Apple is priced for an iPhone hit. What could go wrong?

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Hello! This week: Why next week's iPhone launch is more important than most, Clearbanc's new inventory financing product, and Sinch's CFO on his big Apple mistake.
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A new iPhone is always a big deal. But when Apple unveils its latest devices on Tuesday, it's a bigger deal than normal. "I don't think there's a lot of room for error," Wedbush analyst Daniel Ives told me.
Expectations for the first 5G iPhones are sky high, with Ives one of many predicting a "once in a decade supercycle" off the back of the launch.
But there are significant risks ahead. For one, Apple is launching expensive phones into one of the worst economic environments in living memory. Ives said Wall Street has taken that into account, reducing projected unit sales by 10% to 15%, and that cheaper iPhone models — such as the SE and rumored iPhone 12 Mini — might make up for it. But in a report last month, Wolfe Research's Jeff Kvaal pointed out that "phone sales dramatically decelerated during the 2008 recession."
Plus there's more at stake here: Many of Apple's other most successful recent plays may also depend on strong iPhone sales.
If things don't go to plan, Apple's stock could be in for a tumultuous season. "This has to be a very successful product launch in order for the stock to continue to move higher," Ives said.
No pressure then, Tim.
Stronger care … from more efficient operations
In a defining moment for healthcare, it's even more crucial to deliver patient-centered care efficiently. At Philips, we are committed to providing intelligent, automated workflows that seek to improve patient care. More efficient healthcare means stronger, more resilient healthcare.
Clearbanc, known for offering ecommerce brands money to spend on ads, has a new product that it thinks could solve a big pain point this holiday season.
Clearbanc's solution? "We'll buy your inventory for you, and you pay as you sell it," co-founder Michele Romanow explained. "You don't actually pay for your inventory until a customer buys it." That means Clearbanc is taking on some of the risk instead of the ecommerce brands: "If they don't sell the inventory, then we don't get our money back," Romanow said.
Romanow and D'Souza are positioning this as a better alternative to any other form of inventory financing: a kind of middle way between the available alternatives. "Almost all small-business loans have personal guarantees tied to them," Romanow said. For founders, she said, "that's the scariest thing in the world." D'Souza, meanwhile, said that Clearbanc's product ended up being much cheaper than equity investments, which are "very expensive both from a cost of capital perspective, from a time perspective, and then from a control and ownership perspective."
Pulling this off will be hard, though. Etsy CTO Mike Fisher recently told me that while holiday demand is normally "very predictable," COVID means "it's all up in the air" this year. Romanow and D'Souza hope, though, that they have data that accurately predicts how much inventory brands need.
If it does work, it's easy to imagine Amazon or Shopify rolling out something similar to their merchants. It's a fundamentally different way of thinking about financing, really. "Traditional banks will look at what happens if [companies] fail," D'Souza said. "Their entire underwriting is, 'What can I get for this if I have to go take it?'" Clearbanc, as he sees it, is different. "We really underwrite [on] how likely is this product to sell … We're sort of betting on the company succeeding."
Has COVID-19 been net good or bad for the tech industry?
Net good. There are a few short-term adverse effects, such as reduced smartphone sales, but overall global digitalization has been accelerated due to the pandemic. Customer behavior has been permanently altered in many verticals, including learning, health care, communication, travel [and] banking, and this will favor the tech industry.
What tech stock do you have your eye on?
Nvidia … Several hundred million increasingly advanced chips will be needed to accelerate machine learning tasks. [It] recently released a new series of GPUs, which they claim to be "the largest generational leap" in its hardware.
What's been your worst financial decision?
Not deciding. The one that stands out the most is not buying Apple in 2001, in 2005, in 2007 until I finally jumped in during 2012.
What's your number one tip for adapting your company to post-COVID?
A bit unusual in the fourth industrial revolution, but my No. 1 tip would be to reconnect with your colleagues. We are all going towards a new normal, whether it's working from home or using digital tools at work. It will be even more important to have those deep, meaningful, and inspirational conversations.
What piece of financial advice should a founder ignore?
More funding = more success. Sinch is an excellent example of a company that had to be frugal with its spending to minimize raising capital, yet has managed to make it to the very top of the fragmented CPaaS market globally.
Stronger care … from more efficient operations
In a defining moment for healthcare, it's even more crucial to deliver patient-centered care efficiently. At Philips, we are committed to providing intelligent, automated workflows that seek to improve patient care. More efficient healthcare means stronger, more resilient healthcare.
Thoughts/feedback/tips? Email me — shakeel@protocol.com — or tips@protocol.com. And subscribe to get Index in your inbox every week. Thanks for reading — have a great weekend, and see you next week.