The Shape of Two Trillion Dollars

Screen Shot 2018-08-04 at 10.01.35.png

$1trn dollars matters. Of course, it does. Commentators trying to make out that 'it's just a number' must all be 5ft11. 

And Apple's milestone should be a small but significant moment for all of us who have worked in technology and finance over the last decade. It's another sign that the industry is steadily growing and continuing to deliver results over the long term. Of course, Apple's success is built on the foundation of hardware, for which Jobs, Ive, Cook and in-house capabilities and culture take all credit, but building out infrastructure, platforms, apps and services that support the hardware and drive growth is the responsibility shared by the wider community. For this, we all score 1trn/1trn. 

As WIRED says, what matters more is whether Apple can stay there and whether Amazon and Alphabet - and Alibaba, in the not too distant future - will challenge its hegemony. Now comes the hard part... "It is making more money every day. It is led by a highly competent management team. The only urgency is an existential one and the awareness that every prior company that has reached Apple’s status has subsequently stumbled."

Whether charts can predict the future is debatable, but they do map progress, and the historical market cap of AAPL, AMZN and GOOGL tell a story that is unsurprising but significant. Looking at the three 10-year charts of market cap below, the difference in shape between AAPL and GOOGL on the one hand, and AMZN on the other is marked.

Like a Californian redwood, revenue-machine and all-singing-all-dancing broker, AMZN is stopping for nobody, incrementally growing and steepening over time, whereas GOOGL and AAPL, reliant on innovations, hardware releases and worldwide sales, leap and bound forward, overcoming setbacks and slow periods along the way.

Overcoming the 'hard part' means asking which model will suit to serve future growth and win the race to $2trn. You'd have to say Amazon, but I don't think it's that simple. 

Truth is, we don't know what Apple has hidden up its sleeve in Cupertino. We've never known. Hence, we don't know what will force investors into the stock in their droves and send the market cap further skyward. Famed for its secrecy, we've never been able to predict the next round of innovation before it is upon us. Sure, these magic moments (iPod release, iPhone release, iPad release) have become fewer and further between, but that is the way that Apple has always operated. Just when you think the end is nigh - they innovate and wow you once again. There's no reason to think that the $1trn mark is the end of this process. It's more likely just the start. 

And that's why their growth has its shape. That's why $1trn looks like that. That's the shape of evolution and nature, which is contrary in some respects to the rules of capitalism. As the great comedian, George Carlin, summarises: "It’s the American view that everything has to keep climbing: productivity, profits, even comedy. No time for reflection. No time to contract before another expansion. No time to grow up. No time to fuck up. No time to learn from your mistakes. But that notion goes against nature, which is cyclical."

Hence, I believe the shape of $2trn dollars looks more like Apple than Amazon because through all business cycles, innovation phases and evolution, history shows that the greatest companies may sometimes have to go back to go forward, but they keep driving forward. 

"Apple is America’s first $1 trillion company; it almost certainly won’t be the first $2 trillion company," says WIRED. Well, I wouldn't be so sure. 

Edward Playfair