super hard to
27:52it so very very interesting to see the
27:55stuff and so then app so then all these
27:56companies are now like okay we can't
27:58literally make everything like where the
28:01locks we get locks we're good at locks
28:02but people want like when the lock is
28:04unlocked the security camera to turn on
28:06or off or the garage door or something
28:08and how are they going to connect them
28:10all so then enters Alexa and Google
28:12Voice yeah but and that also comes
28:15through the intermediary of their chip
28:16supply right there whoever the chip
28:18supplier is their chip supplier has done
28:20the deal with Alexa as much as it is
28:22shailaja or quick set has done the deal
28:24with especially though it's a switch you
28:26can flip on your chip and they say right
28:28the chips that we're gonna give you next
28:29year we'll have Alexa and Google
28:32assistant and maybe honk it in and they
28:34might have like a jack you know they
28:36might have a place on the board like to
28:37plug in a microphone if you want yep
28:39like they're ready for ever need any of
28:41the integrations exactly say the Thank
28:43You part of the point here is what's the
28:44level of aggregation and the level of
28:45aggregation in a lot of smart home stuff
28:47is actually the chip vendor it's not the
28:49hardware right the hardware guys will
28:51carry on being Hardware people and they
28:52own that and now they will buy a chip
28:55insertion point is such people who sell
28:57chips to those people it's not actually
28:59making the lot necessarily but the
29:00problem is and this is where it gets to
29:03like my view of like how smart should
29:05something really be and where is the
29:07right place to put the smarts is that
29:09that we really had two different
29:11approaches to to enabling connectivity
29:14between all of these yeah just one was
29:16what Apple tried with homekit which was
29:18well we really want it to work not to be
29:20rude about it but they really wanted it
29:21to be seamless and nice so Apple put in
29:25a requirement that to be homekit you had
29:27to do some stuff to your hardware well
29:30it's a benedict's point about the supply
29:31chain that just eliminates everyone yeah
29:33nobody could actually do that no and so
29:35basically then and recently nobody
29:37implemented home care so nobody
29:38implements a home kit except for like I
29:40have a garage door that has like nine
29:41parts and it took me four hours to get
29:43all work so it didn't really live up to
29:45the expectations and then the other end
29:48was like Alexa and Google assistant
29:50which was like it's five lines of code
29:53like and then all of a sudden your web
29:55interface is now controllable by voice
29:57but it turns out to not enable you to do
30:01very it's like a parlor trick now like
30:04you can say Alexa door unlocked my door
30:07at home front door you know some
30:10sequence it becomes a con line right so
30:13Alexa CD colon slash front door slash
30:16unlock slash I really want to harp on
30:18that because I wrote that in my write-up
30:20which is like if we had shown up and
30:22said like the future of the smart home
30:24is a terminal window where you type in a
30:26very specific syntax and nine out of ten
30:28times it says wrong sentencing text
30:31people would have just laughed at the
30:32homemaker and so for some reason the
30:34idea of saying that was viewed as like a
30:37huge breakthrough where you have to note
30:39that you still have to know that you
30:40know you know exactly what you would
30:42have had to type and said in the right
30:44order and and it's only because voice
30:46got recognition of the words you're
30:49saying got so perfect but it didn't make
30:51the syntax any easier and so I'm really
30:54critical of this approach of like which
30:56I think if you were being cynical about
30:59it you would say this was just a race to
31:00see who could have the most number of
31:02people with logos for their voice thing
31:04on there yeah I mean the worst the worst
31:06of this is you have devices
31:07have a Luxor in but Alexa contacts you
31:09control the device oh yeah you've got a
31:11light that has a light sir but you can't
31:12use a laser to turn the light off it so
31:14it's it's very very frustrating and this
31:16is where we're I think that like like
31:19because you can sort of imagine the
31:20scenario you have like all the marketing
31:21people saying to the product team please
31:23do assistant do Alexa do home kit do any
31:26of them that come along and we want all
31:28the logos on our device you can invite
31:29imagine you're the oven team at LG right
31:31and you and yeah you're the oven team at
31:33LG and it's like we need all the logos
31:35says marketing and then then the test
31:36team is like our heads are gonna explode
31:38because the test matrix for all of this
31:40is ridiculous and then like you have the
31:43engineer saying look each one's like
31:44five lines of code and I can do the demo
31:46so it's great what we're missing is
31:48somebody going like what's the product
31:50for all of this like what do we want to
31:52really accomplish yeah I mean this is it
31:55kind of comes back to the the VCR that
31:57is always flashing at 12:00 Amundsen
32:00gave this number there's a hundred
32:01million devices out there with Alexa on
32:03them they didn't say how many of them
32:04alive they didn't say how many of them
32:06have actually been connected to Wi-Fi
32:08and connected to Amazon they didn't say
32:10what the usage is on are they on those
32:12and it feels like there's a kind of step
32:14one Alexa has been an absolutely
32:16brilliant strategy for Amundsen they
32:18have an endpoint in maybe not a hundred
32:21million homes tens of millions of homes
32:23have an endpoint that just wasn't there
32:25before unless you had opened a web
32:26browser on a smartphone and typed in
32:28Amazon or open the Amazon app so they
32:30have this endpoint they have this point
32:31of leverage right now that might be used
32:35for unlocking the door turning a light
32:36on it probably is used for doing unit
32:39conversions and timers in the kitchen
32:41and playing music dad has no strategic
32:43benefit benefit to Amazon and so the
32:46sort of they've actually to Amazon
32:47questions or to Google questions here is
32:49one of them how do you get from having
32:50lots of a lecture assistant stuff in
32:52your home to that actually being useful
32:54and being used as opposed to it just
32:55being a VCR that flashes at 12:00 like
32:57my oven has a lecture in but I've never
32:59used a lexer that is a thing today oh I
33:02have no idea that it had a like
33:03super-bright there's like an Alexa stick
33:04or I don't even know what electorates
33:05the other is case presume for the sake
33:08of argument you get all this stuff
33:10actually connected to Wi-Fi and talking
33:12to each other what is the benefit to
33:14Amazon of that do people buy stuff with
33:17that are people more loyal to Prime with
33:21is it to drive deliveries like the
33:22delivery person can open the door and
33:24leave your parcel inside your door
33:25because of a lack sir
33:27and so like step two for Amazon is like
33:29you got the point of leveraging fine
33:31what's the lever what are you trying to
33:34lift with this point of leverage what
33:35are you actually doing with that end
33:37point and like huge credit to Amazon and
33:40Google that they've got this thing out
33:42there and they've ridden this wave there
33:44is kind of a second part to that which
33:46is okay now what well and I think there
33:50are two things that occur to me in that
33:51now what kind of thing one is that it
33:54really is like a few lines of code to
33:56integrate if you have like a device that
33:58already had like a web-enabled element
34:00to it which you probably did because the
34:02supply chain just gave it to you and the
34:03thing was like a web server to begin
34:05with and you didn't even know I need
34:06even know so then you're in this phase
34:09the old smartphone phase where where the
34:12platforms really kind of are pretty much
34:13the same and in order to answer the
34:17question of why isn't Alexa or why is a
34:19Google assistant or why is any of these
34:20in the home those companies are going to
34:22end up diverging like Google is gonna
34:24have a different set of ideas for what
34:25you can do with this device then Amazon
34:27does and once the platforms start
34:30diverging the idea of it being five
34:32lines of code and you get both for for
34:34sort of for free is gonna really change
34:36and whether they imply more hardware
34:39constraints or more software the idea
34:41that you work seamlessly and equivalent
34:43on both of them is is really very short
34:45lied particularly because neither of
34:47them do very much and so this is how
34:49things fade from CES
34:51like everybody does them and then
34:53they're all these companies that have
34:55like R&D budgets and and marketing and
34:57they just the first step is they stop
35:00and then the second step is it just sort
35:02of fades away hmm and I think that
35:05that's a very interesting thing that
35:06when it comes to the support and then
35:08the the other one is is that this really
35:10does open up the opportunity for a brand
35:13new player because now that somebody is
35:15seen like okay there's a speaker and it
35:17could be the home hub but it doesn't
35:20control everything and it's super hard
35:21but this is it could have been that home
35:23kit was too early yes and and that what
35:26really is needs as we need home kit now
35:28and that if all of these makers saw home
35:30kit they would go well we could join the
35:34of assistant versus Alexa but nobody
35:36will ever buy our product because of
35:38that well there's a sort of it there's a
35:40point I mean I think we talked about
35:41this last year and Cheers
35:43I mean think the analogy gave was
35:45everything in the kitchen got a DC motor
35:47in the 80s and it turned out that
35:49everyone in Britain gets a kettle
35:51everyone in East Asia gets a rice cooker
35:53everyone in America has a coffeemaker
35:55some people have toasters lots of people
35:57have microwave nobody has an electric
35:58carving knife and see you in this kind
36:00of discovery mode of which things does
36:01it make sense very smart in by extension
36:04there's also a discovery of which things
36:06does it even make sense to connect so
36:08absolutely I can get most people will
36:11have an oven that will turn off if it
36:12smells burning most people many people
36:14will probably have a door that smart or
36:16an a camera that recognizes people yeah
36:19exactly many people have some
36:20combination of these things the more you
36:22start adding scripts and you're saying
36:24if this then that and also this other
36:26thing and do this thing if somebody else
36:27happens the more you've just lost 98% of
36:30the Earth's population well and that's
36:32really important because the the tech
36:33enthusiasts crowd that goes and looks at
36:35all of these actually just thinks that
36:37scripting them and setting them up and
36:39managing them like my I always joke with
36:40a friend of mine who loves the stuff
36:42like you know this person's Nirvana is
36:44like opening up the door and saying you
36:48know my assistant like it's time to
36:50relax and like the lights dim to 37% the
36:54fireplace turns on to 15% but you put
36:56Mary why it comes on these speakers like
36:58all of this and I'm like good lord how
37:00many times do you relax exactly like
37:03that he's like oh like one out of five
37:05but I have like relax - relax three
37:07relax four and you're like really like
37:09nobody is gonna do that one day you
37:11should read a spontaneous one
37:13spontaneous - right exactly and so I I
37:16just I tend to think that that we're
37:18gonna see all of this fading of stuff
37:21that like a whole bunch of stuff was
37:22gonna end up being electric carving
37:23knives like I saw a bed that you could
37:25talk to Alexa like well the best one of
37:27this was somebody tweeted a toilet that
37:30said it was the first smart immersive
37:32experience fairly obvious jokes about
37:33immersive toilets here yeah so a lot of
37:36that will will fade and it'll basically
37:38look like internet-connected that's
37:41right - what we're saying right at the
37:42beginning was people go and they
37:43complain and they say I hate this stuff
37:45it's terrible there's all these stupid
37:47what we're seeing here is
37:48experimentation and some of this will be
37:51the electric toaster and I'm sure there
37:53are people 50 years ago saying why on
37:55earth do you need electric toasters just
37:56hold the piece of bread in front of the
37:57fire it's way easier right why on earth
37:59do you need an electric kettle just put
38:01the kettle on the gas what and and
38:03dishwasher was my grandmother yeah my
38:05mother if my grandmother didn't have a
38:06dishwasher or washing machine and
38:07actually thought that they were bad yes
38:09why would you have that and she
38:10grudgingly had a freezer yeah yeah why
38:12would you want that in hindsight it's
38:15obvious well that was make sense and
38:17that one other did that other one didn't
38:18make sense what we're seeing now is all
38:20of that stuff some of which will last
38:21some of which won't but you kind of have
38:23to have all of it in order to work out
38:24what will work and it may be we're both
38:26completely wrong about the connectivity
38:27and like it will be made seamless and
38:29smooth and it will have machine learning
38:31and it will learn what you want and it
38:32will make suggestions and like
38:33eventually like you'll walk in and the
38:35lights will kind of turn on as he walks
38:37with a home and that will just feel
38:38normal but we're in this experimentation
38:40phase of this discovery phase at the
38:42moment and I think that's really
38:43important when anybody attends CES or
38:46writes about it or thinks about it so
38:48remember that by and large this is a
38:50show about experiments that's the part
38:52that you see behind the scenes it's a
38:54show about transacting business it's
38:56like it's somebody buying a hundred and
38:58fifty thousand Penn colleges right or or
39:00like a Midwest retailer with five stores
39:03picking up a new line or a new product
39:05that he or she is excited about like for
39:07their wholesaler their distribution
39:08network or whatever but still there are
39:10fun things so like we want to wrap up
39:13and each share like a couple of things
39:15that just we we couldn't help but laugh
39:18even though the people will never forget
39:20these are makers their founders they're
39:22entrepreneurs and they're very very
39:23serious about what they do yes so I love
39:25the emoji power banks they like the
39:28emoji power bank or the unicorn power
39:30bank it's just it's a as we're saying
39:33some of you buy batteries you buy a
39:35charger you buy a chip you go to the
39:37foam rubber manufacturer who's also
39:39making all sorts of other stuff out of
39:40foam rubber that will navigate a CF you
39:43go to the packaging guy and there you
39:44are you have a unicorn poop emoji
39:45charger that reminds me of like the old
39:48like sushi USB memory stick yeah exactly
39:51so I add to that I have to talk about
39:53because it really is that the it's the
39:55cultural part of CES and then the
39:57founder part the cultural part was there
39:59was a booth that had
40:00japanese hand clapper so this is
40:03literally like plastic hands big red
40:05like clown heads and they clap and they
40:07clap in unison you could have 20 of them
40:09all connected by bluetooth and they clap
40:11and it it's basically a riff on and
40:14there's a Japanese vendor and it's a
40:15riff on maneki-neko and the Welcome
40:18Kitty that you know that is you see in
40:19every business but it's really about
40:21showing appreciation or having a
40:23birthday celebration and they talk about
40:25having carts of them that they use in
40:26restaurant and and people are just
40:28staring at it and it was like the most
40:31amazing thing because like really they
40:32have all these pictures of it being used
40:34all over Tokyo and I was just in Tokyo
40:36and I actually had seen them and this
40:38restaurant we went to and so I thought
40:39that was very good the other one was
40:41just the reminder to me of like the
40:43entrepreneur hustle you know cuz it's
40:45like the this scale of investment for a
40:48tiny company to show up at CES is insane
40:50hotel rooms are all jacked up like
40:52everything is expensive and then you've
40:54chosen an international flight so there
40:55was one booth that had a founder and an
40:58employee from a company in Ukraine doing
41:00notebooks like paper notebooks with
41:03paper you can't tear no and you you
41:06write in any pen you want but you can
41:08erase the ink later I don't understand
41:10the utility but what I know everything
41:12about the product because the founder
41:14just saw me walked by and said have you
41:17been to Ukraine let me show you the
41:18innovation in Ukraine and grabbed me and
41:20I had to watch the whole demo and hear
41:23from the employee the marketing pitch
41:24and everything cuz it was like the
41:27hutzpah and the hustle and all and
41:29there's five thousand of those yeah like
41:31everywhere you go and and that you just
41:34you can only experience that if you just
41:36walk around and see the floor and give
41:38the people the time and just don't walk
41:40by going oh never buy it never buy it
41:42that's dumb never buy it and you can't
41:44you just can't do that because people
41:46are trying and maybe for all we know
41:48like a ray scible non terrible paper is
41:50the future of paper yeah in moleskin who
41:53would have thought that would be a piss
41:55so with that that was another year of
41:58CES now that was a long hallway we just
42:00walked ran that was definitely a long
42:01hallway not as long as the design/build
42:04hallway it CES oh yeah a mile long or so
42:06all right so thank you this has been
42:07Steven Sinofsky and Benedict Evans
