Why Apple is Not a Tech Company

hand pulling iPhone box off shelf
Maxim Shemetov—Reuters

Peter Thiel argues that buying Apple means betting against innovation.

As the founder of PayPal, and the one of the first external investors in Facebook, it’s hard to argue that Peter Thiel doesn’t understand innovation or technology companies. But in his new book, Zero to One, Thiel takes somewhat of a radical approach to these concepts, drawing a line in the sand that may irk many traditional tech firms, as well as their investors.

Despite being both the largest and most well-known firm in The Valley, Thiel’s personal opinion is that Apple APPLE INC. AAPL -0.0588% isn’t much of an innovator these days: Just a few years ago, Apple’s stock was a bet on new technology — today, it’s a bet against it (at least according to Thiel).

In a recent phone interview, Thiel told me why he doesn’t consider firms like Apple, and most of the members of the Nasdaq 100, to be technology companies, and what that might mean for their investors.

An odd transformation

Thiel has somewhat of a problem with the concept of a “tech firm” — or at least, what people generally define one to be. In Thiel’s mind, true technology companies are firms leveraged to innovation — to new business models designed to shake up the status quo. Plenty of firms begin their life as a tech company, but those that find success often become something quite different.

“A whole bunch of the Nasdaq 100 stocks are bets against innovation … it’s a long list. [There’s] a very short list of companies where you’re actually betting on innovation … Most of [the members of the Nasdaq 100] just throw off huge cash flows, and the risk is actually that there’s some innovation ….These companies are always described as ‘tech stocks’ because they were tech stocks … at some point in the past, but [today] they’re bets against technology.”

Although most still consider Apple, Oracle, and Microsoft to be technology firms, few hold the same opinion of General Motors. Yet according to Thiel, it’s all relative — simply a matter of timing and perspective.

“GM was a tech stock in the 1920s — it was still sort of a tech stock in the 1950s. [But] by the 1980s, you invested in GM as a bet against German and Japanese innovation. You said, ‘I’m long GM because Germany and Japan are never going to build cars that are that good.’ At some point, a lot of these tech stocks become weirdly changed to being bets against technology … [Of course] the companies can never say that, because their internal narrative and their external story is [based] so much around how they were historically innovative.”

Know what you’re buying

Admittedly, General Motor’s transformation from technology firm to incumbent took decades, but Thiel believes the shift is often far more straight-forward: Simply look for the founder to depart. With Apple, the change occurred just over three years ago, with the passing of Steve Jobs that thrust Tim Cook into the spotlight.

Thiel is a fan of Cook’s management skills (“I think Tim Cook has done a very good job in an impossible position to try to fill Steve Jobs’ shoes,” he told me) but believes the Apple story is fundamentally different with him at the helm: Once, people bought stock in Apple because it was creating revolutionary new products — today, it’s all about the cash flow.

“No one is investing in Apple because they think it will create new products. People are investing in Apple because it’s generating massive cash flows, and the bet is that the cash flows will go on [for] somewhat longer than people think … that the rest of the world will not innovate; will not succeed in closing the gap.”

While plenty of investors may disagree with Thiel (the new Apple Watch, for one, gives investors something to look forward to) it’s indisputable that Apple is generating billions of dollars of cash, largely on the back of one product: the iPhone. Apple generated $10.3 billion in cash flow alone last quarter — enough to acquire many members of the S&P 500 outright. The iPhone brings in more than half of Apple’s revenue, and likely the bulk of its profits.

Not a bad investment

But even if Apple’s best work is behind it, it doesn’t make it a bad investment. In fact, Thiel believes Apple could be an excellent stock — so long as the iPhone cash-cow continues to deliver.

“Apple [will keep] generating massive cash flows so long as nothing much changes — as long as it maintains a certain brand lead, a certain premium on the iPhone. [If so,] it will generate huge cash flows [for many years] … the risk is that other people will catch up.”

That risk could come from rival handsets. Competitors like Xiaomi and OnePlus have attracted a fair amount of attention recently for their quality handsets, which they sell at a fraction of what Apple charges for the iPhone. Or it could come from advanced wearables — watches and other gadgets designed to replace the traditional smartphone. It may come from a radical reinvention of the handset — something like Project Ara, that shakes the current smartphone business model to its core.

Of course, it may not come at all — or if it does come, not for many, many years. In which case, the cash flows should continue, and Apple should reward its shareholders.

“Maybe there’s not much innovation happening. Maybe people overestimate innovation … but I think it is very helpful to try to get the framing right and understand, ‘OK, I’m betting against technology here.'”

TIME Innovation

This $150 Device Just Made It Ridiculously Cheap to Crack Open a Safe

Combination lock Getty Images

The contraption fastens to a dial commonly used to lock ATMs and guesses the combination through trial and error

A pair of Australian-based security experts have developed a $150 safe-cracking device, making a technology normally reserved for defense department budgets accessible to anyone who can afford a smartphone.

The contraption, which was fashioned out of repurposed electronics and 3D-printed components, fastens onto a safe and spins the dial through a series of combinations, gradually cracking the code through trial and error, the Register reports.

Its inventors, Jay Davis and Luke Janke, say it typically takes four days to pop a standard 2-combination lock which is commonly used to secure ATMs, but they suspect that time could be shaved down to a matter of minutes by simply spinning a few of the default codes set by the lock’s manufacturer. Turns out a startling number of customers don’t bother to reset the code to something more personal and secure.

Another tweak would give the device some longer term memory to track untested combinations, “so if you get busted you can run away and come back and try later on,” Davis told the Register, “not that we condone that.”


TIME Innovation

Five Best Ideas of the Day: October 14

The Aspen Institute is an educational and policy studies organization based in Washington, D.C.

1. Fix the system, don’t fight individual diseases: Why Ebola may change how aid dollars are spent on healthcare in Africa.

By Lesley Wroughton at Reuters

2. Plan for a global body to regulate the great promise of genetics — balancing unfettered innovation with sensible rules to prevent abuse.

By Jamie F. Metzl in Foreign Affairs

3. Because it increases disease and exacerbates resource scarcity, the Pentagon sees climate change as a threat multiplier.

By Laura Barron-Lopez in the Hill

4. The U.S. should call out Egypt’s rising authoritarian leadership and the plight of repressed people there.

By the Editorial Board of the Washington Post

5. Successful community collaborations build civic confidence for increasingly audacious projects that can improve lives.

By Monique Miles in the Collective Impact Forum blog

The Aspen Institute is an educational and policy studies organization based in Washington, D.C.

TIME Ideas hosts the world's leading voices, providing commentary and expertise on the most compelling events in news, society, and culture. We welcome outside contributions. To submit a piece, email

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Check Out These Army Figurines in Yoga Poses

Let G.I. Joe help you find your inner Zen


This article originally appeared on Lost at E Minor.

Apparently, soldiers of war are now finding peace – not with guns, but with yoga poses! ‘Yoga Joes’ is an action figure concept by San Francisco-based Dan Abramson, in which he takes the classic green army men and makes them do yoga poses.

“I made Yoga Joes in the spirit of getting more people to try yoga. More unexpected folks are reaping the benefits of yoga today, from professional athletes, to children, to military men and women returning from wartime,” says Abramson. “I’m hoping people pass Yoga Joes around as an inexpensive gift to friends and loved ones, who might like to give yoga a shot.”

Some of the yoga poses included in the toy collection are Downward-facing Dog, Warrior Two, Cobra Pose, Child’s Pose, Meditation Pose, and Tree Pose. You can find out more about the Kickstarter project here.

(via Design Taxi)

TIME Innovation

Five Best Ideas of the Day: October 13

The Aspen Institute is an educational and policy studies organization based in Washington, D.C.

1. Women can’t thrive in a society where anything other than “no” means “maybe.” Consent laws are an important step, but we need a change in culture.

By Amanda Taub in Vox

2. Jokes aside, the palace intrigue behind Kim Jong Un’s mysterious absence could contain valuable intelligence.

By Gordon G. Chang in the Daily Beast

3. As we fight the Ebola outbreak in West Africa, global donor organizations should build a recovery plan for the aftermath.

By the editorial board of the Christian Science Monitor

4. That self-parking feature on your new car might help military vehicles avoid enemy fire.

By Jack Stewart at the BBC

5. The next wave of satellite imaging will redefine public space.

By the editors of New Scientist

The Aspen Institute is an educational and policy studies organization based in Washington, D.C.

TIME Ideas hosts the world's leading voices, providing commentary and expertise on the most compelling events in news, society, and culture. We welcome outside contributions. To submit a piece, email

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Five Best Ideas of the Day: October 10

The Aspen Institute is an educational and policy studies organization based in Washington, D.C.

1. With U.S. support, El Salvador is using community policing to address skyrocketing gang crime.

By Jude Joffe-Block in Fronteras

2. A new tool designed to flag bogus stories online might help combat rampant misinformation.

By Alexis Sobel Fitts in the Columbia Journalism Review

3. A multimillion dollar new high rise in Los Angeles exclusively for the city’s sick and vulnerable homeless residents reflects a powerful truth: we can’t ignore poverty away.

By Gale Holland in the Los Angeles Times

4. The CDC is using mobile phone data to track and stop Ebola in West Africa.

By Aliya Sternstein in NextGov

5. “Education is the most important right. When we get education, then we can bring change in our society.”

By Malala Yousafzai addressing the Aspen Ideas Festival

The Aspen Institute is an educational and policy studies organization based in Washington, D.C.

TIME Ideas hosts the world's leading voices, providing commentary and expertise on the most compelling events in news, society, and culture. We welcome outside contributions. To submit a piece, email


Think Tanks: What Are They Good For?

Hands on light bulb
Joos Mind—Getty Images

In a democracy desperate for new ideas and nonpartisanship, they might plan our future

In The Comedian, Jerry Seinfeld’s movie about his craft, Seinfeld reveals he always wanted to do a skit about think tanks. The comedian, always keen to deconstruct meaning, defines think tanks as: “It’s a tank… to think in…” And then he plots a skit where a think tank employee sitting in a bare room in a Rodin-like thoughtful pose is asked by colleagues if he is ready to go to lunch, only to respond that wait, wait, he isn’t done with his “work.” And then he suddenly is.

Seinfeld must have appreciated that Washington think tanks now find themselves in the spotlight, as the New York Times and other news outlets are taking a close look at the links between them and their funders, particularly foreign ones, raising the specter that they are just another form of influence-peddling organizations in disguise. I don’t think this is the case. I hope not, for my sake (I work at a think tank) and for the sake of our democracy. Most of the think tanks singled out have such diverse and competing funding bases that it’s hard to imagine them being overly swayed by any single donor. Still I confess that I’m glad that these reports have put the very important issue of institutional transparency back on our radars.

But the media attention also raised the larger Seinfeldian question of what exactly is a think tank and what is its role in our political system? It’s a question to which I have given a lot of thought, trying to come up with a better definition than Seinfeld’s crisp description. A few years ago, I was directing a growing program at a think tank—albeit one that is also a living presidential memorial and operates a bit differently than others—and I wanted to figure out how we could be more effective in our daily work. I called up colleagues at other organizations, including many I’d never met before, a few journalists, and a handful of policymakers to get a sense of when and how think tanks can impact policy issues. The results were enlightening, and I eventually wrote them down in a short book on think tank strategy.

In their most basic form, think tanks are part of the information flow in a democratic society, conducting research and analysis, and disseminating their findings and recommendations through publications and live gatherings that allow busy policymakers, advocates, journalists, and average citizens to hear diverse perspectives on important public issues. At their best they do even more, framing old issues in new ways and occasionally even coming up with actionable ideas to address some of the challenges and opportunities facing society. Harried policymakers—from cabinet secretaries to members of Congress and their staffs to civil servants implementing legislation—rarely have time to step back from the demands of the moment to conduct research and take a longer view on their portfolios. The best think tanks help break this inertia by injecting some long-term thinking and reassessments into Washington’s bloodstream.

The best think tanks also serve as hubs to bring together diverse groups that may not always speak with each other—politicians, civil servants, advocates, academics, journalists, and average citizens engaged with a particular subject. And some serve as conduits between universities, where a great deal of sophisticated but inaccessible research is done, and the larger public debate. Indeed, think tanks have proliferated in part because traditional academics often withdraw into abstract intramural scholarly debates divorced from day-to-day decision-making. The findings of scholarly research, too, are increasingly disseminated through niche publications that are hard for outsiders to use. Think tanks thus mind the gap between academia and Washington, providing a platform for researchers eager to see their work applied outside the ivory tower (which is looking more and more like an impregnable silo these days).

And much of the best work of think tanks involves building coalitions around new ideas. For instance, the Center for Global Development (one of the think tanks featured in the New York Times for accepting funding from the Norwegian government) was successful at creating a partnership among several institutions a few years ago to encourage research and production of vaccines for deadly diseases that mostly affect children in the developing world. Since drug companies had few market incentives to pursue these vaccines, the CGD worked with Harvard University, stakeholders from the governments of donor nations, and the World Bank to develop a blueprint for an Advanced Market Commitment, in which governments guaranteed that they would buy the vaccines if produced. Today this work has led to the production of millions of doses of vaccines to save the lives of children around the world.

Somewhat more modestly, I was involved in a very practical study a few years ago at the Wilson Center on how to leverage risk management tools to make the U.S.-Mexico border both more secure and more competitive. In the end, we involved two Mexican think tanks and the Los Angeles-based Pacific Council in producing two studies, which engaged key national, state, and local policymakers, business leaders, and civil society representatives on both sides of the border to come up with a blueprint for intelligent border management. Today, many of the ideas have become common practice, make the border more secure and improving the economy at the same time.

There are hundreds of other examples of think tank ideas that have effectively found their way into policy, largely because they have built coalitions of thinkers and doers, often drawing on the resources and knowledge in academia while engaging key stakeholders. The Brookings Institution, for example, has had a major impact in stimulating practical innovations to make U.S. cities better managed and more resilient; the Center for Budget and Policy Priorities has helped extend the Earned Income Tax Credit to almost half of all U.S. states because of its work with state governments and local organizations; and the Heritage Foundation played a decisive role in laying the conceptual and organizational bases for the Department of Homeland Security after the 9/11 attacks. Similarly, the Rand Corporation, a venerable think tank that was first established as an outfit within the Air Force and later spun off, conducted the background study that convinced the Department of Defense to abandon its “Don’t Ask, Don’t Tell” policy and include gays and lesbians as full members of the U.S. armed forces.

And think tanks are probably even more effective in helping frame issues so that policymakers and the public think about them differently—or examine them for the first time. The work of both the Carnegie Endowment and the Kennan Institute on Russia-U.S. relations has been critical to help us better understand the Putin enigma; research on global attitudes at the Pew Center and the Chicago Council on Global Affairs helps us understand what people in the United States and around the world think about each other; the Baker Institute in Houston has produced some of the most insightful work on energy futures.

Some critics have decried the rise of partisan and ideological agendas in think tanks, but the concern seems overwrought. Decision-making in our country is based on a contest of competing interests and opinions in the marketplace of ideas. It is healthy for political parties and interest groups to have their own affiliated research groups that can flesh out proposed policy prescriptions, whatever their political orientation, with more care and consideration than frontline politicians could ever do. The more well thought-out, competing voices in the debates over our nation’s future course, the better. And, as with any marketplace, it is the responsibility of consumers—in this case, journalists and policymakers—to be informed shoppers, to know the leanings of the organizations that they use as sources of information, and to demand transparency regarding their sources of funding and purpose. And think tanks would be wise to err on the side of disclosure to help this marketplace function well.

At the same time, in today’s hyper-partisan environment, Washington is also in need of a set of think tanks not driven by strong partisan or ideological agendas that can convene diverse points of view in a neutral, trusted setting. There has never been a greater need for organizations that can inject a measure of reason and rationality into otherwise polarized debates, bridging and brokering partisan divides, marshaling facts and dispassionate analysis. Indeed, in Washington, as Seinfeld would put it, there has never been a greater need for “a tank… to think in.”

Andrew Selee wrote this for What It Means to Be American, a national conversation hosted by the Smithsonian and Zocalo Public Square. He is executive vice president of the Woodrow Wilson Center and the author of What Should Think Tanks Do? A Strategic Guide to Policy Impact (Stanford, 2013). The views expressed here are the author’s own and do not reflect an institutional position.

TIME Ideas hosts the world's leading voices, providing commentary and expertise on the most compelling events in news, society, and culture. We welcome outside contributions. To submit a piece, email

TIME Innovation

This Woman Can Sing Two Notes at Once and It’s Eerily Beautiful

Watch German vocalist Anne-Maria Hefele demonstrate the technique


This article originally appeared on Lost at E Minor.

In this video, German vocalist Anne-Maria Hefele demonstrates a technique called ‘Overtone singing’, wherein she simultaneously sings multiple notes at once. Having practiced this technique for more than 10 years now, Hefele manages to sing a low note and a high-pitched scale at the same time, even moving the notes in opposite directions.

The sound she makes is eerie – kinda like the music you hear in sci-fi movies – except this one has no special effects! Prepare to be blown away!

(via io9)

TIME Innovation

Five Best Ideas of the Day: October 9

The Aspen Institute is an educational and policy studies organization based in Washington, D.C.

1. Like Pakistan, Turkey nurtured a militant movement next door. Will ISIS enter Turkey as the Taliban made a new home in Pakistan?

By Michael M. Tanchum and Halil M. Karaveli in New York Times

2. Look homeward: America should form a new North American partnership with Canada and Mexico to tackle global challenges.

By Nicholas Burns in the Boston Globe

3. Protestors in Hong Kong and around the world can bypass government censorship with “mesh networks.”

By Gareth Tyson in the Conversation

4. Early childhood development can dramatically change a child’s life and future. Massively scaling up investment in youth could close the income and skills gaps, and accomplish much more.

By the Brookings Institution

5. Rural America has the nation’s fastest rising child poverty rate. To overcome it, we must confront the weaknesses in our economic recovery.

By the Rural Family Economic Success Action Network

The Aspen Institute is an educational and policy studies organization based in Washington, D.C.

TIME Ideas hosts the world's leading voices, providing commentary and expertise on the most compelling events in news, society, and culture. We welcome outside contributions. To submit a piece, email

TIME Innovation

Watch a Swarm of Drone Boats Protect a Larger Vessel

The Navy tests a new way to protect ships

Here’s a unique solution to piracy… autonomous swarms of drone ships to “overwhelm” the enemy. According to the report from IEEE Spectrum, “The system not only steered the autonomous boats but also coordinated its actions with other vehicles—a larger group of manned and remotely-controlled vessels.” No humans were on the boats.

(via IEEE Spectrum)



TIME Ideas hosts the world's leading voices, providing commentary and expertise on the most compelling events in news, society, and culture. We welcome outside contributions. To submit a piece, email

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