00:00I do want to start off with this idea of a hardware guy, a hardware engineer, I should say, being
00:05tapped to run a company who a lot of people would say their problem isn't the hardware.
00:09Maybe their problem is software. Maybe their problem is AI.
00:13What does a hardware engineer, in your view, bring to the table for a company like Apple?
00:19That's a great question. And what I think the most important thing that Ternus has to do is be as
00:27good a recruiter as Steve was, as great a talent engineer.
00:32Right now, we are in the biggest war for talent we've ever seen.
00:35And whoever ends up with the best AI talent wins.
00:38Apple's been losing their best AI talent to companies like Meta and others.
00:43And they're not bringing in the talent that's going to actually lead the future.
00:47So his understanding of engineering and the real attractiveness is people wanting to come to work for him, believing in
00:54his vision, being a little bit more like Steve as to what they can do in the future.
00:59And I think that the time to reinvent the company is now, and it has to be reinvented under AI.
01:05And they've got to be a leader in the AI space.
01:07When we look at a lot of the current crop of CEOs out there, particularly for tech companies and some
01:13of the newer ones, whether they're in the AI space, whether it's a company like SpaceX,
01:17or whether it's even some of the more legacy tech companies like a FaceMeta and Alphabet and Microsoft, there is
01:24sort of an outsized nature to these CEOs as visionaries, whether that's fair or not.
01:30They sort of come across with that.
01:32There is a gravitas that they bring to the table that attracts investors and probably, to your point, attracts employees.
01:37Do you think Ternus has that?
01:39I think he has some of it.
01:41I think people do love working for Ternus.
01:43They love working for Johnny Sergi better, and he does a lot of the AI work today in the chip
01:48space.
01:49And they're being able to hold on to their talent in the silicon world.
01:52But they're losing their talent on the digital AI side, and they've got nothing really going on in robotics.
01:59And they've got to make a statement there.
02:01So Ternus has to be able to be out in front, out in the market, painting a vision that people
02:07want to be a part of.
02:08But everything is about, you know, basically in this new world, is who can recruit the very best AI talent,
02:14whether it's people that are building models or those that are at the frontier of applied AI.
02:18And there's a lot of work to be done in both.
02:21Apple has to start showing, you know, what they're going to do in terms of deploying AI that's going to
02:25drive down costs and accelerate revenue.
02:27That's deploying, like FDs and forward deployed engineers.
02:31We just did a study that said that less than 1% of all big companies are getting more, 100
02:37million or more in ROI return.
02:40Apple has to start reporting that to the street, and they have to start innovating on the AI side.
02:45With regards to just how much of a honeymoon Ternus is going to have, you know, I was thinking about
02:50this idea, too.
02:50Like when I was covering when Steve Jobs passed and Tim Cook formally took over, obviously it was his company,
02:58and there was no way to really doubt it.
03:01Tim Cook is going to stay on in leadership role, from what we can understand, handling some of the political
03:08issues in Washington and some of the other things that maybe Ternus doesn't want to deal with.
03:12But what does it mean, though, to have your predecessor still there in the building, still there in the boardroom?
03:18Is that going to be an overhang, or do you think that they can work together?
03:23Well, we see this a lot in CEO transitions.
03:27The outgoing CEO becomes executive chairman or vice chairman or has some role in the transition.
03:34It is more about, as you said, about continuity, and it usually doesn't last very long.
03:39So it would be one of the first instances that I've seen where the outgoing CEO stays longer than a
03:46year or two.
03:47But it is possible that they can work together, and Ternus probably does not like to do some of the
03:51stuff that Cook does like to do.
03:53But I think that's a temporary situation.
03:57I don't think it's a long-term leadership model that can continue with at Apple.
04:02What are your general thoughts on what type of team that Ternus might build?
04:06We've already seen some departures from the executive team, the longtime executives under Tim Cook.
04:11My assumption is we'll probably see more as Ternus looks to put his stamp on what he wants his inner
04:17circle to look like.
04:19Well, so far, and it happened a little bit not too long ago, he brought in Laura Legros, who was
04:25the head of hardware and retired.
04:28So that's his only hire.
04:29And people are going to be watching as to who's going to want to rejoin Apple or who are some
04:34of the stars that might leave Anthropic or Open or DeepMind or any of the frontier model companies to join
04:42Apple.
04:42Right now, they do not have a frontier model strategy, and they need to.
04:46They don't have a real agentic AI strategy other than how they deploy it within their current products.
04:51So I think that it's going to be—there are a number of people that are going to end up moving
04:55up that are people that have been there for a while.
04:58And I think it's going to take John maybe two months or so before he starts to see what gaps
05:04are there and start the recruiting process.
05:06This is a new thing for him, bringing in new talent at this level as a brand-new job.
05:11Steve was great at it.
05:12He was competing every day against Bill for the best talent.
05:16Now John's got like a four-pronged front that he's got to fight.
05:20He's got to fight for talent against Dario with Sam, with Musk and Zuckerberg and all the others that are
05:26competing for this same talent.
05:28So he's got a number of wars to fight.
05:30Yeah, I mean, a lot of outflows coming out of Apple to some of those companies that you just named
05:35there.
05:35But overall, and I know we have no idea how he's going to perform as CEO, but when this was
05:40first announced or first started leaked out there, no one seemed to be really upset with it.
05:45It seemed like it was a natural fit to move somebody like Ternus, a 20-plus year veteran of the
05:51company, key in that recent relaunch of the Max, and obviously their hardware guy.
05:55You've seen a lot of CEO transitions, a lot of rocky CEO transitions.
06:00How important is it for these boards to know who's on the bench and who can actually step up?
06:06So if they do get to that day where their current CEO, for whatever reason, needs to step down, that
06:12they have somebody there, or at least they have enough people there to actually go through and evaluate?
06:18That's a great question, and I think the most sophisticated companies have a succession plan in place.
06:23They've got two or three internal options, and they're also keeping close ties to their external options, and sometimes they're
06:31operationalizing it.
06:33I don't think that there's a clear heir apparent today to back up Ternus.
06:37It's certainly a part of the board's discussion, but their focus right now is making sure he succeeds, he has
06:44some early wins, and they start building up the bench around them.
06:48But I would say it's critical for Apple's board to have successors for every key role, and they have to
06:55start looking at it in a different way to really make it something that's going to impact the company long
07:00term.
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