What do the Apple Vision Pro, Humane AI, and the AI Tab necklace say about the future of AI hardware?
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I'm Yasmin Gagne. I'm Josh Christensen. And this is Most Innovative Companies.

On today's episode, Fast Company's Global Design Editor, Mark Wilson. I also think that, like, your AI hardware of the future is your phone. Farah Hameedi. I like design and I like excellence, so, like, it was just, it made sense. And as always, keeping tabs. Anyways, Final Fantasy VII Rebirth coming out February 29th. I won't be getting any work done after that week. But first, here's the download. ♪

The news you need to know this week in the world of business and innovation. The European Union is investigating TikTok.

Specifically, they are looking into whether TikTok's current design can help keep young people safe on the app. This is all because a year ago, the EU put into effect the Digital Services Act that aims to flag harmful content, prohibit ads targeted at kids, and help users bypass algorithmic recommendations. When I was a kid, the only TikTok we had was the Kesha song. Wow, that's dating you there.

Straight up millennials. I thought you were going to make like a AOL Kids reference. That was kind of where I came onto the internet in the mid to late 90s. AOL Kids?

Huh. You don't remember that at all? Were you an AOL girl? I had AIM. I had the European version of AIM, which was MSN Messenger. Oh, yeah. I remember MSN. I did have AIM. AOL Kids was something like that was a little bit before that in like 1995, 96. I was on like AOL Kids. My family was living in Haiti at that point, so not a priority for us. Anyway, more social media news.

Meta announced plans to only suggest political content to users who requested in their settings on Instagram and threads. Lol, threads. Still around. Yeah, they just had to throw that in there, on there. Also, you know the people who are going to request that?

That news are the worst people to receive that news. Crazy. This is a huge shift from the last two presidential cycles. In 2016, Facebook sponsored debates and chased political advertising. And in 2020, Facebook used its platform to register voters.

Instead, this year, Mark Zuckerberg had a change of heart, I suppose. He said he's trying to, quote, turn down the temperature on political discourse. From 1,000 degrees Fahrenheit to 900 degrees Fahrenheit. Our next news story, NVIDIA is now the third largest U.S. company with a market cap of $1.825 trillion.

The chipmaker is now ranked higher than Alphabet, which has a cap of $1.82 trillion. It's really that .005 that makes all the difference. Right. Because really, in the trillions, it's the fractions that make a difference. It's actually a real, a lot of money. I'd take that .005. Yeah, so NVIDIA, get ass with that .005 trillion or $5 billion. Just buy our magazine, NVIDIA. Yeah.

Analysts expect NVIDIA's Q4 profits to exceed $11 billion, which would represent a 400% year-over-year increase. All of this is to do with AI, the revolution that won't stop. I said that incredulously, but really it's driving major change. I was like, this thing called AI, as if I didn't believe it. Yeah.

Capital One intends to buy Discover Financial Services for $35.3 billion. The aim of the merger is to compete against larger credit card issuers like Chase, Amex, and Citi. Did you ever have a Discover card? That was like a big thing in college. No, I didn't have a Discover card, but my parents had a Discover card when I was a little kid. I remember specifically when they'd be like, oh, what credit card do you want to put this on? The Discover card or the MasterCard? They had two credit cards.

One was a Discover, one was a MasterCard, I'm pretty sure. And the credit card numbers were... I'm kidding. Yeah.

And finally, the vibe session. Yes, vibe session may be coming to an end. Look it up. Americans seem to be feeling better about the economy. The University of Michigan's Monthly Consumer Sentiment Index marked a third straight month where optimism has grown. I feel like everything still is really expensive. Feels really expensive. It's still expensive. Not me being a vibe session victim. Exactly. Real victim of the vibe sesh.

And that's the news you need to know today.

So Josh, what is your latest and greatest beauty purchase? So unlike most uncivilized men, I actually do care about products and I moisturize my skin. I do try to like take care of myself. You do have great skin. You have great skin. Thank you. Thank you. That means a lot to me. I do try to like take care of my skin at least as much as I can. But like I'm a bald man. I have a beard as is such with white guys and podcasting.

Do you apply your face products all the way on the top of your head? Like where do you decide where to stop? I moisturize my head after I shave my head every time. So I do shave with a razor. So that's something that I do. But the biggest thing that I've started doing recently is using beard oil.

because like I feel like my beard gets very like scratchy and uncomfortable. Sometimes in beard oil really makes a huge difference. I don't do any specifically. What brand? Josh, this is your chance to be an influencer. It's Beard Club for Men that I use. It's just a delivery service. It's specifically jojoba oil. It makes a difference. I do care about that quite a lot. And also it moisturizes the beard, which is a huge,

Huge pain because beards can get really, really uncomfortable. Yeah, ingrown hair is a total nightmare. Huge thing. What about you? Have you made any big beauty purchases recently? So I actually have. I want to shout out to people. As some people know, I had an operation and then I was on bed rest for a long time in January. And then I was like, I got to get my shit together. I need to like...

feel better. And I embarked on a journey to do that. And I got a facial with Sofia Coppola's facialist. I saw this on your Instagram story. Again, follow us on Instagram at the Joshua Chris at Yazzy G. Yep. At Yazzy G. Kristen May Lee. And she somehow cured my TMJ. She did like this amazing massage inside my mouth, which is nuts. That's

Crazy. Yeah, they put like rubber gloves on them. Anyway, I'll just say it worked. It was amazing. And then I got my brows done. You may know from reading some pieces I've written in the cut that I do care a lot about eyebrows by Diana Augustoni. They both work out of Onda Beauty in Tribeca. I'm not sponsored, but I love them and they've changed my life. And they both recommended some products that I've been using. I've never gotten my eyebrows done. I have very delicate eyebrows, naturally. You do have delicate eyebrows.

See, I have the opposite. I have big brown girl eyebrows. Yeah, no, I have, I don't know. They're becoming like drag queen eyebrows to a certain extent now. They're just thinning. They're out there. But we'll be talking more about beauty later because you have a really great panel discussion coming up later in the episode. But first, we're actually going to talk a little bit about AI hardware.

January was a big month for AI hardware, and we wanted to go over some of the biggest devices and tech out there at the moment. To help me dig into all this is Fast Company Global Design Editor, Mark Wilson. What a title. Welcome to the show. What a title. What a title. So let's start with this. The last...

Obviously, this was not AI hardware, but the last piece of hardware that I remember, aside from phones and watches, is the Google Glass. That's the last piece of hardware you remember? Nothing has happened since then. The last piece of, like, funky hardware. Well, yeah, that's kind of, like, broken through in this sort of way. For the Google Glass, for, like, rough reasons. Yeah. So why is AI hardware so hot right now? Did we learn nothing?

It is so fascinating where Google Glass was, I mean, it was like this moment in time. And then I feel like there was, like, we all forgot about it, right? Like we just all, I don't know what to say, repressed it or whatever else. And now like 10 years later, we're like 100% back, right? We're like all in. But you know, right now, obviously, LLMs and modern AI just blew everything up, right? And there's just untold billions going into this space right now.

Obviously, that is just all software at its core. AI is really just software. But for a lot of people, it's kind of created this opportunity to create something that might supersede the iPhone and might supersede all of the smartphones we've had today. Hardware's been boring because your phone does everything, right? - That's true. - Apple came around and they just solved it. You don't need 100 different gadgets, you just use your phone.

And your phone does more and more and more. And so AI came around. It's like, oh, AI can do all this stuff that software today can't do. And so then, you know, a basic question can be build hardware that does something extra special with that AI software. I don't know. That's that's sort of the that's the dream at the moment. And is more VC money pouring into it? It's interesting. Most investment in AI hardware right now is the stuff you don't see, which is, you know, microprocessors.

So, you know, new silicon is being developed to train AI models and run very specialized software that's used for tasks like drug discovery. A lot of people don't realize that Pfizer used AI coupled with specialized chips to develop Paxlovid. And untold billions are going into just microprocessors right now. But in terms of consumer-facing hardware...

That really kicked off in late 2023 with news that OpenAI's Sam Altman had teamed up with Johnny Ives, a design firm he loved from, to work on what's called the iPhone of AI. And they have a billion dollars from SoftBank to develop that. But it's probably a long way off. And in the meantime, we've seen several other startups sharing designs we'll see this year.

So let's talk about some of the devices on the market. Well, we're going to go through the ones that stand out most to you. Tell me about the Tab AI necklace. Yeah, so the Tab AI necklace is, it's a little pendant and it sits around your neck. It's like a plastic Mr. T or something. I don't know. But all it is really is a microphone and it records you all the time.

And it records you for 30 hours on a charge. And the idea is that all of those recordings are then fed to this AI that we don't exactly know what it'll do yet. Oh, comforting. Ooh, that's nice. Exactly. The founder, Avi Shiffman, really became...

like a moderate level celebrity online for building COVID tracking system really early in COVID that like everybody used, like all around the world. And he's like this 21 year old, now he's a Harvard dropout. But, you know, he's really been known for making really quick, minimal viable products for philanthropic projects. And he kind of has gotten burned out by that whole world of philanthropy. He's like, I'm done. I'm done helping people.

I'm done helping people. No, I mean, I think I'm done. I'm done trying to help people in this sector might be how he positioned it. But yes, I mean, you know, he did sort of walk away from that to, you know, to try to become, you know, the next big Silicon Valley inventor for sure. Mm.

So he's working on Tab. It's really hard to say exactly where it'll be beyond this necklace, right? Like it's a necklace. He imagines one day everybody will wear it. But what will you do with if you had all of your conversations recorded ever? What does that really become? I'd like relive all my darkest moments. You know, when you're like in bed and you're like, why did I say that thing? Now you can go back and listen again. It's the 4 a.m. insight machine that's like, no, you were right. You shouldn't have said that. Yeah.

I was going to say that sounds so creepy, but I'm like, I'm wearing an aura ring that's like going to tell me when my next period is. It's over for us. So I want to talk a little bit about another device called Rabbit R1, which does sound like a vibrator, but you need to explain to me what it is. Well, Rabbit's no longer a vibrator, at least in this context. Oh, okay.

I believe the rabbit vibrator is still around, right? But this one is actually a product that is being created by this guy, Jesse Liu, and the company Teenage Engineering. And if you've heard of Teenage Engineering, they are just this really hot retro hardware synthesizer company. They basically build every type of audio gadget imaginable. Oh, that's cool. Yeah.

literally half the internet loves them, right? Like everything they release is kind of like sells out. And so the rabbit itself is, it's basically a walkie talkie for talking to AI. It's the best way I can describe it. It's a big...

I mean, it's like a big, chunky piece of like orange, has a screen on it, has a big button on the side. And, you know, you can basically hold it up and talk to it like you would Siri or something. But the core premise is that you'll actually be able to use this machine and I think a dashboard, you know, in your web browser or whatever to actually train little rabbits.

And these rabbits are sort of like your little AI agents and they go and do tiny jobs for you. So they might learn how to remove a watermark in Photoshop. So you could just say, "Hey, go do this." And once you train it once, it could potentially do it forever.

And what they imagine is that all these rabbits will be like new apps like we have in the app store today. Right. So if I if I created this rabbit, then, you know, you might download it. I might get a little bit of money out of that. And their ecosystem builds and builds and builds. This totally like the rabbit R1 just totally went nuts in early January. CES, the Consumer Electronics Show was going on. And basically nobody was paying attention to anything there because the restaurant was

The Rabbit came out. Right. Or, you know, that was announced, I should say. It's priced at $199. It's not bad. Yeah, for teenage engineering stuff, it's really cheap. They sell a $1,500 tape recorder or audio recorder, right? So, like, by comparison, it's like a total steal.

You know, they've sold tens of thousands of pre-orders at this point, which is, I believe, the most successful AI hardware launch like we know about. It's still not out yet, but it'll be kind of interesting to watch if people actually kind of use it longer term. That's cool. I always think about like, you know, whether it's actually a real person just quickly removing Photoshop, Photoshop watermarks at the end.

I mean, absolutely. There was a startup that was literally their model, right? Wait, really? They answered emails for you with people. You basically had a personal assistant that was supposed to be an AI, but they hadn't created the AI yet. So they had people who would just set up calls and things for you and your email for you. And their idea was kind of good, which was that you would... Who was it? These...

The idea is that you could, you know, they would create training data that they could train an AI on with all these conversations. Right. So like that part of the business model makes sense. Yes. But I think none of us are surprised that they're not around today. Right. So yeah. I think isn't that sort of an interesting thing with all this AI hardware and any sort of technological revolution? Just talking about like removing watermarks from pictures that like...

All of this technology comes out and there's some people are going to use it to its full potential. But that's like a really small percentage of people. Whereas like most people are going to use it if they're going to use it for the simplest things. And then like I remember when I was in college, I bought an iPad so I could play a larger version of Fruit Ninja.

like that's literally kind of what i i bought it i convinced myself it was like this is no this is gonna help me work it's gonna help me like in school and do some things and all i really did on it was play fruit ninja but that's kind of what happens like there's a lowest common denominator factor for just everyday people that you need to kind of hit for this technology to scale right to be fair fruit ninja is really good on that it's a great game on the ipad really really scales

It does scale. That extra like four inches really brings the inner samurai out. That's so good. When my dad worked for Microsoft and he was in the legal department, so not necessarily the most tech savvy, and this was in the 2010s, he'd be like, listen, one day we're going to have desks where you can move windows around. You won't even need an iPhone. I was like, what?

Now I think back to that, I'm like, what was the plan there? What did you think you meant? I know.

Why does Rabbit need to be hardware? Like, Rabbit could be an app, right? Yeah, I mean, this is the question a million people have asked, and I think it's 100% valid. Rabbit could be an app. So there's a few reasons, you know, talking to Jesse about it. And in a past life, like, Jesse created an AI startup, and he sold it to Baidu. And, you know, he's been a really successful, you know, AI entrepreneur in the past, and

And he's also had apps that have like 5 million installs across operating systems. And he points out a few things. Like one, it's like super expensive to maintain apps on Android and iOS if you're like doing a really high level of it, right? It just takes a lot of constant updating,

Then at the same time, at any moment, Apple and Google are both likely to upgrade their own personal assistants in their phones. Right. Right. And so any AI you put onto a phone right now in an app today will be competing with that inevitability. And I think that scares the hell out of everybody who wants to sort of innovate in the space. They'd be like competing with Siri, basically. Exactly. Yeah. Like rabbits are competing with Siri. And, you know, that...

That's somewhat challenging. He also worries that Apple will literally just see his code. And that makes him a bit paranoid in terms of like protecting IP and any innovations, you know, he feels like the software has. Like he was just frankly like, look, building hardware makes us a lot more defensible. Because if you, you know, if you buy, essentially, if you buy my app on a dedicated piece of hardware, you'll have like more loyalty to it. And then if it's just another app on your phone, and he's 100% right about pretty much all of that.

as far as I'm concerned. Yeah. You know, at the same time, like, why is it an app? You can still ask that as an end consumer. God, and can you imagine you'd look like such a dork pulling out an orange walkie-talkie on the street and being like, delete email from Josh. Yeah.

I mean, that's the appeal to part of this audience, right? It's like pulling out the orange walkie-talkie on the street. But 100%. Or like in the boardroom, like, yeah, make sure, you know, solve the stock. I don't know. I don't know what you do. I don't know what you do in these situations. Solve the stock. Rabbit, make me millions. Exactly.

Exactly. So let's talk about the Humane pin, which has always been a really funny name to me. I feel like if you put Humane in your title, I'm instantly wary of you. Yeah, I'm like, you're a robot. You know what I mean? It's just like dry. It's like the Streisand effect of naming products. You're saying like, I'm not a murderer. Hi, my name's Mark. I've never murdered anybody. Yeah, you didn't. Why did you need to start with that? Okay.

All right. So you made us $240 million in funding, which is quite a bit of funding from some pretty famous people. Let's talk about it. Yeah, it's a lot of funding. You know, $240 million is said from people like Salesforce CEO Mark Benioff, OpenAI CEO Sam Altman. And, you know, they gave us money to...

largely on the reputation of Imran Chaudhry, who was a designer at Apple who actually worked on like the original iPhone and a lot of other projects. So he came out basically saying that we had this world that we built with too many screens, which I think a lot of people generally agree with that premise. And he wanted to create a device that sort of

went the other direction, a screen-free device. And so the AI pen is literally a lapel pen, and I think pretty clearly inspired by the Star Trek lapel pen, right? So you tap it to like, you know, you tap it to talk to the AI, you tap it to take a picture,

You know, one kind of twist is that you can hold your hand out in front of you and it will project this like laser green 1980s film war game style looking thing on your hand. When everybody like first saw ads for it, like it seemed, you know, somewhat compelling, right? Yeah, totally. It was really fast. And if, you know, it could work like, wow, I can just get off my phone and like just not live that life anymore. But, you know, I visited Humane in late 2023 and it's,

Imran and his co-founder and wife Bethany walked me through the device. Look, they put a whole lot of money into this hardware, there's no question, but at the same time, everything was really slow. Things barely seemed like they worked. I mean, just to be very frank about it.

They've had to do layoffs in the last month or two. This is still going to come out a little bit this year. But I don't know. Signs aren't great for Humane's future if you look around the internet. And there's a lot of memes. There's just a lot of memes. So I've seen the memes. I know it's janky. But when you were with Imran, did you get to test it out? When you go to these events, a lot of time you walk into a company and they'll show you how something works. And then you're like, oh, cool, I'll try it. Yeah. So I met Humane. I'm like, oh, cool, I'll try it now. And they're like...

uh, and you know, everybody kind of looks around and then a PR person's like, oh, I'm sorry, you cannot try the humane AI pit yet. Uh,

Big Theranos vibes. It wasn't a great time. But, you know, at the same time, you look at everything they've done. Like, they raised a whole lot of money and they did this sort of in the late 2010s. And they were building this big AI platform then. And then all of this modern open AI stuff came out, you know, 18 months ago. Right. And so you imagine they built all this stuff and then these open source models started leaking around the internet. They could do more than what they had built probably. Right.

Yeah. Like, what do you do, you know, when you're trying to release the iPhone killer or something in that moment? It just had to, like, rock their business. Yeah, that would be like if another podcast came out with smarter people called Most Innovative Companies Ever. Exclamation point. Yeah. And in terms of getting smarter people, not a high bar. Yeah, I know. Really?

We got to do better than Yaz and Josh. Oh, OK. But, you know, the Humane Pin's also been in fashion, right? Like Naomi Campbell's worn it. They've done a big marketing push around it. I mean, yeah, it debuted at Paris Fashion Week during the Caperni show on Naomi Campbell. It's like they choreographed, you know, some really amazing moments. And so seeing the company face plant now is amazing.

Pretty shocking. Like, if the pin fails, this is like one of those historic...

Silicon Valley failures for sure. Yeah, that's tough. I mean, smart move for them to play. It's kind of excited about them to face plant. I mean, it is a smart move to make it part of because I think this is always like the stumbling block with a lot of wearables is that it needs to fit into like fashion culture as well, because that's important to a lot of people. So it is a smart move to market as Dan von Furstenberg had a fashion show where everyone wore Google glasses.

Yeah. Google brought DVF in and it did. It just wasn't a good product either. That's the other thing. So I think we have to talk about the, uh, the sort of elephant in the room here, which is the Apple vision pro talk about sleek, uh,

not noticeable design. It just blends in. I've said it before. I'll say it again. The minute Josh wears an Apple Vision Pro, I will slap it off his head. I just like, I want to cut to, no, cut to like, you never taking it off, Josh, right? Just like, it's always on. Oh my God. I'll be that guy coming out of the cyber truck. Just like, yeah.

And it's just me playing Fruit Ninja. You haven't tried Fruit Ninja on the Vision Pro. Honestly, Fruit Ninja on the Apple Vision Pro would be sick. Yeah.

I actually think it exists. That's so funny. But I think you could actually demo it. Yes, I need to do that. I'm going to walk in. Hi-ya! So, Mark, have you worn the glasses? I have worn the glasses. Sick. Do you have neck problems because of it? Because it's a pound and a half. It's not insignificant. I have neck problems for writing books.

tens of thousands of stories on my laptop. That's true. Not from Division Pro yet. I tried it. It is heavy. Like it's heavy on your head, but it's not like a crazy weight on your head, right? Like I think it'd probably be tiring over time or whatever, but I don't know that's the biggest problem with it, right? Like I think the larger challenge for Apple is what will you do with it? How long do you want to wear it to begin with? Do you really want to wear it for hours on end anyway? And things like that, rather than like the actual weight of the device, et cetera, right now.

Because I don't know if like making this thing two ounces or three ounces lighter is really what's going to make a billion people buy it, right? Yeah, it just needs to look cooler. So when you're in the Vision Pro, your eyes are your mouse. Is that right? Yeah. So it's basically like the best analogy I have, because you're really looking at a screen, right? And the screen is somewhat of a cross between virtual reality and

augmented reality. And so it's almost like living life in your car's backup camera or something. Like you see the world, but it's not quite perfectly one-to-one. And then yes, like a big window pops up with apps and all that's very familiar because it's like very related to your iPhone's design language.

You just look at anything you want to click and then you tap your fingers together. And your fingers can be like anywhere because the Vision Pro has literally like, I don't know, 20,000 cameras on it. I have no idea.

Yeah, now for our audio medium, Yaz was putting two of her index fingers on both hands like this together, which is I think what all boomers would do in the way that people text like looking back. But what Mark meant was like thumb and forefinger tap, tap, tap. Yes.

When I was a kid, if I like hated someone in class, I'd like look at their head, you know, and squash them. And squish them like a grape? Yeah. That's a classic. It's a grape squish. Yeah, that's what they call it. So you grape swish, you don't ET phone home. Like it's...

I'm an idiot, guys. That was really so stupid. Honestly, when the next generations are like Gen... What's the one before? Gen Alpha. Gen Alpha. Is like all into the glass. We're going to be what boomers are today with our technology going like, oh, I got...

My Apple Vision Pro, I got to select that. And clicking their fingers together, that's what we're going to do. Does it give you, because this happens to me whenever I wear an Oculus headset, does it give you motion sickness? I didn't get any motion sickness in it. What Apple has done well is just like refine the hell out of everything as much as they can. Yeah. So it's like, it's super responsive. Everything's very polished, you know, within certain lanes.

I didn't really get motion sick at all. But at the same time, you're half in the real world and half in their world. Half in the computer, essentially. There's even a little knob you can twist and fade the world out or bring it back in. And for some reason...

They did like just a lot of work around like proprioception and just all sorts of tiny things that I think stop you from vomiting everywhere. Yeah. In terms of using it day to day, I know you had a demo where you disassembled an F1 car and you met a dinosaur, which look, not everyday experiences. Like.

Like, what could you use it for in your job? What Apple did, I think, very, very cleverly is they've already integrated it with, like, your laptop and other things. And so if you use a MacBook and you put on a Vision Pro, your MacBook screen can become, like, a giant screen over your MacBook.

Got it. Basically, what I call a sports bar UI is the big sell right now, which is that you can put apps and screens like all around you everywhere. And I think there is a...

a certain super hardcore PC user who always wants more monitors. And this to them is the greatest invention like ever conceived, right? Because like you see demos of people with like 20 screens around their living room and it's absolutely ridiculous. And I don't think that practice will like maintain by any means. Like as people actually use this, I think it's like a lot of also done for social. But there is something to say about having

essentially no limitations on where you want to put information in your environment. Totally. My husband had a coworker who he totally hated and he doesn't hate anyone. He's like way nicer than me. And he'd be like, hey, like kid, did you get this thing done? And he'd be like, bro, I literally have nine screens. That's how much work I have on. Yeah.

Did you complete the task? That's a Vision Pro user. Yeah, exactly. Exactly. I just need three more screens and I got this down. His logic is the more screens I have, it means the more work I do. That's what I mean. It would be like... Correlation doesn't equal causation. Fruit Ninja on one screen. Yeah.

I've got Daily Mail articles up on my nine screens reading all of that. That's all it is. It's all just things like Tom Hanks is looking old now. How did that happen? But from the Daily Mail. I was just going to ask, are you literally using the Vision Pro right now? And then I realized you don't have anything on your eyes. No, you look like a human. Yeah, rather than like a weird blob. I mean, we do need to do an interview. Oh, no.

I don't know what to call their avatars. Yeah, this is that. The future of digital legacy is really kind of going to amp up with these sorts of things. That's ultimately where I think is that no one will die for you. I mean, they'll still die, but you can just recreate them with this humane app and the

all the things that are recording you all the time. You can just create AI-generated versions of your loved ones after they pass away, and you can see them on the Apple Vision Pro and interact with them. A very poignant Black Mirror episode about that. So, Mark, we've sort of gone through a bunch of big...

AI hardware innovation. Some are going well, some are not, but it's still kind of unproven. What do you think is the future of AI hardware at the moment? Look, my thought on this is that nothing we're seeing today, right, is what we're going to be using in five and 10 years, right? Like we haven't seen like the iPhone of AI or whatever that is yet. But I do think there's a strong parallel if you look to how smartphones, you know, were developed, which is that like we had a decade of just weird phones, right? We had like...

We had the Motorola Razr. Don't talk about the Razr like that. No, I mean, look, I was at Motorola for their anniversary. It was, like, amazing. I talked to all the guys who created it. It was, like, fantastic. But, you know, they had the Razr. You had the Sidekick. You know, you just had, like, all of these experimentations with form. In the Matrix, they had, like, that phone that, like, had a bottom that popped out. And that was, like, a big reveal in the Matrix, right? Yeah.

And the iPhone came around and just like nuked all of that. And now we all essentially use the exact same device sold by different brands. I think it's reasonable to think that something very similar will happen to the AI hardware. I also think that like your AI hardware of the future is your phone, right? Like for the next five years, I do think whomever like builds that layer, whether that's that Siri layer or whatever else,

to really be a step more responsive and intelligent will just like add so much utility to people's lives because Apple already has all of your apps and stuff, right? Like Google already has all these connections. You know, starting from scratch is enticing because none of these companies have any product debt. Like they don't have to maintain all of these other, you know, pieces of the puzzle that mess up their UIs. But yeah, like 100%, I think like in the near future, AI hardware is literally just your phone. Yeah.

You're like, we've talked about all these inventions, but like, let's be honest. To wrap up a five hour conversation, it's your phone. We're going to take a quick break, followed by my conversation with Starface president Cara Brothers, Volition founder and CEO Patricia Santos, and beauty entrepreneur and makeup artist Farrah Hamedi.

In 2022, the beauty market, defined as skincare, fragrance, makeup, and hair care, generated approximately $430 billion in revenue. Today, beauty is on an upward trajectory across all categories. We're talking to Cara Brothers, the president of Starface, which makes those star-shaped acne patches that are so popular with Gen Z on social media. Patricia Santos, the founder of Volition Beauty and a VC.

who works with influencers to launch products for their audience, and makeup artist and luxury brand founder Farah Hamedi, whose lip compacts have become a must-have fashion accessory. We're trying to understand how the beauty industry is changing as it grows. I started the conversation by asking Cara about how her company connects with Gen Z on social media. So Starface, at its core, of course, is really about flipping that acne experience completely on its head. You know, something that was...

can be pretty sad or isolating for most people, or at least pretty annoying where you want to kind of turn your Zoom camera off or cancel the date or et cetera. We decided to just like put some fun into it, change it up completely and make it a moment to kind of like show yourself and accessorize your outfit.

And that has really lended itself really well to social media, of course. So our customers and our community take a lot of pride in their looks that they make with our patches and then post it. It started off in COVID. So a lot of people are at home posting their look. But now you see people out in the world. And so I feel like our connection point on social media is kind of driven by our audience posting how they feel and how they're deciding to show up with their patches.

Patricia, prior to starting Volition, you worked as a VC in the beauty space. That's right. And beauty is an unbelievably saturated category. There are new brands popping up every single day. What are some ways you see companies kind of breaking through the noise? It's getting harder. It's getting harder. I think I started investing in beauty back in 2005. Oh my gosh, so pre-Instagram. Yeah.

Pre-Instagram, I was investing in beauty before Sephora was a thing, when women were still buying beauty products from department stores. Remember that? Let me say, that was like a curse time. I was in middle school. Somebody should have taken that Maybelline Dream Matte Mousse in the incorrect shade away from me. What?

We've come so far. We have come so far. So I've seen sort of peaks and troughs of the cyclical funding cycle. And I think where we are now, we've just come out of one of the biggest peaks I've ever seen where VCs and private equity folks came into the beauty industry, started funding a ton of companies.

and have all of a sudden pulled back. I think actually like all VC funding for consumer brands in 2023 is at half of the level that it was in 2022. And there's just this rapid decline of investor interest in the space.

And so what I've seen happening is a lot of brands have had to, you know, they've been forced to go back to being scrappy and doing what works. I think there's been about five years where it was just about chasing growth, not caring about tax, overestimating lifetime value, just investing, investing in top line and not really caring about building profit. And I think the successful brands now are really having to self-fund

in a way, really figuring out how to run on lean operations. - What's a brand that you think is doing that really well? - So we work with a lot of brands. So we have, you know, Volition Beauty is our creator-led beauty brand where we work with creators and we help them make products. But we also have our creator brands white label platform where we work with creators who either wanna start their brands or have existing brands

And we're sort of this one-stop shop for them where we do everything from product development to manufacturing all the way to retailer sales and distribution. We work with a lot of brands who have come to us and said, hey, can you help me sort of refine my operations? So those are the brands I think are

are doing well in a way because they know what's coming and they know how the funding is drying up. - Speaking of creator led brands, Farah, I wanna turn to you. The McKinsey report I mentioned earlier said that the premium tier in beauty is projected to grow at an annual rate of 8%

between 2022 and 2027 as consumers basically increase their spending, especially on fragrance and makeup. Your lip compacts, which I'm frankly obsessed with, I'm wearing nude too right now, but the lighting here is bad and I don't do it justice. Yes, you do.

But your lip compacts are priced at $85, and they've made a splash. I mean, the Wall Street Journal basically called them a status symbol this year. Tell me about how you thought about creating this kind of luxury beauty experience. So the compacts are actually $88. $88. They're not even $85. Yeah.

Good job, Yaz. So I think for me, it was really about creating items that I really coveted and that I wanted in my bag. And I think I just feel like there's so much, you know, fast beauty, fast fashion, you know, kind of fast everything right now. And I really wanted to slow things down, which is why part of our ethos is slow beauty.

I think people are, and myself included, are interested in purchasing less, but purchasing quality. They're really interested in the story, where things are made. They're interested in the quality of the products, what the ingredients are. And for me, working in the fashion industry, you know, I love beautiful things. And design is, you know, the kind of thing that gets me going, like little details.

And so if I was going to create anything, I wanted it to be something that I felt like really proud of and that I thought stood out on the shelves as well, because there's so much brands trying to be the next Glossier or that sort of thing. Right. And so I wanted to be my own thing, really. Yeah.

Part of that is, you know, working with best manufacturers and labs and things like that, which are expensive, but I don't know. I like design and I like excellence. So it was just, it made sense. And I think maybe like going back a little bit too with there's so much out there. So what helps a brand stand out or what is different about a brand? And I think like trying to speak in some way to like volumes of people, like,

feels like you're trying to like cast a wide net. And I think that like niche things actually find an audience. Like if you're true and authentic to yourself, like your fans and people will come, you know what I mean? And I think people are afraid to put themselves out there like that.

I was as well. I was contemplating, do I name it my name? Is that too personal? And all that sort of thing. You're obviously well regarded in the industry, but you're not a celebrity, right? Right. How did you end up settling on using your name? I tried to kind of separate my artistry from the brand. And no matter how I kind of

tried to figure out that puzzle, it was like it just kept coming back to the fact that I was pouring all of my knowledge and all of the things that I liked, including color and shape and into this thing. And it kind of became a product or a brand that I felt like was so me that I couldn't really take myself out of it. And then on top of that, I think brands that are luxury

you rarely see an ethnic name that goes with it. So I thought that was something special. Yeah, I love that. Patricia, I want to come back to you and actually talk a little bit more about sort of celebrity makeup and skincare brand launches. It seems like we see one every week. I recently saw performance artist Marina Abramovic, who I love, launched a line recently, which felt random to me. To you, what makes a successful influencer or celebrity-led launch?

It's a crowded space. So I 100% agree with you, Yaz. I think there's been a lot of success stories. And whenever you have, you know, success like Rihanna and Fenty and Selena Gomez and Rare Beauty, even, you know, Hailey Bieber and Rhodes, right? Like whenever you have success, people are going to think, okay, I can do one too. I can do that too. And everyone sort of seems to forget, you know, some of the not so successful brands that have been launched by celebrities.

But I do think that the future of brands, it will be creator-led, right? Like I think that consumers these days, they're not connecting with faceless conglomerate brands anymore, right? Like I think founder stories like Farrah's are extremely important, founder faces and

those things are going to be how I think consumers think about their connection with a brand and the authenticity of that brand. Cara, I want to sort of talk a little bit about something similar with you, which is Starface has really taken off with Gen Z shoppers. I'm a millennial. I've used Starface because I have acne, but...

I'm curious what difference you see in terms of shopping behaviors from the generations. I say this like we hear about the Sephora teen all the time. Yeah, I love this. And I actually kind of want to chat about the kind of creator thing.

like lead brands as well. It's just super, super interesting. And it's fun because Starface has taken this totally opposite approach where our mascot is a big yellow cube. And we were talking about connecting on social media and it's kind of, we use this big yellow cube that came from outer space and doesn't understand why people are so rude about people having pimples. And we use this kind of like,

super lo-fi friendly voice. And that's how we talk and express ourselves, period. And especially on social media. And I feel like that's really resonated. And I totally agree with Patricia on just like customers want to connect with something, a human being, a character, you

Farrah, I love that point about just like that ethnic name with a luxury brand, like there definitely needs to mean something for sure. And so when we talk about the younger audience, I think that that all is going to be even more true. And at Starface, we are noticing that customers are getting younger and younger. And I'm sure that's not new, but it's something that I've noticed in my three years leading the company.

And what we're learning is that young people are actually entering to beauty partly because of the fun of the industry, you know, because of how it makes them feel, because it can be a stress relief on their long days as well. And so I feel like

that's our job as brands is just to keep that authentic as an overused word. But what does it mean to be a part of what we're building and projecting that out? And I think that really resonates with young people. That makes total sense for me. I've given my cousins star face, right? It is funny when you hear about like 11 year olds trying to buy a drunk elephant retinol. You're like, no, we want your skin. Like,

Like what you have now is what I want. Exactly, exactly. When you say you've seen your customers get younger and younger, have you seen the average age shift or like, you know, is there any kind of data around that?

Yeah, I mean, at Starface specifically, we kind of like have a nice average split where we have this 30% millennial for sure. And then 30% Gen Z and then this 30% alpha and then the 10% is kind of parents buying for all of the humans. And it's just that that that alpha has grown. It wasn't quite 30%, I guess, a year ago. And it's true, you know, you want something.

friends of Gen Alpha, parents, whatever, are just concerned. Like you said, we want their skin. We want them to love themselves. We want them to like not try to change, not be worried about aging. But it's also like embracing this new generation into the fun and the play and the embracement of it all is kind of what we're hoping to do. Farrah, I hope there are no 10-year-olds buying your compacts.

I feel like that is some data that I wouldn't know because obviously they're not going to have the credit cards, right? So I wouldn't know that. But just to kind of, I guess, have an anecdote on this point, I was just seeing something on social media today where it was two women on a podcast and they were just flabbergasted by the fact that Sephora is now just full of these people

10 to like 14 year olds. And they're like, what are they doing buying all this makeup and this and that? And I personally, I mean, good thing to bring to a debate, but like, I personally feel like it's fun and it's a hobby. And if you think about other things that kids can be doing, like I find this to be benign. And if I were parents, I'd be like, yeah, this is expensive. But when we were young, we were also, you know, buying other things that were expensive. And

So this has now just been replaced with this hobby. And I being in the beauty industry and knowing how beauty can really like elevate your day and make you feel good or make you help you express yourself. Like, I really don't see the harm in it yet for young people to be into it. But no, I like that. And you told me you were kind of a Sephora teen. Yeah.

I was just a makeup baby. I love color, texture, dressing up, like all of that. I was totally into it. And I definitely, I think I told you the story, like going to school. And like, if my parents listen to this, I

I remember being probably in elementary school and walking to school because that's what we did at the time and sneaking lipstick on and then on the way home, taking it off and hoping it didn't stain my lips because I didn't want to be in trouble. But...

I think that's really cute. Patricia, I've got to sort of turn on you because Cara and Farah both talked about this, but what kind of data do you see around younger consumers and what they're looking for? I noticed the same things. My hypothesis is that it's a function of the advertising channels, right? I think...

I think that because a ton of the beauty brands, Sephora and Ulta, have all started moving their advertising dollars to platforms like TikTok, that's where they're bubbling up the demand for certain products, right? And as you see...

ROAS and productivity for platforms like Facebook and Instagram go down, more Facebook, but as users leave those platforms, you just end up putting a lot of your brand and your products out in front of a younger audience. And what's interesting to us is we definitely skew older. We're very millennial in terms of the volition brand.

But what we see is that once our customers take a break from social media and are no long, you know, stop their Instagram, they've been off Facebook for years, but don't yet migrate to TikTok. It's really hard to reach them now. That's interesting. To get new product launches in front of them, to get, you know, new newness of the brand in front of them. It's getting increasingly difficult now.

But, you know, I think one of the major drivers, I think, of the 10-year-olds and the 12-year-old explosion at Sephora is just where all the advertising dollars are going. Farrah, I'll ask you this first, although I'm curious about Cara and Patricia, feel free to jump in. Your products are refillable and...

I think I hear a lot that younger customers care about sustainability. I'm curious, A, if you think that's true, but also B, what are the other things they're caring about or looking for these days? I do think that they care about sustainability, obviously with climate change and everything that's very topical right now about what the world is going to be like and all of that stuff. I think that they are paying attention to

to waste and where they want to kind of like align themselves with as well. It's kind of like part of your persona in a way to be like, this is what I stand for.

So I definitely think that it's going that way. And as a makeup artist, you're not putting anything out into the world. You're doing a service. And so when I created the brand, I was like, OK, so now I'm actually creating something and I want to do that as responsibly as I can. I understand sometimes refills could be greenwashing. It depends on the component. It really just depends on how much of the material you're actually saving personally.

and all of that kind of stuff. But people are paying attention to that. And the response has been pretty overwhelming. And I also think people are paying attention to more brands that are thoughtful in general. I think it's more than just

refillable or sustainability, it's like a 360 approach. It's like, are you giving back? Like, what do you stand for? What are you doing with your packaging? Why did you create this product? Like all of those things, I think younger and younger people are paying attention to.

Patricia, I saw you nodding through part of that. Yeah, I know. You know, definitely we hear a ton. You know, we pride ourselves on really listening to our community. And, you know, whenever we launch something that is single use or, you know, has too much extra packaging, we definitely hear it. We're not quite at 100% recyclability. So, you know, we are definitely trying to get there and we've migrated all of our packaging to be more sustainable, etc. So I think

customers will be patient with you as a brand, as long as you're showing the effort and, you know, the sincere sort of mission to get better. That's what we found, at least. Cara, what do you think sort of emerging consumers are looking for or consumers are just increasingly looking for from brands? I don't have a ton to add on that. I totally, they're certainly watching out for

sustainability, probably like the over-indexing on like influencer kits and making sure that there's not a bunch of plastic for sure. But I think that they're just looking for like a brand that means something to them. Cuts through the noise in some way or another, honestly.

I have three questions that I'm going to ask all of you. And this is rapid fire. The first, Carl, I'll start with you. But next, we're going to have to think about this. What do you think is the next big trend we'll be seeing in beauty? I feel like we saw hair care explode. We've seen body care become big. Like, what do you think? This is a cop out because it's already happening. But I think nails, you know, nails on men or people who don't traditionally take care of their nails for sure. And also like...

like the scalp. I'm kind of here for like starting early in the beauty life cycle. Like what can you do to get your, your scalp going and, and that kind of stuff. Farrah, what do you think? I think hybrid products. I mean, I know that's not like overarching, like, Oh, it's nails or, you know, but I just think products that are multitasking maybe again, this might be a cop out, but I think cosmetics and skincare is, is,

already a thing, but how are we pushing that forward with formulation, meeting packaging, and, you know, that sort of thing. And Patricia, finally, what do you think? So I'll just talk about our brand because, you know, we make everything from, you know, skincare, body care, hair care, etc. And one of our best selling collections right now is Sunless Tan.

And I think it's interesting because I always thought of it as a very niche category. And we have a stellar creator behind the product that could be a confounding variable. But, you know, I think you saw SPF sort of explode and then everyone looked around and was like, damn, we're pale. Let's go to Sunless Tan. I don't know. That's my current theory. No, that's really interesting. Yeah.

All right. The next round is, and you can't say your own brand here, and Carl, we'll start with you. What's a brand that you think is really getting it right? I

I have to say something super random, like Uggs or Crocs for me. I mean, no offense to those brilliant brands, but I feel like a couple of years ago, I was just like, oh, why? And now I'm like, oh, cool. And it's just kind of like, there's something about the way that they have remained good businesses, but also have reentered the conversation. That's pretty smart.

I was talking to a middle school teacher friend of mine who was like, the amount of sprained ankles I see because of kids wearing platform Uggs. It's like you have no idea. Gosh, platform. That's a good one. Yeah, for sure. Farrah, what about you? I think as a culture, I think Patagonia is always leading the way. I feel like they're definitely looking out for the women. They're giving their employees amazing time off.

The way they give back is incredible. And then I think their product is also tried and true. And they've found a niche. It's kind of like athletic, but it's kind of like dad wear athletic. But, you know. Yeah, yeah. So in that way, I think it's cool because they're not trying to be anything but themselves. I should have asked you, too, for a beauty brand. I shouldn't have let you cop out, Cara. Yeah.

Patricia, what's your answer? I'll answer with it. I'll answer with some beauty brands. So of course, they're going to be, you know, founder led sort of creator led brands, because that's

That's where I spend my time. But I love what Casey is doing over at St. Jane. It's a Sephora brand. She makes flower-based serums. Just gorgeous, gorgeous brand. I love what Gloria Noto is doing over at Noto. She's an LA-based makeup artist, but a lot of her skis are actually very skincare-focused, gender-inclusive products.

It's just one of those brands that you know what it is when you see it. You know, you just, she has a very, very unique voice. I like that. So my last one, and this should be pretty, this is like fun and easy for you guys. What is your favorite product from your brand or can you preview a new one that is coming out soon?

And tell us about it. I wish so much I could preview something that's coming out, but I will not do that. I'm a big yellow fan. So Big Yellow is our hero skew. It's the yellow cube that's coming from outer space, our mascot. And it houses our hydrostars. And it's just cute. I mean, we were talking about, like, design. We took a lot of inspiration from makeup when making this. And it's just...

It feels really good in your hand. It's got a mirror so you can kind of check yourself out. And it's fun and silly, so it makes me happy. Farrah, what about you? I also don't know how much I can say, but I'll do my best.

So one of the things that I'm really known for in the beauty and fashion industry is this sort of kind of like raw yet sophisticated skin that I do. And it's almost like if you look at these images or you look at the runways, you imagine they just look like they came out of a spa or they're not really wearing anything, right? But somehow they look beautiful.

affected. And so in the past, as a makeup artist, it's taken me using a little bit of this and mixing it with that. And I like this texture, but then it doesn't have the shade range that I want, or this has the shade range, but it's not the texture that I want. So now I need to mix some moisturizer with it, you know, and all of that sort of thing. And so I wanted to create a complexion product that was

complexion considerate that I think has a beautiful range that fits a wide range of skin tones and that you could get this finish with this one product all in one place.

and that you can kind of customize your finish. Very exciting. I think it's revolutionary. There's nothing like it out there and I'm really excited. Patricia, I've got to ask you, what's your favorite product that you make and why? Sure. So my favorite product is actually one of our best-selling products since I think we launched it in like 2019. So it's been around a while. It's the Snow Mushroom Water Serum, which is just this super, super hydrating serum that

It's somewhere between like an essence and a serum. So it's a very, very soft liquidy texture, which I like. I don't love stickiness when it comes to serum unless I'm like wearing a full face of makeup. So I just love how it feels and how hydrated my skin feels afterwards. So that's one of our best selling serums. I think we sell one every two minutes. So it's a great product.

And then in terms of products that are coming out, we're very open about what we're launching. We have on our website page called The Lab where all of the products that we are pre-selling with our creator partners are on there.

And what I'm really excited about is we have about four hair SKUs that are coming out soon with different creators. That category I'm excited about because we're taking all our expertise from skincare and then applying it to the scalp. All right. Well, thank you all so much for taking the time. I feel like I could talk to you forever. I had so many more questions, but I appreciate it. Thank you. Thanks. Thanks so much. Yes.

Okay, we are back with Mark and it's time to wrap up the show with Keeping Tabs. This is where each one of us shares a story, a trend, or a company we are following right now. And Mark, since you're our guest, what are you keeping tabs on? I'm keeping tabs on Pal World. What? What? Do you know Pal World? No, what is this? Sounds like Neopets for adults. It does. Is this related to Tamagotchi? You nailed it right there, yes. Really? Yeah.

It's been called Pokemon with guns. Oh, no. So Palworld is, look, that's a crass generalization of Palworld, which I believe is the highest form of art. But Palworld is essentially like really a big Pokemon knockoff that has gotten, you know, I believe almost 20 million users within a week. Wow.

And people are playing it because it combines sort of the best of Pokemon, which is like capturing like, you know, all these little buddies. And then like a lot of other mechanics and video games that are also highly addictive. So it's like a super drug of the video game world, like a really refined game.

chemical lab drug and I'm playing with my six-year-old daughter and we're both obsessed and like drawing pals and things like that. Oh, that's awesome. It's entirely adorable, actually. There are some guns in it, but you know, you can kind of avoid some of them. As such is life. Josh, what are you keeping tabs on? In a similar video game-ish world, I'm keeping tabs on

on the upcoming release of the second edition of the Final Fantasy VII Remake. This one's called Final Fantasy VII Rebirth. For those of you who aren't video game fans, Final Fantasy VII was a PlayStation game from 1997. It's one of the most seminal video games in any sort of gamer's life.

Especially for millennials of my age, it was one of the first real video games that I played and completed and loved. It's an awesome game. The first edition of the remake was really, really fantastic. It's been three and a half years since the first edition of the remake came out.

And so I'm really excited to play this new version of it. Yaz, did you ever play? Are you a video game person? Or Mark, did you ever play? I wasn't. I had a Dance Dance Revolution. Okay, cool, cool. I did karaoke on my PlayStation, but that was...

Sort of the extent of it. Do either of you play Baldur's Gate? I do not play Baldur's Gate. I do play Baldur's. Yes. My husband gets stoned and plays Baldur's Gate every night. And I'm like, this needs to still like, this is like not healthy. Like we need to. The new Baldur's Gate is supposed to be like, like the best edition yet. So I hear. So I haven't gotten around to it though. You know, you can grab, you can grab a controller. I think it supports up to two players playing together. No. Mark, Mark, I'm too cool. I don't know.

I don't think you're up with the times. Video game culture is mainstream culture, yeah. So you're out of the loop. You're the uncool one. Whatever, guys. Anyways, Final Fantasy VII Rebirth coming out February 29th. I won't be getting any work done after that week. So, yeah, you might have a co-host guest instead of me. But, yes, what's your keeping tabs?

So I've brought her up a couple times. In fact, I brought her up on our recording yesterday. Taylor Swift. Now, I'm not a Swifty, but I also don't hate Taylor. I do think she did one incredibly lame thing, though. There's an awesome college student. Just one? No, she's done a bunch. But like, there's a college student. Kind of a brand of like, cool, like, like, affable, but a little cringe. You know what I mean? Yeah. No, but that I don't mind.

My thing is there's this college student who basically figured out how to check flight logs and has made a website to track the comings and goings of her private jet, which is like public information. But I still don't like that. Well, now she's trying to sue the college kid for harassing her. I think Elon Musk literally had the same narrative happen to him like a year ago. Yeah.

Yeah, I'm pretty sure that was happening. Someone was tracking Elon Musk's private jet. When you hear Elon Musk suing this guy, you're like, what an asshole. Then Taylor Swift, it's like, I don't know. She does need her privacy. Exactly. No, I think it's ridiculous that she's suing some sort of like this person instead of just like politely being like, hey, can you stop? And like starting there. Yeah. Also, sorry if you're going to fly a private jet around and like pollute that much, like it's fine. Yeah.

It's not like you're getting off the private jet into crowds. Like it's not, I don't know. This is a whole, you know what I mean? It's not like you're in a secure place when you land and then it's, that's all. Yeah, it's fine. I don't think it's that big of a deal. I don't think it's something you need to sue over. Yeah. Don't sue a college student also. Yeah. And don't sue Olivia Rodrigo either. Is that a thing?

Yeah. Okay, we got a sidebar about this. That's a sidebar whole thing. No, it was about like IP of like a song that Olivia Rodrigo wrote that was like too close to a Taylor Swift song. It's like music IP law is a whole thing. This stuff actually happens all the time. Oh, is this the thing that Vampire was about? I think so, yeah. Anyway. Or maybe not Vampire, but another one. Sorry. Anyways. That's it for Most Innovative Companies. Mark, thank you so much for joining us. Yeah, thanks for having me.

Our show is produced by Avery Miles, Blake Odom, and Julia Xu. Mix and sound design by Nicholas Torres. And our executive producer is Josh Christensen. Remember again to subscribe, rate, and review, and we'll see you next week.