TAGMA is the new FAANG

Tesla Apple Google Microsoft and Amazon – TAGMA

Tesla, Apple, Google, Microsoft and Amazon are leading their fields in terms of innovation and if you’re interested in business or just making money in the stock market, pay attention because these five are doing something different. TAGMA is the new FAANG and it’s here to stay.

First, let’s start out with a premise, and that is that customer-centric companies that innovate outperform non-innovative companies.

Is this true? Well, there’s research that shows that innovation can be correlated to company performance. A group from MIT looked at corporate ideation software (an overly expensive suggestion box) to see how many ideas were actually implemented and then looked at the performance of these companies to see how they did.

Source MIT Sloan

When there are few ideas implemented you have some winners and some losers but when you get to the right you have zero companies doing poorly when they are implementing the ideas of the organization.

Now a suggestion box is a good idea and this type of tool can lead to better communication and decentralized improvements across many parts of the company. Some of these suggestions may be small, but it’s not the size of the suggestion, it’s what you do about it that counts.

This is a small lens to use for large companies but small changes and innovations are good indicators that companies are open to larger changes, ideas and bigger, company pivots.

What’s this have to do with TAGMA and is it the new FAANG? I’m getting to that….

The S&P is changing

If you look at the S&P 500 it lists the largest 500 companies by market cap.

If you look at how long companies stay on the S&P 500 list, it’s changed dramatically.

Source Innosight

In the 1980’s it was over 30 years for the average company to stay on the S&P 500. By the year 2000 it was 15 years and some think it will shrink even more. Firms keep slipping off and the average time on the S&P has gone from 20 years down to 7. According to this research into longevity 50% of the companies on the S&P500 today won’t be there in 10 years.

So to be a high-performing firm you need to innovate and to stay on the list you need to be able to reinvent yourself every few years.

That brings us to my list.
Tesla, Apple, Google, Microsoft and Amazon.

Let’s start with four of these. If you look at the composition of the S&P 500 by market cap, 20% of it is made up by Amazon, Google, Microsoft, Apple and Facebook. 20%! Ok, then, why isn’t Facebook on my list?

Why not Facebook?

Well… I started off by saying that our premise was that customer-centric companies that innovate outperform non-innovative companies.

Now, don’t get me wrong. I have friends who work at Facebook and before I get angry emails, let me explain. While Facebook dominated their segment ofsocial media and the acquisitions of Oculus and Instagram were brilliant. Facebook just has a terrible reputation when it comes to customers.

They actually have a negative net promoter score… when you compare that to Apple, Amazon, Microsoft and Google, it’s not even close.

Facebook has a negative net promoter score compared with all of it’s tech peers

Why Tesla?

Ok, then but what about Tesla? Well, it’s not part of the S&P500? Why? Well, it hasn’t made the list yet. Tesla meets most of the criteria except for one. It needs to have positive reported earnings in the most recent quarter, as well as over the four most recent quarters. Tesla was supposed to hit that requirement but… global pandemic and all. If Tesla was on the list, it would likely be in the top 40.

The other reason I had it on my list is that unlike Netflix (a member of the FAANG club, who already destroyed Blockbuster) Tesla has a tiny fraction sliver of the market and lots of room to grow. Fast growing companies that are innovative grow up to be the next Apple’s and Google’s. No other company is growing like Tesla at scale.

Innovation wins in the long-term

For the last 10 years, I’ve personally invested in innovative companies and doing so I’ve consistently outperformed the S&P500 year, over year, over year. Now your mileage may vary but customer-centric innovation pays off; not just in terms of returns but in terms of positive impacts on society and the world.


Apple’s 2020 iPad Pro

If you’re anything like me, it’s been many days in quarantine and your kids stole your iPad a few weeks ago. So let’s take a look Apple’s new iPad Pro and what makes it so new.

Since the original announcement of the iPad over 10 years ago, the iPad has typically been considered the fourth screen device.

Your TV was the 1st screen, your computer was the second, the third was the mobile phone. With this release of the iPad pro, Apple is trying to change the narrative. Apple released two videos –
“Your next computer is not a computer” and “How to correctly use a computer”

In both videos, Apple is clearly trying to make the iPad your second screen taking the place of the computer and they are starting by targetting Pro’s with the iPad Pro. But Why would Apple do that?

If you look at Apple’s financials, over the last year you can see that revenue went down for Mac and iPhone business. However, iPad was up 17%. Apple would love for you to buy an iPad, pair it with some Airpods or Beats, and buy plenty of accessories like keyboards, apple pencils, and dongles.

Apple has been great at hardware advances and it’s no surprise that the display, camera, and performance are getting better and better. The introduction of Lidar is a surprise but this seems to be an extension of what Apple’s been doing with the Facetime camera.

Lidar stands for LIght Detection And Ranging. It sends light beams and then captures the reflection to figure out the range and spacial orientation. It’s used by the Mars Rover, some self-driving cars and now the iPad. It’s being used to improve the Augmented Reality experiences.

In terms of AR, I think there are two interesting areas to explore. The first is gaming. We’ve seen a lot of AR-enhanced games and while they are fun for a few minutes, apart from Pokemon go, few have had lasting value. With better cameras, these games will continue to improve. These technologies set the stage for AR glasses that Apple is rumored to be working on.

The second area in AR is how it’s being used professionally and this is where the iPad Pro may really shine in terms of its technology.

Several years ago Google had introduced AR into it’s larger tablets and Facebook’s Oculus has been pushing into this space. The new iPad’s Lidar is likely to find fans in architecture, space planning, and interior design and Apple’s videos are showing this future.

I know a number of folks who have tried to move to the iPad as their primary computer over the years with many issues, but Apple is systematically working on removing their objections.

Certain types of editing workflows are just easier with your hands on the keyboard and trackpad so Apple is introducing what can only be described as a variation of the traditional mouse and pointer user experience.

The user experience of the trackpad interface is particularly interesting. When not in use the pointer disappears and when it is in use the pointer snaps to controls as you get close. As you hover over text, spreadsheets or other controls the pointer shows context. Apple is even taking advantage of Fitts’s law to make sure that edge gestures like control-center or task switching is particularly easy. The full-size keyboard also removes many of the objections for typing longer documents on the iPad.

The other main objection for using the iPad as a computer is the lack of pro-level applications. Apple has been chipping away at this problem and some tools such as Adobe Photoshop and other pro-level tools have started to be available, however, even Apple’s own pro-level tools such as Final Cut Pro, Motion, and Xcode haven’t yet gotten their 1st generation iPad versions, making it hard to convince both Pros and larger software companies.

The iPad is looking like a great computer alternative but, it’s unlikely to replace your computer if you’re a true pro. Pros in audio, video, photography, architecture and engineering are likely to need tools and applications that aren’t yet available on the iPad Pro.

Apple is making great progress on a technology called “Mac Catalyst” that is allowing developers to share more code between their iPad, iPhone and Mac apps and that will also help.

So if you’re a Pro the new screen, keyboard, performance, and Lidar enhanced camera can certainly come in handy, but what if you’re not a Pro?

For non-pros, this can absolutely be a computer replacement. Web-browsing, document editing, portability, is a great option. The only potential downside is the price. When comparing the new iPad Pro with the new 13″ Macbook Air the two are almost the exact same price. If you configure both with 245GB and keyboard the iPad Pro is $84 more expensive.

So is the iPad Pro a computer replacement? Probably not for the true pros, it’s still a fourth screen for most but I do think the format for a tablet/slate computer is likely to become the second screen of the future.


Apple User Experience

Apple has struggled on the UX design front over the last few years. You can see some of the problems in both the hardware and the software across a number of products but I’m going to go deep on just one feature that you use every day the lock screen…

The iPhone lock screen and it’s overall design was part of the original launch of the iPhone, but the simplicity of the original design has eroded over the years.

The original design was:

  • Hard to trigger by accident
  • Simple and intuitive (even for a baby)
  • Could be done with one hand and taking the phone out your pocket couldn’t cause an accidental gesture
  • There was nothing to confuse you

As the iPhone grew in popularity there was a lot of interest in having more functionality quickly available. The iPhone was the most popular camera and quick access to the camera was added to the lock screen in iOS 6.

All the way through iOS 8, there were two primary gestures… Swipe across to unlock and a new gesture to swipe up to get the camera. The camera was hard to trigger by accident and gave a hint if you tapped it.

In iOS 10 things started to get more complicated.

  • The home button had become a fingerprint reader
  • The home screen was now the primary way to view notifications and act on them.
  • Apple was also experimenting with HandOff allowing you to launch or hand off applications from your computer to your phone.

That brings us to iOS 12 & 13. With the elimination of the home button, FaceID, 3D Touch, Control Center, Widgets and Notification Management… the functionality of the home screen got confusing and the original simplicity and vision were lost.

Apple introduced gestures from every edge of the screen and even used 3D-Touch to overload additional actions. The obvious on-screen gestures were gone and in it’s place were a large collection of ways to access secondary functionality.

  • The time is harder to read – thinner font
  • No on-screen instruction or obvious visual area to drag to unlock.
  • Camera no-longer bounces to show the direction of camera bounce/hint.
  • If you drag up to show notifications, you can’t drag down to hide them.
  • If you drag right you end up in widgets (unused by most people)
  • If you drag to the left you get locked in the camera area with no obvious way to get out

None of these things is a show-stopper but combined they clutter the simplicity of the original design. While the new design has more features it’s not necessarily better for the majority of people. While it adds features that 5-10% of folks may care about it complicates the experience for the other 90%.

When Apple originally released the iPhone they also released the Human Interface Guidelines (HIG). Over the years the HIG has gotten diluted and much of the advice on simplicity, legibility, texture, and usability has been diluted or removed.

As Apple continues to grow and evolve, I’m hoping they re-focus on the simplicity and elegance of the user experience. While there’s no doubt that Apple has been successful from a financial perspective the quality of their products have been declining. I’m hoping Apple’s able to re-focus on the core experiences and bring back the simplicity and delight that made the first generations of the device so magical.