Tim Sweeney

`3:55:24`

Tim recently revealed that it has cost well over a hundred million dollars in legal fees to carry on this battle against Apple. We, for a hot moment, considered suing Apple when they were threatening to kick us out. We shopped the case around with a few law firms and perhaps of course they would tell us you have a good case. I mean they're trying to sell a product here, but they would also tell us. — It's gonna cost a minimum of $10 million and it's gonna take five to seven years through all the appeals. Now we now learned the actual price tag was 10 times higher, right? Epic spend over 100 million. It would've destroyed us to take on Apple in the legal realm. Only a company like Epic could do it and only a company run by founders Like Tim, like Mark could risk the business in the way that they did, the audacity they had to provoke the fight in the first place, which I thought was just incredible. And to stick with it for the long term,

`3:56:25`

no board would've signed off on this lawsuit to a professional CEO, no freaking way. So the fact that they've been able to beat Apple in also the most hilarious way possible, I think it's just incredible. 'Cause remember their first victory in the case was actually not much of a victory. There were about 11 counts in the trial. Apple basically won 10 of them and the judge awarded Epic this one little win that Apple couldn't tell 'em not to link out to the internet to be able to do the payment processing. So they won this one little thing. And Apple, instead of just taking the 10 out of 11 wins and going fine, you can have your little links but all these other rules stay in place decided to essentially commit criminal contempt of court as they've now been referred to for prosecution and angered the judge to such a degree

`3:57:26`

that the rule of law in the US now is that you can launch an app in the app store. And you don't have to use in-app payment, but you can have a direct billing relationship with a customer if you just link out to the open internet when you take the credit card and then hop back into the app. And we owe all of that to Tim and Mark. We owe all of that to Epic. We're gonna launch new apps any minute now, I hope actually next week to take advantage of this that revamp the hey apps so that people who download the Hey app off the Apple app store can sign up in the app and can then use the web to put in their credit card so we don't have to pay 30%. Instead we have a direct billing relationship and such that they can take that subscription to Android, to PCs, whatever without any hassle. And we have Tim and Mark to thank for it. — Yeah, Tim, I mean, like you said founders but also specific kind of founders. 'Cause I think maybe you can educate me on this, but Tim is somebody who maintains.

`3:58:27`

to this day sort of the unreasonableness of principles. Yes, that's what I love. I think sometimes maybe even with founders you can get worn down. It's a large company. There's a lot of smart, quote, unquote, people around you lawyers and just whispering your ear over time and you're like, well just be reasonable being a, you know, this is a different thing. And to be the sort of maintain, I mean Steve Jobs did this. Still are the asshole. Who' says, "No, I'll sink this whole fucking company over this." — That's the exact language basically I used in our original campaign. I will burn this business down before I hand over 30% of it to Apple. And that sort of indignation, that actual rage is something I try to be a little careful about tapping into because it is a little bit of a volatile compound. Because I mean I have a bunch of employees, we have a bunch of customers. It would be pretty sad if the journey of 37 signals

`3:59:29`

after 25 years would come to an end because Apple would burn us down or I would burn the business down over this fight with Apple. But I think you also need that level of conviction to be able to even drive the day-to-day decisions. One of the other Apple examples, and I know we're racking on Apple a little bit here, and I don't actually hate them. I really don't. I am tremendously disappointed at the squandered relationship that did not need to be sold away for so little. Now I understand that the app store toll booth is actually a pretty big business. It's multiple billions, but Apple is a trillion dollar company. And I think in the lens of history, this is gonna come off as a tremendous mistake and I think it's already coming off as a tremendous mistake. The flop that was the Vision Pro was partly because Apple had pissed off every other developer. No one was eager to come build the kind of experiences for their new hardware that would perhaps have made it a success. So when you're on top and you have all the cards,

`4:00:31`

you can dilute yourself into thinking that you can dictate all terms at all times and there are no long term consequences. Apple is learning finally, the fact that there are long-term consequences and that developers actually are important to Apple's business. And the relationship is not entirely one sided. We don't owe our existence to Apple and Apple alone. We've built our own customer bases. Apple has been beneficial to the industry. I'm glad the iPhone exists, da da da da. It's not that it doesn't go both ways, but Apple wants it only one way. And I think that is a mistake, and it's a mistake that was avoidable. And A, that's disappointing. Certainly disappointing for me. I've literally spent 20 years evangelizing this shit, right? I've spent so much money buying Apple hardware, excusing a bunch of things they've done over the years. And then for what? For the fact that you wanted 30% of something

`4:01:31`

that I created in the most unreasonable way possible? Couldn't we have found a better way to do this? I think they're going to get forced to do a better way. But did you also have to go through the indignity of having a criminal contempt charge against you getting referred to prosecution? It just seems so beneath Apple, but it also seems so in line with what happens to huge companies who are run by, quote, unquote, "professional managers" rather than founders and unreasonable people. — Well, we should probably also say that the thing you love about Apple, the great spirit of Apple I think still persists and there's a case to be made that this 30% thing is a slice, a particular slice of a company, not a defining aspect of the company. And that it Apple is still on top in the hardware that it makes and a lot of things that it makes. And you know this is, that could be just a hiccup in a long story of a great company that does a lot of awesome stuff for humanity.

`4:02:33`

So like Apple is a truly special company. We mentioned Amazon, there is no company like Apple. — I agree, this is why the disappointment is all greater. Because we had such high aspirations and expectations to Apple that they were the shining city on the hill and they were guiding the industry in a million positive ways. I think as we talked about earlier, hardware is exciting again in large part because Apple bought PA Semi and pursued a against all odds mission to get ARM up to the level it is today. And we have these incredible M chips now because of it. And the design sensibilities that Apple bring to the table are unparalleled. No one has taste certainly at the hardware level like Apple does, even at the software level. I'd say there's a lot of taste left in Apple, but there's also some real sour taste now.

`4:03:34`

So they have to wash that off first I think before they find their wear back. But Apple's been in a mirage before, I mean Wozniak and Steve Jobs started this thing in the garage, has great success with the Apple II. He hands the company over to a sugar drink salesman who tanks the company into the '90s. He doesn't learn the lesson, spends the next 20 years building up this amazing company, then hands the company over again to a logistics person who presumably had more redeeming qualities than the first guy who put in charge, but still ends up leading the company astray. Now this is the norm. The norm is that great companies don't last forever. In the long arc of history, almost no company lasts forever. There are very few companies around that was here 100 years ago, even fewer 200 years ago. And virtually nothing that are 1000 years old outside of a handful of Japanese sorts makers

`4:04:35`

or something like that, right? So you can get diluted into thinking that something is forever when you're in the moment. And they seem so large. Apple could absolutely stumble and I think they have more reason to stumble now than ever. They're behind on AI, terribly behind. Their software quality is faltering in a bunch of ways. The competition is catching up on the hardware game in part because TSMC is not an Apple subsidiary, but a foundry that services a MD and NVIDIA and others who are now able to use the same kind of advanced processes. This is something I learned after not looking at PC hardware for the longest time, that holy smokes, AMD actually makes CPUs that are just as fast, if not faster than apples. They're not quite as efficient yet because ARM has some fundamental efficiencies over x86, but they're still pretty good. So Apple should have reason to worry. Apple's shareholders should have reason to be concerned. Not just about all these stumbles,

`4:05:36`

but also by the fact that Apple is run by old people. Apple's board has an average age of, I think, 75. Their entire executive team is above 60. Now that sounds horribly ageist. And in some ways, it a little bit is. In the same way, I'm ageist against myself. Like I'm 45 now and I sort of kind of have to force myself to really get into AI because it is such a paradigm shift and a lot of people when they reach a certain age are just happy to stay with what they know. They don't wanna go back to being a beginner. They don't wanna go back to having to relearn everything. And I think like, ah, this is a little hard for me at 45. How the hell do you do that at 75? — I have to come back to, you mentioned it earlier, you're a parent. Can you speak to the impact that becoming a father has had on your life? — I think what's funny about fatherhood is that for me, I wasn't even sure it's something I wanted.