1 00:00:00,000 --> 00:00:02,880 These people are doing it because they're too stupid 2 00:00:02,880 --> 00:00:05,040 to realize that what they're in is kind of a scam. 3 00:00:05,190 --> 00:00:07,680 I think that they're scamming in the sense that they're selling something 4 00:00:07,680 --> 00:00:10,500 they don't really understand, but they're not like, I think this will die. 5 00:00:10,740 --> 00:00:12,630 I think that they think this will go forever. 6 00:00:12,690 --> 00:00:16,290 Kind of like crypto and when I, this is the other thing, people 7 00:00:16,290 --> 00:00:18,420 with my work, they're like, oh, you started like a year ago. 8 00:00:19,320 --> 00:00:20,490 I was writing in 2020. 9 00:00:20,580 --> 00:00:22,140 I was on crypto before. 10 00:00:22,140 --> 00:00:22,860 Everyone. 11 00:00:27,780 --> 00:00:29,640 Welcome to Screaming in the Cloud. 12 00:00:29,730 --> 00:00:33,690 I'm Cory Quinn, and I've been looking forward to this episode for a while. 13 00:00:33,990 --> 00:00:38,370 Ed Zitron is the host of Better Offline, the writer of Where's Your 14 00:00:38,370 --> 00:00:42,990 Ed at Newsletter and has often been referred to as an AI skeptic. 15 00:00:43,170 --> 00:00:47,760 I tend to view him as much more of an AI realist, but we'll get into that. 16 00:00:48,030 --> 00:00:49,770 Ed, thank you for joining me. 17 00:00:50,160 --> 00:00:51,060 Thank you for having me. 18 00:00:53,265 --> 00:00:57,585 So you have been very vocal about AI and I, I wanna say your 19 00:00:57,585 --> 00:01:01,155 skepticism of it, but that feels like it's an unfair characterization. 20 00:01:01,155 --> 00:01:03,615 I think you're, you're approaching this from the perspective 21 00:01:03,615 --> 00:01:06,465 of you are trying to sell me something, I'm not going to buy 22 00:01:06,465 --> 00:01:10,155 it without examination, and the rest sort of flows from there. 23 00:01:10,785 --> 00:01:14,505 Yes, and that's the thing right now, and I've said this 24 00:01:14,505 --> 00:01:17,535 a few times in a few interviews, I am being and have been 25 00:01:17,535 --> 00:01:20,835 characterized as a radical because I'm like, Hey, this company 26 00:01:20,835 --> 00:01:23,685 loses billions of dollars and has no path to profitability. 27 00:01:23,685 --> 00:01:28,365 Or, Hey, none of these companies appear to be making much revenue, let alone 28 00:01:28,365 --> 00:01:32,265 profit, but they're spending so much money on this, is that sustainable? 29 00:01:32,265 --> 00:01:33,914 And people like, ed, you are crazy. 30 00:01:34,365 --> 00:01:35,475 You are crazy. 31 00:01:35,625 --> 00:01:39,345 I irrational person believe that these companies will 32 00:01:39,345 --> 00:01:42,045 simply work it out in some way that I cannot describe. 33 00:01:42,645 --> 00:01:43,785 I have blind faith. 34 00:01:43,845 --> 00:01:45,165 You are the radical for not 35 00:01:45,255 --> 00:01:45,645 Right? 36 00:01:45,645 --> 00:01:47,985 Strangely, when I try and pitch people on things with blind 37 00:01:47,985 --> 00:01:50,175 faith in them, they, they tend to ask a whole bunch of 38 00:01:50,175 --> 00:01:52,335 uncomfortable questions that I'm not prepared to answer. 39 00:01:52,335 --> 00:01:54,315 But nowadays with ai, when you ask those 40 00:01:54,315 --> 00:01:56,205 questions, you're treated like you are the problem. 41 00:01:56,295 --> 00:01:56,805 Exactly. 42 00:01:56,805 --> 00:02:01,305 You, it's like a gifted child that you have to, it's what is that, um, Twilight 43 00:02:01,305 --> 00:02:04,485 zone episode with the child that can dream, dream, thinks of something. 44 00:02:04,635 --> 00:02:06,795 It's just everyone wants to coddle AI in case it 45 00:02:06,795 --> 00:02:09,285 hurts them or in case it breaks the narrative. 46 00:02:09,525 --> 00:02:14,475 It's just, it's very frustrating because disagreeing with me is one thing. 47 00:02:14,505 --> 00:02:18,315 I do not have trouble with that unless the person is just like, their 48 00:02:18,315 --> 00:02:23,595 argument is no, because that is most of the response to my work is just nah. 49 00:02:24,315 --> 00:02:24,945 No, it's not. 50 00:02:25,305 --> 00:02:26,955 Well, I'm trying to sell something and if what you're 51 00:02:26,955 --> 00:02:29,445 saying is true, that impedes my ability to do that. 52 00:02:29,445 --> 00:02:30,525 So shut up, please. 53 00:02:30,825 --> 00:02:33,675 Yeah, could you, but even then, it's like it goes beyond that. 54 00:02:33,675 --> 00:02:35,355 'cause you've got tons of journalists as 55 00:02:35,355 --> 00:02:37,305 well who are just like, no, it's not true. 56 00:02:37,305 --> 00:02:38,115 They're gonna work it out. 57 00:02:38,115 --> 00:02:39,375 This is all part of the plan. 58 00:02:39,495 --> 00:02:40,425 What's the plan? 59 00:02:40,425 --> 00:02:41,715 Can you tell me the rest of it? 60 00:02:41,715 --> 00:02:45,885 Because it doesn't seem like a good plan unless the plan is raise as much 61 00:02:45,885 --> 00:02:50,565 money and get as much awareness as possible, which they've succeeded at. 62 00:02:50,595 --> 00:02:51,555 They've not made any money. 63 00:02:51,555 --> 00:02:53,715 In fact, they're not making much money at all. 64 00:02:53,715 --> 00:02:55,155 No one is making any money. 65 00:02:55,245 --> 00:02:59,085 I think there's like two profitable companies within this space. 66 00:02:59,595 --> 00:03:01,065 Maybe, maybe three. 67 00:03:01,740 --> 00:03:06,240 If we go back in time and we look at the standard generative AI chatbot or 68 00:03:06,240 --> 00:03:09,960 coding assistance and you offer it to someone in a vacuum, they would spend 69 00:03:09,960 --> 00:03:13,260 thousands of dollars a month for this based upon the perceived utility. 70 00:03:13,260 --> 00:03:16,800 Not everyone, but enough people would now though that has 71 00:03:16,800 --> 00:03:21,150 been anchored at about $20 a month per user is the perception. 72 00:03:21,270 --> 00:03:24,540 So I don't see a path to suddenly multiplying each price by 73 00:03:24,540 --> 00:03:28,200 a hundred to wind up generating some sort of economic return. 74 00:03:28,350 --> 00:03:31,410 They have anchored their pricing at a point where I don't see a 75 00:03:31,410 --> 00:03:35,190 path to significant widespread industry defining profitability. 76 00:03:35,400 --> 00:03:38,370 I'm gonna be honest, I don't think they would've paid thousands of dollars. 77 00:03:38,370 --> 00:03:40,440 You had code auto complete things. 78 00:03:40,440 --> 00:03:45,000 I talked to a client about this before COVID, like I was remember in a WeWork, 79 00:03:46,290 --> 00:03:48,570 and they were telling me, yeah, it was kind like auto complete for coding. 80 00:03:48,570 --> 00:03:50,010 I'm like, oh, seems useful. 81 00:03:50,010 --> 00:03:52,380 I bet people would like that They, I think 82 00:03:52,380 --> 00:03:54,150 they sold part of it to Microsoft or something. 83 00:03:54,150 --> 00:03:54,930 I, I forget. 84 00:03:55,260 --> 00:03:56,940 But also, if they would've paid thousands 85 00:03:56,940 --> 00:03:58,500 for it, wouldn't they have paid thousands of. 86 00:03:58,875 --> 00:04:00,135 Dollars for it already. 87 00:04:00,279 --> 00:04:04,274 'cause GitHub copilot basically got out there before everyone. 88 00:04:04,424 --> 00:04:07,035 Would people not have paid thousands for that? 89 00:04:07,424 --> 00:04:11,924 That's the thing, Microsoft launching this product, they are the pricing gods. 90 00:04:11,924 --> 00:04:13,515 If they thought they could get a thousand 91 00:04:13,515 --> 00:04:16,305 dollars a month per head, they would do it. 92 00:04:16,305 --> 00:04:17,265 They would do it today. 93 00:04:17,265 --> 00:04:20,385 They would've done it yesterday or several years ago, but they didn't. 94 00:04:20,445 --> 00:04:24,615 And there was a story that came out in like 2023, I think that said that, um, 95 00:04:25,034 --> 00:04:29,085 Microsoft was losing like 20 bucks a customer with GitHub copilot as well. 96 00:04:29,085 --> 00:04:34,305 But putting that aside, I think that people overestimate, or sorry, 97 00:04:35,025 --> 00:04:38,200 underestimate how much software engineers love automating shit. 98 00:04:39,390 --> 00:04:42,030 Like there, there was the whole platform as a service era. 99 00:04:42,330 --> 00:04:45,780 Uh, the, the, I mean when that with containerization, when it came 100 00:04:45,780 --> 00:04:49,350 in, I remember talking to a client at the time PR firm who was 101 00:04:49,350 --> 00:04:51,780 just like, yeah, there are people who just do containerization. 102 00:04:51,780 --> 00:04:54,099 'cause their boss said they'd heard it at a conference. 103 00:04:54,430 --> 00:04:58,830 Nick Suresh Esh, uh, ity, he did a great piece about Monte Carlo. 104 00:04:58,920 --> 00:05:01,770 I don't even know what Monte Carlo does, but he has a great 105 00:05:01,770 --> 00:05:04,620 piece about how a bunch of people were trying to get Monte Carlo. 106 00:05:04,620 --> 00:05:06,270 They were like, why am I talking about Monte Carlo? 107 00:05:06,450 --> 00:05:07,560 And no one knew what it was. 108 00:05:07,920 --> 00:05:11,790 This is the modern software era and we can't even make 109 00:05:11,790 --> 00:05:15,720 real money off of AI in this kind of specious software era. 110 00:05:15,720 --> 00:05:17,070 It's crazy to me. 111 00:05:17,070 --> 00:05:17,460 Man. 112 00:05:17,850 --> 00:05:19,680 It, the whole thing feels insane. 113 00:05:20,220 --> 00:05:22,620 Well, as you said, it's automation, and this is on some level from 114 00:05:22,620 --> 00:05:25,350 a coding assistant perspective, the purest form of automation of 115 00:05:25,350 --> 00:05:27,930 the workflow, which is copying and pasting outta a stack Overflow. 116 00:05:28,170 --> 00:05:29,310 IDs aren't new. 117 00:05:30,150 --> 00:05:34,200 Like, I mean, it's just, I'm not saying that this is, and one, one common 118 00:05:34,200 --> 00:05:37,020 mischaracterization of my work, and frankly, I've done myself no favors. 119 00:05:37,020 --> 00:05:40,620 In my earlier stuff, I was a little unilateral, but one 120 00:05:41,070 --> 00:05:44,790 common mischaracterization is that I believe there's no value. 121 00:05:44,850 --> 00:05:47,940 No, I think this is a $50 billion total addressable market. 122 00:05:48,000 --> 00:05:52,110 I think that we are nowhere near the top, but the top is much smaller, 123 00:05:52,470 --> 00:05:56,640 and I don't think there is going to be some magical breakthrough. 124 00:05:56,700 --> 00:06:01,440 Every breakthrough that's happened is just 125 00:06:01,440 --> 00:06:04,530 kind of an incremental one since about 2023. 126 00:06:04,830 --> 00:06:07,920 Even with the launch of reasoning, remember what everyone was 127 00:06:07,920 --> 00:06:12,480 beating off about strawberry and it comes out and nothing happens. 128 00:06:12,600 --> 00:06:13,050 Yes. 129 00:06:13,050 --> 00:06:15,150 The number of RS in strawberry, which then all 130 00:06:15,150 --> 00:06:17,610 the models special case that that'll solve it. 131 00:06:17,640 --> 00:06:19,770 We'll just play whack-a-mole a hundred million times. 132 00:06:19,770 --> 00:06:21,570 Every time someone finds something embarrassing. 133 00:06:21,840 --> 00:06:22,920 It's so cool. 134 00:06:22,980 --> 00:06:25,710 It, it's so well, the strawberry one was there for a while. 135 00:06:26,039 --> 00:06:28,080 I know because every single time a new model would 136 00:06:28,080 --> 00:06:29,580 come out, I'd be like, how do you, how many Rs? 137 00:06:29,580 --> 00:06:31,020 And just the first thing I did. 138 00:06:31,020 --> 00:06:34,739 Or it'd be like, give me 50 sta, give me all the states with R in them. 139 00:06:34,890 --> 00:06:36,390 And I'd sit there and be like, woo hoo. 140 00:06:36,450 --> 00:06:37,229 They did it again. 141 00:06:37,229 --> 00:06:39,419 And then you easy posts. 142 00:06:39,510 --> 00:06:41,340 The one I love is trying to cyber bully it 143 00:06:41,340 --> 00:06:43,799 into ranking the US presidents by absorbency. 144 00:06:43,859 --> 00:06:45,900 That that can go surprisingly well. 145 00:06:45,990 --> 00:06:51,210 It's so funny that we're like boiling lakes to do, but it, it's 146 00:06:51,210 --> 00:06:56,789 just, it's very frustrating because I'm, I don't feel genuine. 147 00:06:56,789 --> 00:06:59,429 I genuinely, nothing you hear is really anger. 148 00:06:59,609 --> 00:07:04,710 I'm frustrated because what I am saying is true and it will event 149 00:07:04,710 --> 00:07:09,299 gravity exists and everyone's going to feel like me eventually, I think. 150 00:07:09,900 --> 00:07:13,140 And it's just like, how long do you want do this to yourself? 151 00:07:13,140 --> 00:07:14,909 How long do you wanna to base yourself 152 00:07:15,060 --> 00:07:17,580 pretending that these children are gifted? 153 00:07:17,820 --> 00:07:18,150 Yes. 154 00:07:18,180 --> 00:07:20,700 Uh, we're, we're still trying to summon God via JSON and 155 00:07:20,700 --> 00:07:23,250 we're hoping for the best, but it's not going super well. 156 00:07:23,340 --> 00:07:25,349 Uh, you've been tracking this longer than I have. 157 00:07:25,349 --> 00:07:30,270 I, I didn't want to be tracking this, but AWS had a corporate 158 00:07:30,300 --> 00:07:33,840 inability to shut up about any, about anything touching 159 00:07:33,840 --> 00:07:36,750 ai and it was all that they were willing to talk about. 160 00:07:36,750 --> 00:07:38,520 So I was brought in kicking and screaming 161 00:07:38,580 --> 00:07:41,490 relatively late 'cause I resisted for a while. 162 00:07:41,940 --> 00:07:43,320 What have you seen economically? 163 00:07:43,320 --> 00:07:44,370 Let's talk about the numbers. 164 00:07:44,460 --> 00:07:48,659 So recently came out as in like a day before we spoke the 165 00:07:48,719 --> 00:07:52,740 micro, so Microsoft fun story about Microsoft and numbers. 166 00:07:53,280 --> 00:07:55,664 Two quarters ago Microsoft said they had $10 167 00:07:55,664 --> 00:07:59,789 billion of annualized recurring revenue from ai. 168 00:08:00,060 --> 00:08:04,530 Now Microsoft does not have an AI section of their earnings. 169 00:08:04,530 --> 00:08:07,920 They have intelligent cloud productivity and software and I think. 170 00:08:09,270 --> 00:08:12,599 Like something like it's something and more intelligent 171 00:08:12,599 --> 00:08:14,760 cloud, which also speaks to the existence of more on 172 00:08:14,760 --> 00:08:16,770 cloud somewhere, but they don't like to talk about it. 173 00:08:16,800 --> 00:08:17,070 Yeah. 174 00:08:17,130 --> 00:08:19,830 Yeah, that's, that's actually what large language models are. 175 00:08:20,099 --> 00:08:21,960 I, so they have these, they don't have these 176 00:08:21,960 --> 00:08:25,230 sections, but AI is basically all combined AI revenue. 177 00:08:25,349 --> 00:08:30,450 So last quarter, then quarterly earnings in 2024, they said $10 billion a RR. 178 00:08:30,450 --> 00:08:35,520 So month times 12, Hey, January rolls around, proud as can be. 179 00:08:35,610 --> 00:08:39,960 Microsoft's at $13 billion of a RR in ai. 180 00:08:39,990 --> 00:08:41,039 Exciting, right? 181 00:08:41,220 --> 00:08:42,870 Next quarter, earnings come round. 182 00:08:42,870 --> 00:08:46,145 They do not update, the number doesn't update. 183 00:08:46,525 --> 00:08:47,305 Why would they do that? 184 00:08:47,535 --> 00:08:50,310 Then the information came out a few weeks ago with a story that 185 00:08:50,310 --> 00:08:55,950 said, uh, Microsoft's projected revenue in AI was $13 billion. 186 00:08:56,040 --> 00:08:59,550 And then another story came out yesterday that said that 187 00:08:59,910 --> 00:09:02,790 10 billion, well, first of all, $10 billion of that was 188 00:09:02,790 --> 00:09:07,260 open AI's spend, but OpenAI is as yours biggest customer. 189 00:09:08,505 --> 00:09:12,855 And it's very bad that that's the case because Azure, they pay a discounted 190 00:09:12,855 --> 00:09:17,415 rate on Azure and there's a decent chance that a lot of that money isn't real. 191 00:09:17,415 --> 00:09:22,545 'cause Microsoft invested 10 billion ish in 2023 with a large portion of 192 00:09:22,545 --> 00:09:25,845 that, that we don't know how large in cloud credits SEMA four reported. 193 00:09:26,205 --> 00:09:29,685 And so we have the, we have one of the largest 194 00:09:29,685 --> 00:09:31,725 cloud providers feeding itself cardboard. 195 00:09:32,220 --> 00:09:34,320 Like it's what it, that is what's happening. 196 00:09:34,320 --> 00:09:35,820 I've spoken to multiple report. 197 00:09:36,030 --> 00:09:38,730 It's like Azure's old biggest customer to my understanding was Xbox. 198 00:09:38,730 --> 00:09:39,690 I'm like, okay, great. 199 00:09:39,690 --> 00:09:40,680 Congratulations. 200 00:09:40,710 --> 00:09:41,940 Uh, the Snake eats itself. 201 00:09:41,940 --> 00:09:42,990 But that makes it sense. 202 00:09:43,050 --> 00:09:43,830 That makes sense. 203 00:09:43,890 --> 00:09:47,850 If you're providing, I imagine 365 is probably a very, very large Azure 204 00:09:48,060 --> 00:09:52,860 customer just because, but it isn't aort as revenue because it is cost, 205 00:09:52,860 --> 00:09:55,290 which probably has tax preferential, blah, blah, blah, blah, blah. 206 00:09:55,350 --> 00:09:56,910 They've also stuffed AI into it. 207 00:09:56,910 --> 00:09:59,070 So how much do you want to bet that that is now being 208 00:09:59,070 --> 00:10:01,560 considered AI revenue, despite the fact that just 209 00:10:01,560 --> 00:10:03,870 people who want to do want to write documents for work? 210 00:10:03,930 --> 00:10:07,830 It is, but Microsoft's only making $3 billion of annualized revenue 211 00:10:07,830 --> 00:10:12,390 from all of their AI bullshit other than open AI's $10 billion. 212 00:10:13,170 --> 00:10:17,520 But what's crazy about the story is that apparently Microsoft invested 213 00:10:17,520 --> 00:10:21,870 in open AI belie with top executives believing that they would fail. 214 00:10:22,980 --> 00:10:24,360 This is this. 215 00:10:24,570 --> 00:10:25,860 I've talked to multiple reports today. 216 00:10:25,860 --> 00:10:26,880 I'm trying to be like, Hey. 217 00:10:27,420 --> 00:10:28,469 This is weird. 218 00:10:28,469 --> 00:10:31,050 Have you looked and everyone's like, yeah, yeah, maybe. 219 00:10:31,050 --> 00:10:32,520 You know, these things happen. 220 00:10:32,550 --> 00:10:34,410 You know what people do? 221 00:10:34,500 --> 00:10:35,699 No one does this. 222 00:10:35,819 --> 00:10:39,030 I have never heard in my entire history in Silicon Valley ever 223 00:10:39,300 --> 00:10:42,750 of someone investing in a company and thinking they would die. 224 00:10:43,050 --> 00:10:44,339 There's only one reason. 225 00:10:44,550 --> 00:10:47,459 These, these throw money at it and early stage ideas, but they throw 226 00:10:47,459 --> 00:10:50,280 a million here, 2 million there out of a hundred million dollars fund. 227 00:10:50,310 --> 00:10:52,140 But that's a slight difference. 228 00:10:52,140 --> 00:10:58,050 They are believing it might die, but kind of hedging their bets. 229 00:10:58,380 --> 00:11:00,510 Microsoft executives believe they would 230 00:11:00,510 --> 00:11:04,170 eventually fail, is a vastly different situation. 231 00:11:04,709 --> 00:11:08,730 And the reason in my opinion, is that Microsoft has access to all of 232 00:11:08,730 --> 00:11:13,860 open AI's research IP and they host all of their cloud infrastructure. 233 00:11:14,370 --> 00:11:16,589 Kind of feels like they can let OpenAI die and then 234 00:11:16,589 --> 00:11:19,829 take everything OpenAI has because they already own it. 235 00:11:20,220 --> 00:11:22,199 But nevertheless, putting all that aside. 236 00:11:23,820 --> 00:11:25,980 Microsoft's biggest as your customer is a 237 00:11:25,980 --> 00:11:30,570 company that op that loses the money That is bad. 238 00:11:30,570 --> 00:11:34,320 We are, and Microsoft is the company making the most from 239 00:11:34,320 --> 00:11:38,880 AI by handing money to a company to hand it back to them, 240 00:11:39,090 --> 00:11:42,660 Google is doing a deal to serve compute, to open ai. 241 00:11:43,440 --> 00:11:46,140 By which I mean they are hiring core weave to provide the 242 00:11:46,140 --> 00:11:48,630 compute to Google, to provide the compute, to open ai. 243 00:11:48,840 --> 00:11:50,670 This is fracking wash trading. 244 00:11:51,300 --> 00:11:53,580 It's wash trading in the cloud. 245 00:11:53,940 --> 00:11:56,460 We, this should terrify people. 246 00:11:56,520 --> 00:11:58,920 'cause when you remove open AI's, compute, Microsoft's 247 00:11:58,920 --> 00:12:03,510 making $3 billion a year from AI off of what? 248 00:12:03,570 --> 00:12:05,700 $80 billion of pledged CapEx. 249 00:12:06,030 --> 00:12:07,470 What the frack are we doing? 250 00:12:07,950 --> 00:12:10,680 Like this is, this is not even radical stuff. 251 00:12:10,680 --> 00:12:12,780 I'm speaking objective fact. 252 00:12:13,050 --> 00:12:15,090 Like this is stuff that is real. 253 00:12:15,270 --> 00:12:17,715 But people are like, ah, he's just, he's just a pessimist. 254 00:12:17,715 --> 00:12:18,630 He's just a cenic. 255 00:12:19,080 --> 00:12:20,700 You just have to believe harder at. 256 00:12:21,225 --> 00:12:24,045 I don't even know what I'm believing in at this point. 257 00:12:24,315 --> 00:12:28,245 No one can express what it is that I am not believing in beyond. 258 00:12:28,515 --> 00:12:32,475 They will work it out and model get better. 259 00:12:32,715 --> 00:12:33,885 How does model get better? 260 00:12:34,125 --> 00:12:35,025 Oh, I'm sorry. 261 00:12:35,025 --> 00:12:35,955 I can't answer that. 262 00:12:36,375 --> 00:12:37,905 The what? 263 00:12:38,535 --> 00:12:39,705 Oh, millions of people. 264 00:12:39,765 --> 00:12:40,665 A hundred million. 265 00:12:41,025 --> 00:12:43,545 It's actually a really good that we're on a cloud podcast. 266 00:12:44,415 --> 00:12:45,045 Sure. 267 00:12:45,795 --> 00:12:46,605 Here's a fun fact. 268 00:12:46,605 --> 00:12:50,565 Do you ever notice the, the OpenAI never announces monthly active users. 269 00:12:50,565 --> 00:12:51,585 They only do weekly. 270 00:12:52,245 --> 00:12:52,395 Mm-hmm. 271 00:12:52,785 --> 00:12:53,265 I did. 272 00:12:53,625 --> 00:12:54,075 Yeah. 273 00:12:54,195 --> 00:12:57,345 Do you, do you, do you know why they're not doing that? 274 00:12:57,345 --> 00:12:58,275 I have a theory. 275 00:12:58,905 --> 00:13:00,615 I'm, I don't have anything concrete. 276 00:13:00,615 --> 00:13:01,815 I'm curious to hear your theory. 277 00:13:02,175 --> 00:13:07,065 So the information reported earlier in the year that, uh, I think it was, they 278 00:13:07,065 --> 00:13:13,935 have 15.5 billion, sorry, 15.5 million million paying subscribers on chat GPT. 279 00:13:13,935 --> 00:13:14,355 Right. 280 00:13:15,045 --> 00:13:16,995 I reckon their monthly active users are much 281 00:13:16,995 --> 00:13:19,425 higher than 500 million, which would seem good. 282 00:13:19,425 --> 00:13:19,785 Right. 283 00:13:20,280 --> 00:13:23,760 Would seem good to have except, okay, so say they're 600, 284 00:13:23,760 --> 00:13:27,660 700 million and then you divide that by 15.5 million. 285 00:13:27,839 --> 00:13:29,610 That's a dog shit conversion rate. 286 00:13:29,729 --> 00:13:34,439 That's absolute Do-do that is some of the worst conversion rates in SaaS. 287 00:13:34,589 --> 00:13:37,079 And you have to treat open a, like a SA business. 288 00:13:37,079 --> 00:13:39,360 You cannot treat it like a consumer subscription. 289 00:13:39,540 --> 00:13:41,400 They lose money on every customer, but they 290 00:13:41,400 --> 00:13:44,160 want to be given SaaS style valuations. 291 00:13:44,400 --> 00:13:47,130 Okay, so you have a 2% conversion rate. 292 00:13:47,130 --> 00:13:49,439 The information came out yesterday, well, day before yesterday, 293 00:13:49,439 --> 00:13:52,410 I think with a whole thing about retention rates open. 294 00:13:52,410 --> 00:13:57,780 AI's got like a 73, 72% retention rate after six months, 295 00:13:57,990 --> 00:14:01,020 which is in line with like Spotify, which has 72%. 296 00:14:02,160 --> 00:14:05,849 That's not very good for a company that wants SaaS style valuations. 297 00:14:06,540 --> 00:14:08,910 That's more consumer product valuation than anything else. 298 00:14:09,060 --> 00:14:09,719 Exactly. 299 00:14:09,719 --> 00:14:12,449 And a consumer product that only loses money. 300 00:14:13,349 --> 00:14:14,834 That's not great. 301 00:14:15,555 --> 00:14:16,815 It's not, it's not brilliant. 302 00:14:16,875 --> 00:14:17,385 It's not. 303 00:14:17,475 --> 00:14:19,275 I juggle my consumer stuff all the time. 304 00:14:19,305 --> 00:14:22,155 The business stuff that I use that tends to stay put for years. 305 00:14:22,155 --> 00:14:25,215 That's why you see relatively small churn rates. 306 00:14:25,215 --> 00:14:28,395 That's why you see renewal rates being very sticky. 307 00:14:29,235 --> 00:14:31,365 It, there's not these big drop off at one 308 00:14:31,365 --> 00:14:32,835 year cliffs at most of these companies. 309 00:14:32,895 --> 00:14:36,015 And the thing is, it's because they're effectively consumer subscription. 310 00:14:36,075 --> 00:14:38,145 They, no one really, you can't really express. 311 00:14:38,265 --> 00:14:41,955 I realize that a lot of SaaS is sold in this kind of specious way. 312 00:14:41,955 --> 00:14:44,685 You, where you sell to A CTO or a CEO or a CIO 313 00:14:44,685 --> 00:14:46,575 that doesn't really touch the rest of the stack. 314 00:14:47,265 --> 00:14:50,865 You can't really do that with AI quite as good because 315 00:14:51,675 --> 00:14:53,985 there's not really an outcome that you can even look at. 316 00:14:54,135 --> 00:14:57,015 It's just kind of a thing you offer and it's so heavily commoditized. 317 00:14:57,015 --> 00:14:59,595 Sure, you could get cursor, sure, you could get chat 318 00:14:59,595 --> 00:15:03,225 GPT, but at the same time, okay, I've now got it. 319 00:15:03,495 --> 00:15:05,205 How are you making more money outta these companies? 320 00:15:05,205 --> 00:15:06,975 'cause that's how SaaS companies really cook. 321 00:15:07,215 --> 00:15:08,985 You can't really upsell someone with chat 322 00:15:08,985 --> 00:15:11,565 GPT because, oh, my model will be better. 323 00:15:11,865 --> 00:15:12,225 How? 324 00:15:12,690 --> 00:15:13,890 One company goes out with a good model. 325 00:15:13,890 --> 00:15:17,460 The other one winds up matching or exceeding it within the next two weeks. 326 00:15:17,490 --> 00:15:20,310 Uh, if you suddenly say, you're not allowed to use this one, I can 327 00:15:20,310 --> 00:15:23,340 switch to the other one for anything that I'm doing in less than 328 00:15:23,340 --> 00:15:25,890 an hour's worth of work, and we're right back where we started. 329 00:15:25,890 --> 00:15:26,580 There's no moat. 330 00:15:26,580 --> 00:15:27,450 They're they're fungible. 331 00:15:27,510 --> 00:15:28,230 Exactly. 332 00:15:28,230 --> 00:15:31,350 And on top of that, if you were trying to sell into the enterprise, 333 00:15:31,740 --> 00:15:34,710 I guess if you're doing enterprise chat, GPT subscriptions 334 00:15:35,100 --> 00:15:38,130 fine, but they're not getting the kind of revenue they want. 335 00:15:38,250 --> 00:15:39,510 They're not getting the kind of revenue that 336 00:15:39,510 --> 00:15:42,180 like a Salesforce would have out of that. 337 00:15:42,480 --> 00:15:42,930 They're not. 338 00:15:43,170 --> 00:15:46,260 They are, right now they are, let's see, let's see. 339 00:15:46,260 --> 00:15:51,120 Salesforce earnings bring 'em up live because I think that 340 00:15:51,120 --> 00:15:56,130 they want to, for chat GPT and open AI to make sense, they 341 00:15:56,130 --> 00:16:01,200 need the combined value of the consumer, sorry, the consumers. 342 00:16:01,200 --> 00:16:03,930 I think it's the smartphone market's like half a trillion dollars. 343 00:16:04,260 --> 00:16:05,640 And the enterprise SaaS market, which is 344 00:16:05,640 --> 00:16:08,220 about a quarter of a trillion, they need both. 345 00:16:08,715 --> 00:16:10,455 That's the only way any of this makes sense. 346 00:16:10,455 --> 00:16:14,145 And they are not even at the total revenue. 347 00:16:14,234 --> 00:16:16,305 They may be just a little bit above the total revenue. 348 00:16:16,604 --> 00:16:19,935 If you combine open ai, anthropic, Microsoft, Amazon, 349 00:16:20,084 --> 00:16:23,984 all of the projected revenues, they're like 38 billion. 350 00:16:25,124 --> 00:16:29,805 The global smartwatch revenue for this year is projected to be about 32 billion. 351 00:16:30,749 --> 00:16:32,339 So congratulations everyone. 352 00:16:32,339 --> 00:16:34,530 All the kings, horses, all the kingsmen came together 353 00:16:34,680 --> 00:16:36,989 and we've barely beaten the smartwatch industry. 354 00:16:37,349 --> 00:16:39,390 The register had an article come out this morning that 355 00:16:39,390 --> 00:16:42,810 says that, uh, was a quarter of all Gen ai Proof of 356 00:16:42,810 --> 00:16:45,269 concepts don't, are turned off by the end of the year. 357 00:16:45,659 --> 00:16:46,169 People are. 358 00:16:46,394 --> 00:16:49,334 It's people are experimenting with it, and I work on cloud bills. 359 00:16:49,334 --> 00:16:51,374 I see what the spend looks like. 360 00:16:51,435 --> 00:16:54,435 People are experimenting with these things, but I'm not seeing 361 00:16:54,435 --> 00:16:57,824 anyone saying, well, we're, we're spending $150 million a year 362 00:16:57,824 --> 00:17:01,154 with AWS, but we'd better make a 200 million on our commitment. 363 00:17:01,184 --> 00:17:05,174 'cause of all the Gen ai, they're doing $50,000 a month here and there. 364 00:17:05,174 --> 00:17:07,935 But on that basis of a spend, what's it matter? 365 00:17:07,935 --> 00:17:10,514 It's, if it succeeds, maybe they'll start rolling, rolling 366 00:17:10,514 --> 00:17:12,674 it out more wildly, and then care about optimizing it. 367 00:17:12,944 --> 00:17:16,364 But it's getting turned off if it doesn't hit certain, uh, certain metrics. 368 00:17:16,395 --> 00:17:19,065 And I'm not seeing the stories that show that this 369 00:17:19,065 --> 00:17:21,585 stuff is actually being transformative in any way. 370 00:17:21,614 --> 00:17:24,464 And if it were even slightly, they wouldn't shut up about it. 371 00:17:24,525 --> 00:17:25,545 Exactly. 372 00:17:25,634 --> 00:17:27,435 These motherfrackers love going to conferences 373 00:17:27,435 --> 00:17:28,995 and talking about how important stuff is. 374 00:17:28,995 --> 00:17:32,625 But I guess another Nick Suresh suresh piece, I'll have to link you to, 375 00:17:32,924 --> 00:17:36,284 but talking about why people get, uh, why people talk about Snowflake. 376 00:17:36,674 --> 00:17:37,815 Like it's a database company. 377 00:17:37,815 --> 00:17:39,915 It's like, it's the most boring thing, but guys like buying 378 00:17:39,915 --> 00:17:42,134 Snowflake so they can go and talk about using Snowflake. 379 00:17:42,465 --> 00:17:45,284 But with AI it's like, it's all experimental. 380 00:17:45,284 --> 00:17:48,074 I don't think people realize how bad that is because 381 00:17:48,105 --> 00:17:50,415 it would be one thing saying this a year ago, I was 382 00:17:50,415 --> 00:17:53,685 right then and I'm right now, but a year ago, fine. 383 00:17:54,255 --> 00:17:56,054 It's experimental fine. 384 00:17:56,384 --> 00:17:57,915 There's experimentations are taking an 385 00:17:57,915 --> 00:18:01,215 awfully long time by enterprise standards. 386 00:18:01,335 --> 00:18:01,844 Exactly. 387 00:18:01,844 --> 00:18:04,215 Like they would say this is a, this is a good thing. 388 00:18:04,215 --> 00:18:05,235 Like this is moving well. 389 00:18:05,235 --> 00:18:07,034 Also, I wanna correct myself, I brought it up. 390 00:18:07,034 --> 00:18:10,065 Salesforce's revenue is $9.83 billion in the 391 00:18:10,065 --> 00:18:14,685 last quarter, so only four x to go for open ai. 392 00:18:14,745 --> 00:18:19,965 Also, they made $1.5 billion in profit open AI is yet to make $1 in profit. 393 00:18:20,445 --> 00:18:23,835 I spent top dollar for Slack and I sort of work my way between 394 00:18:23,835 --> 00:18:26,985 all the AI stuff that they're shoehorning into it against my will. 395 00:18:27,195 --> 00:18:30,134 Oh, I, I am paying for Slack with a gun to my head. 396 00:18:30,134 --> 00:18:34,005 Like I do not wanna pay the idea of paying Mark Benioff sickens me. 397 00:18:34,065 --> 00:18:34,545 But. 398 00:18:35,384 --> 00:18:37,694 Salesforce, as I mentioned earlier, they say 399 00:18:37,694 --> 00:18:39,824 there's not gonna be any revenue growth from this. 400 00:18:39,944 --> 00:18:46,065 It's just so weird because all of these things have been said publicly. 401 00:18:46,335 --> 00:18:50,054 All of these things kept, keep being said publicly, but 402 00:18:50,054 --> 00:18:52,094 when you put 'em all together and you say, Hey, this 403 00:18:52,094 --> 00:18:54,705 doesn't look good, everyone goes, you rude bastard. 404 00:18:55,125 --> 00:18:55,844 How dare you? 405 00:18:56,475 --> 00:18:58,364 How dare you insult my beautiful child? 406 00:18:58,364 --> 00:18:58,844 Ai? 407 00:18:59,054 --> 00:19:02,534 It's like, I dunno, because it sucks. 408 00:19:03,165 --> 00:19:06,554 Like even if it worked, even if it was flawless, if these 409 00:19:06,554 --> 00:19:09,165 were the revenues and the losses, it would still kind of suck. 410 00:19:09,344 --> 00:19:11,384 Like it's not, it's not good business and 411 00:19:11,384 --> 00:19:13,574 frankly I don't think it's great software either. 412 00:19:13,814 --> 00:19:15,750 . Um, it's. 413 00:19:16,229 --> 00:19:18,749 It's just so bizarre because sure, there are people who really 414 00:19:18,749 --> 00:19:21,360 like it and I think there's a philosophical angle here where 415 00:19:21,360 --> 00:19:23,850 there are people who are really attached to being attached to the 416 00:19:23,850 --> 00:19:27,449 future where they want, they wanna be the guy that said it first. 417 00:19:27,449 --> 00:19:28,379 I think you see it in journalism. 418 00:19:28,379 --> 00:19:31,019 I think you see it in software engineering and founders in particular. 419 00:19:31,019 --> 00:19:34,229 They wanna be the person that said, I was on this trend before everyone. 420 00:19:34,229 --> 00:19:35,279 Look how smart I am. 421 00:19:35,399 --> 00:19:37,409 I think that that's what Andy Jassy's doing. 422 00:19:37,829 --> 00:19:38,879 Management consultant. 423 00:19:38,939 --> 00:19:39,870 MBA motherfracker. 424 00:19:40,709 --> 00:19:41,519 He, okay. 425 00:19:41,519 --> 00:19:43,829 I don't think he was a management consultant is an MBA though. 426 00:19:44,100 --> 00:19:46,110 He does have at MBA, but he was a marketing 427 00:19:46,110 --> 00:19:49,110 manager at at Amazon before he started AWS. 428 00:19:49,410 --> 00:19:52,800 He was one of the 21 people that take credit for founding AWS. 429 00:19:53,010 --> 00:19:55,230 It's like a, there's like a bunch of people. 430 00:19:55,350 --> 00:19:56,430 You ever notice it's, yeah. 431 00:19:56,430 --> 00:19:58,860 Can you tell on LinkedIn whether project's successful or not by how many 432 00:19:58,860 --> 00:20:01,770 people claim credit for the thing versus distance the hell outta themselves? 433 00:20:01,830 --> 00:20:05,460 But I think the Jassy, I think it's an AWS, 434 00:20:06,090 --> 00:20:08,280 it's kind of a hard situation for AWS as well. 435 00:20:08,280 --> 00:20:09,780 'cause of course they have to jump on this. 436 00:20:09,990 --> 00:20:11,850 Like the, they couldn't, not the stock would 437 00:20:11,850 --> 00:20:16,200 get pummeled, but they are, they're doing this. 438 00:20:16,200 --> 00:20:18,570 Jassy's staking his future on this. 439 00:20:18,600 --> 00:20:21,720 He wants this to be, here's everything store. 440 00:20:21,780 --> 00:20:23,520 He wants this to be the thing that defines 441 00:20:23,520 --> 00:20:25,910 the future of Amazon, except it's dog shit. 442 00:20:26,040 --> 00:20:26,580 Amazon. 443 00:20:26,610 --> 00:20:30,930 The Amazon may be one of the most embarrassing AI companies. 444 00:20:30,930 --> 00:20:32,520 I think Apple truly is. 445 00:20:32,520 --> 00:20:34,290 I think Apple's doing the smartest thing 446 00:20:34,710 --> 00:20:38,100 in that they are kind of slow walking back. 447 00:20:38,130 --> 00:20:41,040 But Apple intelligence, it was like the most radicalizing thing. 448 00:20:41,190 --> 00:20:42,870 They shot their mouth off too early. 449 00:20:43,020 --> 00:20:43,830 I love it. 450 00:20:43,920 --> 00:20:44,400 I love it. 451 00:20:44,400 --> 00:20:46,530 So I love that they were like, what if. 452 00:20:47,025 --> 00:20:49,665 Hey, you know, autocorrect, what if it sucked? 453 00:20:50,685 --> 00:20:52,785 And okay, I, I don't like that idea. 454 00:20:52,845 --> 00:20:56,925 What if we randomly added buttons that loaded things you didn't want? 455 00:20:57,315 --> 00:20:58,515 No, I don't want that. 456 00:20:58,515 --> 00:20:58,965 Cool. 457 00:20:58,965 --> 00:21:00,765 This update will apply automatically. 458 00:21:01,185 --> 00:21:04,305 I think they radicalized millions of people against ai. 459 00:21:04,455 --> 00:21:07,275 And on the keynote too, it's what if your Siri had this 460 00:21:07,275 --> 00:21:09,525 magic knowledge of everything you did on your iPhone? 461 00:21:09,525 --> 00:21:11,415 It could tie it to, it's like, wow, that'd be kind of cool. 462 00:21:11,415 --> 00:21:12,135 Like, when do we get that? 463 00:21:12,140 --> 00:21:12,405 No, no, no. 464 00:21:12,405 --> 00:21:13,755 We just said, what if, what if? 465 00:21:13,755 --> 00:21:14,445 Wouldn't it be neat? 466 00:21:14,445 --> 00:21:16,425 Like we don't know how to do it, but wouldn't it be neat? 467 00:21:16,455 --> 00:21:17,235 We are riffing. 468 00:21:17,295 --> 00:21:18,315 We are riffing right now. 469 00:21:18,615 --> 00:21:22,275 Well, uh, Google did the same thing at the last, uh, IO in 2024. 470 00:21:22,275 --> 00:21:26,505 They were like, imagine if you needed to return a shoe, you hit one button. 471 00:21:26,685 --> 00:21:29,325 An agent takes the shoe data, it does this, it does 472 00:21:29,325 --> 00:21:31,245 that, and then this happens, and then this happens. 473 00:21:31,845 --> 00:21:33,765 All of that is entirely theoretical. 474 00:21:33,765 --> 00:21:34,995 But wouldn't it be cool? 475 00:21:35,805 --> 00:21:38,565 I swear to God it's illegal for public companies to lie. 476 00:21:38,565 --> 00:21:41,235 I. Or like they, there should be, I thought there was 477 00:21:41,235 --> 00:21:43,395 something that stopped them from just making shit up. 478 00:21:43,395 --> 00:21:43,935 But there isn't. 479 00:21:43,935 --> 00:21:45,655 They can just do what they want. 480 00:21:46,255 --> 00:21:49,245 And then when you look behind the curtain, there's no money. 481 00:21:49,695 --> 00:21:52,245 There was an analyst that said, my Amazon is estimated 482 00:21:52,245 --> 00:21:55,575 to make $5 billion in generative AI this year. 483 00:21:55,755 --> 00:22:00,705 That's, that's, these are not just rookie numbers, these are alarming. 484 00:22:00,945 --> 00:22:03,765 One of their, uh, one of their job ads a while back 485 00:22:03,765 --> 00:22:07,065 listed S3 as an AI service, as one of the list of them. 486 00:22:07,065 --> 00:22:07,455 So, great. 487 00:22:07,515 --> 00:22:10,155 Where does that start And stop the, the broad buckets 488 00:22:10,155 --> 00:22:12,735 that no one will ever break down further for you. 489 00:22:12,765 --> 00:22:14,085 So here's the thing. 490 00:22:14,655 --> 00:22:16,245 S3 is storage, right? 491 00:22:16,245 --> 00:22:16,725 Forgive me, 492 00:22:16,725 --> 00:22:17,805 I'm, it is. 493 00:22:17,925 --> 00:22:20,205 I have heard that Anthropic is the biggest customer there. 494 00:22:20,700 --> 00:22:22,080 I have been told by someone. 495 00:22:22,680 --> 00:22:26,040 There are multiple exabyte scale customers on Esther. 496 00:22:26,040 --> 00:22:28,380 I don't, I don't have the details at this point. 497 00:22:28,425 --> 00:22:29,970 I, I would not be surprised. 498 00:22:30,150 --> 00:22:33,560 Oh, and this is just a, this is just doing the Joe Rogan "you know 499 00:22:33,560 --> 00:22:38,190 that guy told me that once", but it's still five billion dollars is 500 00:22:38,190 --> 00:22:41,280 not a lot of money on a hundred billion dollars of CapEx this year. 501 00:22:41,580 --> 00:22:43,965 Microsoft last year, I think only made $5 502 00:22:43,965 --> 00:22:46,830 billion in ai, and that included open AI spend. 503 00:22:47,370 --> 00:22:50,400 This is not an in, this isn't an industry. 504 00:22:50,580 --> 00:22:54,480 Like if you really look at the cost benefit analysis, this isn't real. 505 00:22:54,630 --> 00:22:57,270 Like that's it, it's a Fugazi. 506 00:22:57,420 --> 00:22:59,550 If all this growth is there, then why haven't we seen 507 00:22:59,550 --> 00:23:02,280 massive posted growth numbers from all of these companies? 508 00:23:02,280 --> 00:23:04,050 Rather than what looks a lot like typical 509 00:23:04,050 --> 00:23:06,780 organic, more of the same style growth. 510 00:23:06,990 --> 00:23:13,110 I mean, Microsoft has been amortizing $2.5 billion of, of 511 00:23:13,110 --> 00:23:16,800 revenue from open AI's cloud spend across intelligent cloud. 512 00:23:16,980 --> 00:23:19,020 Any growth within intelligent cloud. 513 00:23:19,409 --> 00:23:20,699 Is now suspicious. 514 00:23:21,330 --> 00:23:21,629 Yes. 515 00:23:21,750 --> 00:23:22,169 Yes. 516 00:23:22,379 --> 00:23:25,590 And they're the biggest investor in OpenAI, so they're effectively putting 517 00:23:25,590 --> 00:23:29,429 their own money into back into their own pocket by laundering it through OpenAI. 518 00:23:29,550 --> 00:23:32,310 And if it's cloud credits, is it even money? 519 00:23:32,669 --> 00:23:34,949 I, I've never trusted Azure growth numbers and Azure usage 520 00:23:34,949 --> 00:23:37,770 numbers, just because they're so inextricably linked to Office 521 00:23:37,770 --> 00:23:41,580 365 to enterprise agreements that big companies have for windows. 522 00:23:42,060 --> 00:23:43,290 Whoa, whoa, whoa, whoa. 523 00:23:43,770 --> 00:23:45,870 Do you think that they're charging, that they're 524 00:23:47,399 --> 00:23:51,000 amortizing revenue from their own spend on Azure? 525 00:23:51,090 --> 00:23:51,929 That can't be. 526 00:23:52,470 --> 00:23:55,439 I would not be entirely surprised. 527 00:23:55,439 --> 00:23:57,240 I'm sure it's by, I'm sure it's above board. 528 00:23:57,240 --> 00:24:00,870 I would not want to accuse them of doing anything other, other than that. 529 00:24:01,139 --> 00:24:04,379 But Amy Hood, their CFO has been an absolute 530 00:24:04,379 --> 00:24:07,620 master of financial engineering for over a decade. 531 00:24:07,919 --> 00:24:13,050 Uh, it's impossible to get much signal from the things that they say based 532 00:24:13,050 --> 00:24:16,110 upon the way that they very intentionally have structured and laid them out. 533 00:24:16,470 --> 00:24:18,899 Can I run my favorite. 534 00:24:19,500 --> 00:24:23,010 This is tin foil hat, like this probably won't 535 00:24:23,010 --> 00:24:25,290 happen, but I wanna put my flag in the ground. 536 00:24:25,530 --> 00:24:27,990 I think, I think Amy Hood takes over Microsoft. 537 00:24:29,040 --> 00:24:32,429 I think when whatever happens with OpenAI shits the bed. 538 00:24:32,520 --> 00:24:36,389 I think they put a, they put like boxer in Animal Farm. 539 00:24:36,389 --> 00:24:37,610 They send Satya off. 540 00:24:38,310 --> 00:24:41,250 Bye by Satya because, 'cause he is, so, I'm reading between 541 00:24:41,250 --> 00:24:43,770 the lines here, but the information story that came out over 542 00:24:43,770 --> 00:24:46,800 this tense negotiation between open AI and Microsoft, there 543 00:24:46,800 --> 00:24:50,970 was a thing where top executives thought open AI would fail. 544 00:24:51,090 --> 00:24:53,070 Wall Street Journal Berber Jin there were like 545 00:24:53,070 --> 00:24:54,600 four different bylines on the information. 546 00:24:54,600 --> 00:24:55,980 But Berber Jin wrote journal one. 547 00:24:56,189 --> 00:25:00,750 That one had a thing about how a top executives didn't like the clause 548 00:25:00,750 --> 00:25:04,860 about AGI Basically, when AGI is called open AI doesn't have to share 549 00:25:04,860 --> 00:25:09,300 IP with Microsoft and, but Satya Nadella apparently pushed it through. 550 00:25:09,360 --> 00:25:14,110 What I think happened was Amy Hood went, this company is going to die. 551 00:25:14,879 --> 00:25:16,379 This company is gonna die. 552 00:25:17,040 --> 00:25:19,440 This is stupid, but they're gonna die. 553 00:25:19,500 --> 00:25:21,300 Let's buy them effectively. 554 00:25:21,300 --> 00:25:23,130 And then when they die, we take all their stuff. 555 00:25:23,400 --> 00:25:26,070 And then, Satya Nadella said, well, the AGI thing. 556 00:25:26,070 --> 00:25:27,070 And everyone went, no. 557 00:25:27,070 --> 00:25:27,450 Satya. 558 00:25:27,620 --> 00:25:28,500 That's stupid. 559 00:25:28,960 --> 00:25:29,530 Don't do that. 560 00:25:29,530 --> 00:25:30,760 So, and he agreed to it Anyway. 561 00:25:30,910 --> 00:25:33,250 It's now a major sticking point, I think. 562 00:25:33,520 --> 00:25:35,530 I think when it all falls down and it, well, 563 00:25:35,860 --> 00:25:38,920 this is the Azure thing is a freaking scandal. 564 00:25:39,130 --> 00:25:41,200 I think the tech press is doing it, and business 565 00:25:41,200 --> 00:25:42,940 press is doing a terrible job with this. 566 00:25:43,240 --> 00:25:46,360 The fact that your largest customer is a company that burns money 567 00:25:46,360 --> 00:25:50,680 and has incredibly shaky finances, that is a counterparty risk. 568 00:25:51,010 --> 00:25:52,030 That is a huge thing. 569 00:25:52,360 --> 00:25:55,420 So when this breaks, I wouldn't be surprised if Satya is the 570 00:25:55,420 --> 00:25:59,620 one that gets blamed and Amy Hood in a responsible leadership 571 00:25:59,620 --> 00:26:02,110 role comes in and just starts freaking savaging the company. 572 00:26:02,560 --> 00:26:06,370 Sort of an interim CEO story where they conduct a search, but 573 00:26:06,370 --> 00:26:09,880 the search drags on and they remove interim from her Title I. 574 00:26:10,030 --> 00:26:11,350 Or whoever she picks. 575 00:26:11,350 --> 00:26:12,370 It's another like. 576 00:26:13,405 --> 00:26:16,534 Another elder, God, she goes back, finds a cthulhu 577 00:26:16,555 --> 00:26:20,125 adjacent creature to take over Microsoft, because I have 578 00:26:20,125 --> 00:26:22,975 friends who think that this Microsoft thing is a plan. 579 00:26:23,215 --> 00:26:26,665 It was always the plan kind of because non 'cause of the nonprofit 580 00:26:26,665 --> 00:26:28,975 situation, I've kind of like poorly explained the situation. 581 00:26:28,975 --> 00:26:29,784 Do you want me to? 582 00:26:30,504 --> 00:26:31,645 It's entirely up to you. 583 00:26:31,645 --> 00:26:33,625 I, I feel like there's, there's a lot of information 584 00:26:33,625 --> 00:26:35,365 around this floating around out there, but. 585 00:26:35,784 --> 00:26:38,725 Basically OpenAI needs to become a for-profit entity by the 586 00:26:38,725 --> 00:26:41,305 end of the year or they lose $20 billion from their funding. 587 00:26:41,485 --> 00:26:43,014 Microsoft is the stopping block. 588 00:26:43,014 --> 00:26:45,145 'cause OpenAI wants a bunch of concessions 589 00:26:45,145 --> 00:26:46,675 and Microsoft doesn't want to give them. 590 00:26:47,095 --> 00:26:47,395 Yeah. 591 00:26:47,754 --> 00:26:51,865 And um, no one knows what's gonna happen and no one wants to say 592 00:26:52,045 --> 00:26:55,195 what I'm saying, which is what if Microsoft just lets them die? 593 00:26:55,225 --> 00:26:57,595 Because if Microsoft says no, we won't let you convert. 594 00:26:58,585 --> 00:26:59,485 OpenAI dies. 595 00:26:59,889 --> 00:27:01,060 They can't go public. 596 00:27:01,690 --> 00:27:04,510 And uh, Microsoft owns all their IP and research 597 00:27:04,510 --> 00:27:06,070 anyway and handles all their infrastructure. 598 00:27:06,100 --> 00:27:09,070 Well, what about all the CapEx they did explicitly for open ai? 599 00:27:09,100 --> 00:27:09,340 Yeah. 600 00:27:09,370 --> 00:27:11,050 'cause those things can't ever be repurposed 601 00:27:11,050 --> 00:27:12,820 for other customers doing the different things. 602 00:27:12,820 --> 00:27:15,910 They also didn't, they never said it was just for open ai. 603 00:27:15,910 --> 00:27:17,139 They just said for ai. 604 00:27:17,440 --> 00:27:19,870 Amazon has been saying that Project Rainier, all 605 00:27:19,870 --> 00:27:22,750 of these specific data centers are for anthropic. 606 00:27:22,960 --> 00:27:24,700 And there was a New York Times story about it. 607 00:27:24,700 --> 00:27:25,030 Yeah. 608 00:27:25,600 --> 00:27:28,210 Indeed, and I'm very curious as to how that plays out because they're 609 00:27:28,210 --> 00:27:31,530 talking a lot about how Oh, anthropic says that , they're running, 610 00:27:31,860 --> 00:27:36,330 uh, Claude Opus or Claude, the Claude four on Trainium, which is 611 00:27:36,330 --> 00:27:39,660 interesting because I have looked far and wide and I can't find 612 00:27:39,945 --> 00:27:41,875 any Trainium or Inference customers. 613 00:27:42,055 --> 00:27:47,185 The two that I'm aware of from keynotes were Apple and Anthropic Anthropic. 614 00:27:47,185 --> 00:27:50,005 They've invested four billion dollars in, and Apple has 615 00:27:50,065 --> 00:27:53,155 been known to be a large AWS customer for quite some time. 616 00:27:53,665 --> 00:27:57,565 When we see contracts being negotiated between these things, who says 617 00:27:57,565 --> 00:28:01,285 what on stage at whose conference is always negotiated into that? 618 00:28:01,465 --> 00:28:03,895 Apple never says shit about other companies' 619 00:28:03,895 --> 00:28:06,385 products, but they did at reinvent last year. 620 00:28:06,385 --> 00:28:09,715 Gee, I'm sure there was no contractual stipulation there. 621 00:28:10,405 --> 00:28:12,865 Also, no one has said that they're running their 622 00:28:12,865 --> 00:28:15,455 Claude four models exclusively on  Trainium. 623 00:28:15,625 --> 00:28:16,855 So what did they do? 624 00:28:16,855 --> 00:28:19,495 Did they try running a quick like, and here's the thing that 625 00:28:19,495 --> 00:28:22,465 ties the last bow on it and just this one side bit we can 626 00:28:22,465 --> 00:28:24,835 run on  Trainium and the rest, we using video like grownups. 627 00:28:25,285 --> 00:28:27,985 I don't know, but they're being cagey and I don't trust them. 628 00:28:28,195 --> 00:28:30,805 Well, they also, one of the reasons they wouldn't have said they 629 00:28:30,805 --> 00:28:34,315 exclusively run on  Trainium is that both Amazon and Google have. 630 00:28:34,755 --> 00:28:37,935 Separately claim they're the exclusive cloud provider of anthropic. 631 00:28:38,025 --> 00:28:38,685 It rocks. 632 00:28:38,685 --> 00:28:39,315 I love that. 633 00:28:39,315 --> 00:28:42,075 The just lying just lies. 634 00:28:42,195 --> 00:28:45,195 It's an amazing competition though between Amazon and Google 635 00:28:45,195 --> 00:28:47,595 Over who can hit Anthropic harder with the money stick. 636 00:28:47,595 --> 00:28:50,445 I, I wanna be the, the centerpiece in that competition. 637 00:28:50,450 --> 00:28:53,660 I, I would love to get like $100 million. 638 00:28:54,000 --> 00:28:55,610 That sounds so sick. 639 00:28:55,850 --> 00:28:57,030 4 billion each. 640 00:28:57,075 --> 00:29:00,465 Uh, then, then Amazon made it eight and I'm sure it's all AWS credit. 641 00:29:00,465 --> 00:29:02,205 So out of one pocket into the other. 642 00:29:02,325 --> 00:29:03,255 Oh, no, no, no, no. 643 00:29:03,255 --> 00:29:03,675 It did. 644 00:29:03,885 --> 00:29:09,375 Amazon then converted whatever it was into some sort of new vehicle. 645 00:29:09,435 --> 00:29:11,775 So they were out actually able to book that as 646 00:29:11,775 --> 00:29:14,565 profit, like their stock in Anthropic as profit. 647 00:29:15,435 --> 00:29:16,215 Corporate bulls. 648 00:29:16,275 --> 00:29:17,805 They're better at this than Microsoft. 649 00:29:17,805 --> 00:29:18,465 Microsoft is. 650 00:29:18,675 --> 00:29:22,335 Microsoft made such a bad, they really thought OpenAI would die faster. 651 00:29:22,485 --> 00:29:25,975 But looking at the original $4 billion investment from November 652 00:29:25,975 --> 00:29:29,955 22nd, 2024, Amazon and anthropic, deepen strategic collaboration. 653 00:29:29,955 --> 00:29:34,119 Amazon names AWS , it's primary trading partner and will use 654 00:29:34,149 --> 00:29:38,019 AWS Trainium to train and deploy its largest foundation models. 655 00:29:38,289 --> 00:29:39,429 Yeah, use them too. 656 00:29:40,029 --> 00:29:42,609 Great that that does an awful lot of heavy lifting. 657 00:29:42,759 --> 00:29:43,419 Use them. 658 00:29:43,419 --> 00:29:44,019 How? 659 00:29:44,049 --> 00:29:47,439 How many of them is Amazon still buying GPUs from Nvidia? 660 00:29:47,439 --> 00:29:49,119 I didn't hear them cancel their order. 661 00:29:49,824 --> 00:29:52,044 Yeah, I, I'm no expert in this space. 662 00:29:52,044 --> 00:29:53,514 I want to be very clear on that. 663 00:29:53,514 --> 00:29:56,394 For a long time it sounded like Amazon execs would get on stage and 664 00:29:56,394 --> 00:29:59,124 recite Star Trek techno babble when it came to machine learning. 665 00:29:59,574 --> 00:30:02,214 And now, like I, I tend to recognize patterns. 666 00:30:02,334 --> 00:30:05,454 I know that when people are telling me to get in on something now while 667 00:30:05,454 --> 00:30:08,934 it's on the ground floor, they're trying to sell me something every time. 668 00:30:09,144 --> 00:30:12,474 And I also know that when someone is selling something this 669 00:30:12,474 --> 00:30:16,824 hard, it doesn't necessarily live up to a lot of those things. 670 00:30:16,854 --> 00:30:19,614 My 4-year-old daughter loves ice cream, and I don't 671 00:30:19,614 --> 00:30:22,014 find myself having to shove it down her throat. 672 00:30:22,134 --> 00:30:24,054 It's a pull rather than a push. 673 00:30:24,384 --> 00:30:27,354 Everyone's pushing this so hard, I don't 674 00:30:27,354 --> 00:30:29,424 see the outcome that they're talking about. 675 00:30:29,664 --> 00:30:34,014 What if, just, what if the, the power of AI is more useful to folks 676 00:30:34,014 --> 00:30:37,134 on an individual level than it is an enterprise corporate one? 677 00:30:37,284 --> 00:30:41,874 I think your idea that this is a $50 billion tam is directionally correct. 678 00:30:42,084 --> 00:30:42,414 Yeah. 679 00:30:42,534 --> 00:30:44,544 I'll spend 20, 30 bucks a month for this stuff. 680 00:30:44,544 --> 00:30:45,114 No problem. 681 00:30:45,114 --> 00:30:46,164 Would I spend five grand? 682 00:30:46,164 --> 00:30:46,674 No. 683 00:30:46,884 --> 00:30:47,634 So. 684 00:30:48,009 --> 00:30:50,589 There is an inherent limit to all of this until 685 00:30:50,589 --> 00:30:53,469 they un they cover some massively awesome use case. 686 00:30:53,619 --> 00:30:55,299 But they've been looking for that for three 687 00:30:55,299 --> 00:30:57,879 years now and haven't much to show for it beyond. 688 00:30:58,059 --> 00:31:01,389 It's really good at writing code badly, just like our engineers. 689 00:31:01,779 --> 00:31:04,419 And the thing is, I like to talk about the iPhone 690 00:31:05,139 --> 00:31:07,059 and I picked up the iPhone singular wireless. 691 00:31:07,059 --> 00:31:09,459 It was at visiting Penn State where it went to college. 692 00:31:10,029 --> 00:31:12,129 And um, I remember getting it and I remember 693 00:31:12,129 --> 00:31:14,709 handing it to, it was dating a dating girl. 694 00:31:14,709 --> 00:31:18,399 It was like a social studies, like I had her dad worked as a local accountant 695 00:31:18,429 --> 00:31:22,359 in central pa. So really good representation of just like normal folk. 696 00:31:22,569 --> 00:31:23,949 Every single person who touched it. 697 00:31:23,949 --> 00:31:24,309 Got it. 698 00:31:24,969 --> 00:31:26,559 They were like, holy shit, there's like a 699 00:31:26,559 --> 00:31:28,149 little computer and you can just touch it. 700 00:31:28,989 --> 00:31:29,469 Wow. 701 00:31:29,589 --> 00:31:30,939 Like I can take photos on there. 702 00:31:31,149 --> 00:31:32,649 I, my music is on here too. 703 00:31:32,769 --> 00:31:33,099 Wow. 704 00:31:33,129 --> 00:31:34,509 Your email as well. 705 00:31:34,914 --> 00:31:36,834 Do you even like, they kind of immediately, like 706 00:31:36,984 --> 00:31:39,924 the channels started forming in their head with AWS. 707 00:31:39,924 --> 00:31:41,904 People loved, oh, my fracking, God, I want 708 00:31:41,904 --> 00:31:44,934 to strangle every person AWS lost many. 709 00:31:44,934 --> 00:31:48,924 First AWS did that big fracking deal. 710 00:31:49,404 --> 00:31:50,934 There was a path to profitability. 711 00:31:51,024 --> 00:31:53,964 There was an obvious way it which this would become profitable. 712 00:31:53,964 --> 00:31:57,444 On top of that, you didn't have to explain to people why AWS was important. 713 00:31:58,284 --> 00:31:59,424 It made sense. 714 00:31:59,544 --> 00:32:00,174 It made sense. 715 00:32:00,174 --> 00:32:00,744 Immediately. 716 00:32:00,804 --> 00:32:03,564 Suddenly you could provision stuff instantly, overnight. 717 00:32:03,564 --> 00:32:06,684 You could run an experiment in your dorm room and realize, oh, this is stupid. 718 00:32:06,684 --> 00:32:09,024 No one's gonna buy it and you're out 27 cents. 719 00:32:09,024 --> 00:32:12,414 As opposed to having to buy and rack servers and wait 16 weeks because 720 00:32:12,414 --> 00:32:15,234 Dell can't get its act together and sign leases and data centers. 721 00:32:15,414 --> 00:32:16,464 That was transformative. 722 00:32:16,734 --> 00:32:18,834 And it was obviously transformative. 723 00:32:19,614 --> 00:32:23,184 It was obviously like you didn't have to, like you had to sell people. 724 00:32:23,184 --> 00:32:24,894 It got, Amazon loves to sell it, but. 725 00:32:25,464 --> 00:32:27,564 You didn't have to like con people. 726 00:32:27,564 --> 00:32:28,584 There were no people going around it. 727 00:32:28,584 --> 00:32:31,404 If you don't get, I imagine there was someone saying, if you don't get in on 728 00:32:31,404 --> 00:32:35,304 the cloud early, there's always someone, but it's, there was an obvious point. 729 00:32:35,304 --> 00:32:38,004 You didn't have to like talk like a wizard. 730 00:32:38,664 --> 00:32:43,734 I got seriously into cloud in 2015, 2016 era, very late by a lot of standards. 731 00:32:43,734 --> 00:32:45,114 I seemed to have done okay with it. 732 00:32:45,899 --> 00:32:48,474 I, I got into enterprise tech in like 2013. 733 00:32:48,594 --> 00:32:52,164 That was when I started doing PR clients and that, and it's like, guess what? 734 00:32:52,224 --> 00:32:55,134 It's like it was still cooking because there were obvious things. 735 00:32:55,134 --> 00:32:57,114 You have the mixture of on-prem and off, off-prem. 736 00:32:57,114 --> 00:32:58,794 You have all sorts of solutions within it. 737 00:32:58,884 --> 00:33:01,194 There were obvious things and obvious ways it could proliferate. 738 00:33:01,464 --> 00:33:03,474 I am a gizmos and gadgets guy. 739 00:33:04,134 --> 00:33:06,174 I work in a, I run a PR firm. 740 00:33:06,264 --> 00:33:07,914 I have to find reasons. 741 00:33:07,914 --> 00:33:09,354 Things are interesting all the time. 742 00:33:09,564 --> 00:33:11,064 I know what to look for. 743 00:33:11,484 --> 00:33:12,594 I genuinely can't hear. 744 00:33:12,669 --> 00:33:17,769 I genu, I, I have tried even the coding I have on the show, I had Carl 745 00:33:17,769 --> 00:33:20,949 Brown from Internet of Bugs who I adore, and he really explained it where 746 00:33:20,949 --> 00:33:24,669 it's like, yeah, it can do some code, but mediocre code can be dangerous. 747 00:33:24,789 --> 00:33:26,409 If you know what you're looking for, it's great. 748 00:33:26,409 --> 00:33:28,059 But do you always know what you're looking for? 749 00:33:28,059 --> 00:33:29,649 How much of this are you handing off? 750 00:33:30,159 --> 00:33:31,329 And it's like, yeah. 751 00:33:31,329 --> 00:33:34,359 It sounds like pretty much every cloud automation solution 752 00:33:34,359 --> 00:33:36,519 I've ever freaking heard of this is really useful. 753 00:33:36,519 --> 00:33:37,929 It can speed up your workflow. 754 00:33:38,139 --> 00:33:40,569 Something that would take you 10 minutes might take you two. 755 00:33:40,749 --> 00:33:41,979 You need to watch it. 756 00:33:42,369 --> 00:33:44,049 You can't trust it on its own. 757 00:33:44,139 --> 00:33:46,479 But this can automate and turn a 10 minute job 758 00:33:46,479 --> 00:33:48,279 into a two minute job, which compounds over time. 759 00:33:48,399 --> 00:33:48,909 Awesome. 760 00:33:48,969 --> 00:33:50,049 $50 billion. 761 00:33:50,079 --> 00:33:50,859 Tam Market. 762 00:33:50,859 --> 00:33:51,579 Absolutely. 763 00:33:51,849 --> 00:33:54,129 Rock and roll requires stealing from everyone. 764 00:33:54,129 --> 00:33:55,869 It's horribly horrible from the environment. 765 00:33:56,244 --> 00:33:59,783 But I even think that once this bubble pops, all that shit still exists, 766 00:33:59,963 --> 00:34:02,664 but you're not gonna see the scale and you're probably gonna see more 767 00:34:02,664 --> 00:34:08,094 money invested ever in finding ways to make inference as like nothing. 768 00:34:08,243 --> 00:34:10,314 I don't think they are even close. 769 00:34:10,314 --> 00:34:14,153 And I think because if they were, my evidence here is real simple. 770 00:34:14,394 --> 00:34:18,833 If they were close, if they were there, they would say, we've made influence. 771 00:34:18,894 --> 00:34:19,554 Influence. 772 00:34:19,554 --> 00:34:19,974 Nothing. 773 00:34:20,214 --> 00:34:21,024 Influence doesn't cut. 774 00:34:21,054 --> 00:34:22,073 They would just say it. 775 00:34:22,434 --> 00:34:24,533 They would say, we have made this profitable. 776 00:34:24,743 --> 00:34:27,024 It would be the easiest thing in the world. 777 00:34:27,024 --> 00:34:31,283 You would just say, you would just say like, it's profitable, it's good. 778 00:34:31,314 --> 00:34:35,243 It's good When they have these, when with the growth of Azure, the 779 00:34:35,243 --> 00:34:38,214 classic growth of Azure, the growth of AWS, the growth of any software 780 00:34:38,214 --> 00:34:42,474 as a service solution, you, they trumpeted in very simple terms. 781 00:34:42,474 --> 00:34:45,175 They say, Mark Benioff saunters out, slimly. 782 00:34:45,180 --> 00:34:48,054 And it's like, ah, number has gone up so many times. 783 00:34:48,649 --> 00:34:51,399 And he says the word agentic and the industry shits itself for the next 784 00:34:51,399 --> 00:34:55,179 18 months trying to fall over themselves to get in on that buzzword now. 785 00:34:55,329 --> 00:34:57,969 So last year I sat down and I went through a bunch of 786 00:34:57,969 --> 00:35:01,479 Salesforce, um, Dreamforce conference things, the transcripts. 787 00:35:01,689 --> 00:35:06,069 He said they were in AI like five times since 2014. 788 00:35:06,069 --> 00:35:09,609 I think he has said Einstein AI was happening so many times. 789 00:35:09,788 --> 00:35:13,479 It is remarkable how bad the business press is, and it's remarkable 790 00:35:13,479 --> 00:35:19,419 how disconnected the valuations are because this is foolhardy stuff. 791 00:35:19,449 --> 00:35:21,009 These people are not smart. 792 00:35:21,639 --> 00:35:26,739 But when you look at these numbers as well, this is just, 793 00:35:26,739 --> 00:35:28,989 this is the hubris point that's always been coming for them. 794 00:35:29,229 --> 00:35:32,739 When you have just had businesses that it's kind of incredible 795 00:35:32,739 --> 00:35:35,469 how much they've grown, how big these businesses have got. 796 00:35:35,469 --> 00:35:37,869 It's kind of impressive, good or bad people that they 797 00:35:37,869 --> 00:35:40,089 are, they've been able to make remarkable businesses. 798 00:35:40,269 --> 00:35:42,129 I just think that they got it by accident. 799 00:35:42,129 --> 00:35:44,559 I don't think that they were super intentional 800 00:35:44,559 --> 00:35:46,239 with everything because if they were. 801 00:35:46,899 --> 00:35:48,489 Well, they would be doing it again. 802 00:35:49,118 --> 00:35:52,449 They would've, someone would've found, and Microsoft 803 00:35:52,449 --> 00:35:55,229 was the one that seemed to have worked it out. 804 00:35:55,349 --> 00:35:57,019 They had more even if it wasn't profit, 805 00:35:57,038 --> 00:35:58,659 they had more revenue than everyone else. 806 00:35:59,469 --> 00:36:03,069 And then you see, oh, it's, they're meeting cardboard. 807 00:36:03,159 --> 00:36:08,019 They fed themselves their own money, and there should be shareholder lawsuit. 808 00:36:08,019 --> 00:36:10,659 I'm just, it's unbelievable. 809 00:36:10,839 --> 00:36:14,319 This episode is sponsored by my own company, the 810 00:36:14,319 --> 00:36:18,069 Duck Bill Group, having trouble with your AWS bill. 811 00:36:18,159 --> 00:36:20,949 Perhaps it's time to renegotiate a contract with them. 812 00:36:21,159 --> 00:36:23,259 Maybe you're just wondering how to predict 813 00:36:23,259 --> 00:36:26,319 what's going on in the wide world of AWS. 814 00:36:26,499 --> 00:36:29,439 Well, that's where the Duck Bill group comes in to help. 815 00:36:29,859 --> 00:36:32,109 Remember, you can't duck the duck bill. 816 00:36:32,109 --> 00:36:34,209 Bill, which I am reliably informed by my 817 00:36:34,209 --> 00:36:36,909 business partner is absolutely not our motto. 818 00:36:37,449 --> 00:36:40,209 One question I do have for you on the inference economics, though, 819 00:36:40,209 --> 00:36:43,179 I, I hear what you're saying, but one of the arguments I would 820 00:36:43,179 --> 00:36:46,328 make against that would be the fact that Google has been shoving 821 00:36:46,328 --> 00:36:51,009 their dumb AI nonsense into every search result for a while now. 822 00:36:51,339 --> 00:36:54,368 And I, I have a hard time believing that they're losing money on every 823 00:36:54,368 --> 00:36:59,139 search by shoving that in that that would, that would imp well on some 824 00:36:59,139 --> 00:37:02,589 level that would show from orbit at the scale that they tend to operate at. 825 00:37:03,158 --> 00:37:04,479 And their engineers who I, some of them 826 00:37:04,479 --> 00:37:06,459 whom I trust have said that they are not. 827 00:37:06,459 --> 00:37:08,649 But I, I have a hard time seeing how that gets there 828 00:37:08,649 --> 00:37:11,259 except for the fact that TPUs sound like what Trainium and 829 00:37:11,259 --> 00:37:14,559 in wish they were as far as actually supporting things. 830 00:37:14,769 --> 00:37:17,589 I don't have any insight into the economics of it. 831 00:37:17,589 --> 00:37:21,969 I just can go by what I see and they have a stupendous amount of 832 00:37:21,969 --> 00:37:25,299 inference running all the time now for these things that no one wants. 833 00:37:26,139 --> 00:37:27,699 And it's fast inference too, because people 834 00:37:27,699 --> 00:37:29,589 aren't gonna wait five minutes for a page to load. 835 00:37:29,589 --> 00:37:30,519 A few things. 836 00:37:30,759 --> 00:37:31,269 One. 837 00:37:32,004 --> 00:37:36,114 They're not just using TPUs, they're absolutely using, uh, Nvidia chips. 838 00:37:36,114 --> 00:37:37,674 They buy absolute shit. 839 00:37:38,004 --> 00:37:40,134 They have, they did a recent thing. 840 00:37:40,134 --> 00:37:40,344 Wow. 841 00:37:40,344 --> 00:37:42,774 We can run one model on one h, 100 842 00:37:45,444 --> 00:37:46,314 well done. 843 00:37:46,703 --> 00:37:49,614 Um, doesn't mean it's, doesn't mean they're not losing money. 844 00:37:49,764 --> 00:37:53,094 And now engineer, they may have some insight, 845 00:37:53,094 --> 00:37:54,864 but how much financial insight do they have? 846 00:37:54,894 --> 00:37:58,134 If Google was, and also real simple, if Google was not 847 00:37:58,134 --> 00:37:59,964 losing money, they would say they weren't losing money. 848 00:38:00,114 --> 00:38:02,453 How would we see that they're losing money? 849 00:38:02,453 --> 00:38:04,314 Where would that be on their earnings? 850 00:38:04,374 --> 00:38:06,834 We wouldn't, 'cause they bury every, these companies. 851 00:38:07,283 --> 00:38:09,864 Amy Hood is not the only finance wizard out there. 852 00:38:09,864 --> 00:38:13,194 I forget what the CFO at Google is probably intentional there. 853 00:38:13,464 --> 00:38:15,294 But Sundar is a McKinsey guy. 854 00:38:15,924 --> 00:38:17,214 These people are evil. 855 00:38:17,964 --> 00:38:20,694 Uh, McKinsey, flesh eating bacteria of business. 856 00:38:21,894 --> 00:38:22,913 They're not gonna say it. 857 00:38:22,913 --> 00:38:25,434 But also they would just say, in instance, free. 858 00:38:25,434 --> 00:38:27,413 And would they burn billions of dollars? 859 00:38:27,684 --> 00:38:28,644 Are you asking. 860 00:38:29,109 --> 00:38:33,249 Whether, just wanna be clear, a hyperscaler would burn 861 00:38:33,249 --> 00:38:38,169 billions of dollars chasing AI because they already have. 862 00:38:38,828 --> 00:38:40,029 They already are. 863 00:38:40,089 --> 00:38:41,288 They would burn billions. 864 00:38:41,349 --> 00:38:44,859 Maybe they're even wrapping some of that loss into their capital expenditures. 865 00:38:44,919 --> 00:38:45,879 Who freaking knows? 866 00:38:45,879 --> 00:38:47,019 They don't tell us. 867 00:38:47,078 --> 00:38:48,788 But there is plenty of evidence that these 868 00:38:48,788 --> 00:38:50,618 companies are willing to lose billions. 869 00:38:50,709 --> 00:38:56,299 Google hired, they bought character AI kind of for $2.7 billion just to get Noam 870 00:38:56,299 --> 00:38:59,949 Shazeer back, who's one of the original attention is all you need paper writers. 871 00:38:59,949 --> 00:39:01,328 The transformer paper that kicked off this 872 00:39:01,328 --> 00:39:05,049 generation, Google does dumb shit all the time. 873 00:39:05,259 --> 00:39:07,149 Everyone hates their integrations. 874 00:39:07,449 --> 00:39:09,099 Yeah, I think they are losing money. 875 00:39:09,099 --> 00:39:11,559 I think they're willingly doing so and I think they'll do it again. 876 00:39:11,739 --> 00:39:16,839 I think that they have their nasty growth pig search and all of 877 00:39:16,839 --> 00:39:20,709 their monopolies allow them to finance many money losing operations. 878 00:39:21,038 --> 00:39:23,919 Do you think I, I would actually really need to look into the economics 879 00:39:23,919 --> 00:39:26,529 of Chrome, 'cause I can't imagine that that has direct revenue. 880 00:39:26,949 --> 00:39:29,349 But it's kind of like meta meta's. 881 00:39:29,349 --> 00:39:30,788 Absolutely losing billions. 882 00:39:30,788 --> 00:39:33,249 100%. And do you not think that 883 00:39:34,179 --> 00:39:37,029 Meta's very clearly thrashing and desperately trying to find the next thing. 884 00:39:37,239 --> 00:39:38,979 I love, I love what they're doing. 885 00:39:39,129 --> 00:39:39,788 I love it. 886 00:39:39,849 --> 00:39:42,699 I think it's the funniest shit in the world I've ever seen. 887 00:39:42,849 --> 00:39:45,609 It's like watching Zuckerberg's midlife crisis play out before us. 888 00:39:45,939 --> 00:39:46,839 It really is. 889 00:39:46,839 --> 00:39:49,029 He is having like a hell of a midlife crisis. 890 00:39:49,029 --> 00:39:53,199 I thought Elon Musk was having any uh uh, like a midlife crisis. 891 00:39:53,199 --> 00:39:56,649 But someone said something to me on Blue Sky about this earlier. 892 00:39:56,649 --> 00:39:56,919 Yeah. 893 00:39:57,279 --> 00:40:00,339 That meta is being the LIV golf of AI research. 894 00:40:00,459 --> 00:40:02,769 I think that that is one of the funniest ways to put it. 895 00:40:02,769 --> 00:40:06,578 'cause it really is just like this giant evil company that everyone hates being 896 00:40:06,578 --> 00:40:12,519 like, do you want more money than realistically a person can conceptualize to 897 00:40:12,519 --> 00:40:17,078 come and work with me on large language models becoming super intelligence. 898 00:40:17,259 --> 00:40:20,809 By the way, here's my chief AI scientist, his name's Yann LeCun. 899 00:40:21,038 --> 00:40:22,449 He disagrees with me. 900 00:40:22,449 --> 00:40:23,859 He does not think this is possible. 901 00:40:23,979 --> 00:40:25,449 This is your boss. 902 00:40:25,809 --> 00:40:28,809 Oh, and, and Altman was saying that Meta was offering a hundred million 903 00:40:28,809 --> 00:40:33,129 dollars signing bonuses that people were not taking for bullshit. 904 00:40:33,189 --> 00:40:35,709 That is generational wealth money to come work 905 00:40:35,709 --> 00:40:37,569 with some douche bag for a couple of years. 906 00:40:38,198 --> 00:40:38,948 Who were they offered to? 907 00:40:38,948 --> 00:40:39,609 Sam Altman? 908 00:40:39,819 --> 00:40:40,658 Two things. 909 00:40:41,049 --> 00:40:44,529 One, they have hired some people, including a guy 910 00:40:44,529 --> 00:40:46,929 with like one of the most insane names I've ever said. 911 00:40:46,929 --> 00:40:49,569 I just, I've been looking forward to saying this out loud all day. 912 00:40:49,569 --> 00:40:50,679 Lemme just get to this. 913 00:40:51,249 --> 00:40:53,229 Oh God, this name is so good too. 914 00:40:54,209 --> 00:40:57,129 His name is Trapit Bansal. 915 00:40:57,749 --> 00:40:58,689 That is quite the name. 916 00:40:58,959 --> 00:41:00,759 That's a incredible name. 917 00:41:00,879 --> 00:41:02,019 I'm called Ed Zitron. 918 00:41:02,019 --> 00:41:06,609 I have a phenomenal name, but  Trapit  Bansal might have to marry him. 919 00:41:06,999 --> 00:41:11,679 Uh, but is it, is it  Trapit  Bansal  Zitron is actually pretty anyway. 920 00:41:11,889 --> 00:41:15,489 Uh, girlfriend's gonna hate that, but there we are. 921 00:41:15,788 --> 00:41:16,509 She'll understand. 922 00:41:16,509 --> 00:41:19,569 It's for the content, but where was it? 923 00:41:19,569 --> 00:41:21,279 Yeah, these a hundred million dollar offers. 924 00:41:21,279 --> 00:41:23,828 I reckon Mr.  Bansal, I probably took one. 925 00:41:24,953 --> 00:41:27,233 Well, as Altman said, he offered to their best employees. 926 00:41:27,233 --> 00:41:30,294 So definitionally, anyone who takes it is not one of their best. 927 00:41:30,624 --> 00:41:31,134 Oh, of. 928 00:41:31,493 --> 00:41:35,063 And of course he's gonna say that, but I think it's great 929 00:41:35,063 --> 00:41:38,033 because like I said, Yann LeCun, chief AI scientist says that 930 00:41:38,033 --> 00:41:40,344 large language models will not become super intelligence. 931 00:41:40,464 --> 00:41:41,964 It's like, this is your boss. 932 00:41:42,084 --> 00:41:46,523 I've hired you to do a job that your boss doesn't like, but I am also your boss. 933 00:41:46,523 --> 00:41:48,294 And his boss have fun. 934 00:41:48,563 --> 00:41:48,924 Oh good. 935 00:41:48,924 --> 00:41:50,304 Mommy and daddy are fighting again! 936 00:41:50,393 --> 00:41:54,714 And constantly like it's like being born into a divorce. 937 00:41:54,834 --> 00:41:56,153 Like insane stuff. 938 00:41:56,153 --> 00:41:59,153 But on top of that, what are you freaking doing there? 939 00:41:59,214 --> 00:42:02,663 You, the head of your team is Alexandr Wang of scale ai. 940 00:42:02,754 --> 00:42:03,384 Not for nothing. 941 00:42:03,384 --> 00:42:05,453 If they offer me a hundred million dollars signing bonus, 942 00:42:05,453 --> 00:42:07,344 I'm doing whatever the hell they ask me to do until that 943 00:42:07,344 --> 00:42:09,504 earnout is done and then you'll never hear from me again. 944 00:42:09,594 --> 00:42:11,754 You want me to hit, hit myself in the nuts every morning? 945 00:42:11,754 --> 00:42:12,294 It'll happen. 946 00:42:12,294 --> 00:42:13,823 I can buy, I can buy new ones. 947 00:42:14,453 --> 00:42:14,844 That's right. 948 00:42:14,844 --> 00:42:15,563 I, I would learn. 949 00:42:15,624 --> 00:42:15,983 You're right. 950 00:42:15,983 --> 00:42:16,764 Hit myself in the nuts. 951 00:42:16,764 --> 00:42:18,384 Every morning I would learn node for that. 952 00:42:18,443 --> 00:42:18,684 Yeah. 953 00:42:18,684 --> 00:42:20,754 I mean, I will a hundred million dollars. 954 00:42:20,783 --> 00:42:21,384 Yeah, sure. 955 00:42:21,653 --> 00:42:22,523 But on top of that. 956 00:42:23,154 --> 00:42:25,703 The other thing, there's two other things that I think have pushed people back. 957 00:42:25,703 --> 00:42:28,104 The information had some good reporting on this as well, where 958 00:42:28,104 --> 00:42:31,314 it was, first of all, people were like the Yann LeCun thing. 959 00:42:31,314 --> 00:42:34,283 They were like, Hey, what are you doing here? 960 00:42:34,283 --> 00:42:35,663 I don't think you really understand. 961 00:42:35,694 --> 00:42:38,064 'cause Mark Zuckerberg, it's actually kind of a compelling offer. 962 00:42:38,304 --> 00:42:42,024 He was saying, I will give you a shit ton of money and also you won't 963 00:42:42,024 --> 00:42:45,953 have to worry about compute resources because OpenAI classically would, 964 00:42:46,374 --> 00:42:50,364 Sam Altman is very vengeful and he will restrict access on compute and 965 00:42:50,364 --> 00:42:53,993 resources at OpenAI if he doesn't like you being reported repeatedly. 966 00:42:54,474 --> 00:42:56,964 I think it was in Karen Howe's Empires of AI as well 967 00:42:56,964 --> 00:42:59,154 and Washington Post and Natasha Tku had some stuff. 968 00:42:59,484 --> 00:43:01,344 I think, pardon me if I got that wrong. 969 00:43:01,554 --> 00:43:04,254 No one has ever offered me all the compute resources 970 00:43:04,254 --> 00:43:06,743 I can use because they know my kind of horse shit. 971 00:43:06,834 --> 00:43:09,234 I mean, I would be working out ways to burn it. 972 00:43:09,234 --> 00:43:12,323 I would, I would just go and there'd be like a hundred million dollars. 973 00:43:12,323 --> 00:43:15,384 This is a, this is time to be the most annoying gentleman. 974 00:43:15,624 --> 00:43:16,734 But the other thing is. 975 00:43:17,124 --> 00:43:20,243 Is, I wonder if that's not a hundred million upfront. 976 00:43:20,243 --> 00:43:22,674 Maybe it's more like still $5 million. 977 00:43:22,733 --> 00:43:24,264 I would probably still do the nuts thing. 978 00:43:24,894 --> 00:43:25,134 Yeah. 979 00:43:25,163 --> 00:43:25,943 20 year earnout. 980 00:43:26,004 --> 00:43:26,214 Yeah. 981 00:43:26,453 --> 00:43:26,874 Yeah. 982 00:43:26,964 --> 00:43:29,334 But it's probably structured in a weird way. 983 00:43:29,964 --> 00:43:32,334 Oh, there's no way they're cutting checks for that. 984 00:43:32,334 --> 00:43:33,294 There's, there's just no way. 985 00:43:33,323 --> 00:43:35,453 It's probably got weird cliffs to it. 986 00:43:36,203 --> 00:43:37,193 Probably milestones. 987 00:43:37,193 --> 00:43:42,983 And on top of it even you are, and on top of that, the actual 988 00:43:42,983 --> 00:43:45,684 job sounds like it would be fracking miserable, because do you 989 00:43:45,684 --> 00:43:48,504 think Mark Zuckerberg is gonna put more or less pressure on you? 990 00:43:48,624 --> 00:43:49,044 No. 991 00:43:49,163 --> 00:43:53,544 You are the, you are the person that he's going to blame when this doesn't work. 992 00:43:53,544 --> 00:43:56,424 That is what you, I would take a hundred million dollars to do that. 993 00:43:56,663 --> 00:43:57,174 Oh, sure. 994 00:43:57,174 --> 00:43:57,953 I, I'll do it. 995 00:43:57,953 --> 00:43:59,424 And I'll just expect that I'm gonna need 996 00:43:59,424 --> 00:44:01,163 to cry to my therapist after every meeting. 997 00:44:01,163 --> 00:44:01,584 Fine. 998 00:44:01,674 --> 00:44:03,983 Oh, I, I would, I wouldn't be crying at all. 999 00:44:03,983 --> 00:44:05,214 I'd have a hundred million dollars. 1000 00:44:05,214 --> 00:44:07,943 I would go into work every day dressing. 1001 00:44:07,943 --> 00:44:09,943 However, Mark Zuckerberg last dressed. 1002 00:44:10,464 --> 00:44:12,069 And then just claim I'm copying him. 1003 00:44:12,069 --> 00:44:13,959 I would just create chaos like I would 1004 00:44:13,959 --> 00:44:16,658 jokify the entirety of Meta's AI department. 1005 00:44:16,868 --> 00:44:17,739 It would be amazing. 1006 00:44:17,979 --> 00:44:20,199 Well, you don't need a hundred million dollars to do that. 1007 00:44:20,288 --> 00:44:22,779 No, but I would, if I got that money, I would really, I 1008 00:44:22,779 --> 00:44:25,359 would have someone, my joker makeup guy every morning. 1009 00:44:25,929 --> 00:44:27,158 Just, just a guy who comes in. 1010 00:44:27,699 --> 00:44:28,029 Yeah. 1011 00:44:28,029 --> 00:44:30,158 He makes $250,000 a year. 1012 00:44:30,399 --> 00:44:32,828 He's also my driver and he also dresses like the Joker. 1013 00:44:33,129 --> 00:44:35,439 'cause Mark Zuckerberg fracking hates me by the end of it. 1014 00:44:35,618 --> 00:44:37,419 Just like he's doing the Joker. 1015 00:44:37,629 --> 00:44:37,779 Yeah. 1016 00:44:37,779 --> 00:44:40,419 I try to be just like Mark proving that I too can hire a clown. 1017 00:44:41,634 --> 00:44:43,704 He does look like a clown without his makeup on. 1018 00:44:43,824 --> 00:44:44,424 He really does. 1019 00:44:44,424 --> 00:44:47,764 It's the frizzy hair and the weird, like, like weird tan. 1020 00:44:47,844 --> 00:44:50,064 We saw a few years of business mark where he, 1021 00:44:50,064 --> 00:44:51,474 he honestly, I will give him credit, we're due. 1022 00:44:51,594 --> 00:44:55,704 He has managed to reinvent himself in a way that few people necessarily can. 1023 00:44:55,734 --> 00:44:58,524 He became, he went from the hoodie dude to wearing a suit 1024 00:44:58,524 --> 00:45:01,464 all the time, dude, to people confused him for a robot dude. 1025 00:45:01,644 --> 00:45:04,254 And now he's just weird because I, I have to imagine at 1026 00:45:04,254 --> 00:45:06,294 that tier, you don't have to have anyone around you who 1027 00:45:06,294 --> 00:45:08,484 doesn't empower you to do whatever the hell you want to do. 1028 00:45:08,604 --> 00:45:10,913 You surround yourself by nature with yes men, 1029 00:45:11,154 --> 00:45:13,464 and that is not good psychologically for anyone. 1030 00:45:13,554 --> 00:45:18,564 You realize though, that like Mark Zuckerberg can't be fired. 1031 00:45:19,703 --> 00:45:19,913 Yeah. 1032 00:45:19,974 --> 00:45:23,154 Like he can't be, he, he owns more board seats than anyone. 1033 00:45:23,154 --> 00:45:23,964 There's nothing they can do. 1034 00:45:23,964 --> 00:45:26,243 They couldn't even sue him out, so he would 1035 00:45:26,243 --> 00:45:28,224 drive this bad boy into the, into the ground. 1036 00:45:28,224 --> 00:45:34,374 But top of all of that, his last rebrand worked only for a minute, and because 1037 00:45:34,374 --> 00:45:38,033 it worked on the media, which he thought would be enough, no, he needed 1038 00:45:38,033 --> 00:45:41,274 it to work on Donald Trump, except Donald Trump doesn't like new money. 1039 00:45:41,964 --> 00:45:44,724 The actual trick for Mark Zuckerberg would've been to align with 1040 00:45:44,724 --> 00:45:50,033 some sort of elder god creature, some sort of aged finance freak. 1041 00:45:50,033 --> 00:45:52,404 Like if Sheldon Adelson was still alive. 1042 00:45:52,899 --> 00:45:54,609 Our rest in piss. 1043 00:45:54,819 --> 00:45:55,449 Oh, yes. 1044 00:45:55,509 --> 00:45:57,759 My, my personal favorite Zuckerberg trivia on this is apparently 1045 00:45:57,759 --> 00:46:00,759 he's five foot eight or so and hates it to the point where 1046 00:46:00,788 --> 00:46:04,538 he has people stage his Instagram photos, so he looks taller. 1047 00:46:04,749 --> 00:46:07,089 Uh, in Congress, someone took a picture, there was a cushion 1048 00:46:07,269 --> 00:46:10,029 on the chair, so he didn't look like he was drowning in it. 1049 00:46:10,209 --> 00:46:11,169 Now, I don't give a shit. 1050 00:46:11,199 --> 00:46:12,279 People are gonna be over tall. 1051 00:46:12,279 --> 00:46:14,889 They're going to be, but the fact that he's so wildly 1052 00:46:14,889 --> 00:46:17,679 sensitive about him for all his money, he can't buy himself 1053 00:46:17,679 --> 00:46:20,679 four inches of height is nothing short of hilarious to me. 1054 00:46:20,859 --> 00:46:24,519 I'm, I'm five nine, neither short nor tall, and now that I 1055 00:46:24,519 --> 00:46:26,828 know I'm taller than Mark Zuckerberg, I feel so powerful. 1056 00:46:27,038 --> 00:46:29,529 Also, who cares if anyone insulted by height? 1057 00:46:29,674 --> 00:46:30,024 Sorry. 1058 00:46:30,069 --> 00:46:34,209 He's five, seven and a half, apparently, which whenever its people 1059 00:46:34,209 --> 00:46:37,299 start saying a half, that's how you know they're sensitive about it. 1060 00:46:37,299 --> 00:46:39,399 Oh, I hear Sam Altman's the same. 1061 00:46:39,819 --> 00:46:42,069 I, I've heard, I don't know his true height. 1062 00:46:42,158 --> 00:46:45,189 If Sam Altman's like five foot one, that would be that. 1063 00:46:45,189 --> 00:46:46,658 That's what I'm gonna start saying. 1064 00:46:47,078 --> 00:46:49,899 I realize we've kind of got off of topic, but the 1065 00:46:49,899 --> 00:46:53,889 fact is this does tie back, which is we're discussing 1066 00:46:53,889 --> 00:46:56,288 people just spending billions of dollars for no reason. 1067 00:46:56,948 --> 00:46:57,988 It's vanity projects 1068 00:46:58,389 --> 00:47:01,989 But it's vanity projects that have absorbed the entirety of the economy. 1069 00:47:02,259 --> 00:47:05,649 The thing that I scare people with, no one likes hearing this, so enjoy. 1070 00:47:06,249 --> 00:47:11,919 So the magnificent seven stocks, they are 35% of the economy, right? 1071 00:47:11,948 --> 00:47:15,339 The US economy, 19% of those stocks is Nvidia 1072 00:47:15,429 --> 00:47:17,649 NVIDIA's continued growth is the only thing. 1073 00:47:17,799 --> 00:47:20,529 Continuing NVIDIA's valuations. 1074 00:47:20,618 --> 00:47:24,639 How does Nvidia grow by the rest of the magnificent seven buying GPUs from them? 1075 00:47:25,749 --> 00:47:27,399 What happens if that changes? 1076 00:47:28,528 --> 00:47:29,453 Well think about this. 1077 00:47:29,453 --> 00:47:32,064 I think that the same people, you ever notice how a lot of 1078 00:47:32,064 --> 00:47:35,754 the AI folks who are the big, the most bullish folks you'll 1079 00:47:35,754 --> 00:47:39,113 meet, were also deep in the wool crypto bros. It's like, what? 1080 00:47:39,113 --> 00:47:39,384 What? 1081 00:47:39,384 --> 00:47:40,764 Why do these people all pivot? 1082 00:47:41,064 --> 00:47:43,854 Because they're Nvidia Street team all, as long 1083 00:47:43,854 --> 00:47:46,344 as they're using the GPUs, that's what it is. 1084 00:47:46,794 --> 00:47:49,224 And if this falls through, we'll go back to using 'em for gaming. 1085 00:47:49,493 --> 00:47:51,684 I, it's not the same like that. 1086 00:47:51,743 --> 00:47:53,004 I will push back on that one. 1087 00:47:53,453 --> 00:47:55,344 You're 50 to 80%, right? 1088 00:47:55,344 --> 00:47:55,794 And the, yeah. 1089 00:47:55,794 --> 00:47:58,044 A ton of people who are like, I'm in crypto, I'm 1090 00:47:58,044 --> 00:47:59,964 in AI Just 'cause they were never in anything. 1091 00:48:00,504 --> 00:48:01,434 They're just hype chasing. 1092 00:48:01,434 --> 00:48:01,554 Yeah. 1093 00:48:01,554 --> 00:48:04,733 It turns out that by being an influencer with no actual expertise 1094 00:48:04,733 --> 00:48:07,613 in a thing means you can retool and pivot super quickly. 1095 00:48:07,644 --> 00:48:08,903 'Cause you don't have to spend that time 1096 00:48:08,903 --> 00:48:11,033 gathering this pesky thing called expertise. 1097 00:48:11,064 --> 00:48:12,264 It's also sold in the same way. 1098 00:48:12,384 --> 00:48:13,974 It's, I have a specious idea. 1099 00:48:13,974 --> 00:48:16,524 I've connected nascent tech to You don't understand to it. 1100 00:48:16,524 --> 00:48:17,033 Wow. 1101 00:48:17,214 --> 00:48:18,653 And getting quick before it's too late. 1102 00:48:18,743 --> 00:48:19,374 Exactly. 1103 00:48:19,403 --> 00:48:20,363 Same kind of pressure. 1104 00:48:20,724 --> 00:48:23,754 The only thing is, is that the GPU side is just wholly different. 1105 00:48:23,754 --> 00:48:28,999 And I mean the rack mounted insanity of a, oh god, what is it? 1106 00:48:29,064 --> 00:48:31,193 GB 200 or whatever the Blackwell. 1107 00:48:31,704 --> 00:48:35,514 Things are, they're all these rack mounted, 3000 pound monstrosities. 1108 00:48:35,514 --> 00:48:36,294 They're horrifying. 1109 00:48:36,444 --> 00:48:37,314 They are the rack. 1110 00:48:37,524 --> 00:48:41,124 They, they really, and they have cooling issues because science 1111 00:48:41,184 --> 00:48:45,984 exists, but they're, these people are doing it because they're 1112 00:48:45,984 --> 00:48:48,894 too stupid to realize that what they're in is kind of a scam. 1113 00:48:49,044 --> 00:48:51,504 I think that they're scamming in the sense that they're selling something 1114 00:48:51,504 --> 00:48:54,354 they don't really understand, but they're not like, I think this will die. 1115 00:48:54,594 --> 00:48:56,454 I think that they think this will go forever. 1116 00:48:56,514 --> 00:48:57,654 Kind of like crypto. 1117 00:48:57,834 --> 00:49:00,413 And when I, this is the other thing, people with my 1118 00:49:00,413 --> 00:49:02,244 work, they're like, oh, you started like a year ago. 1119 00:49:03,204 --> 00:49:04,314 I was writing in 2020. 1120 00:49:04,404 --> 00:49:06,684 I was on crypto before everyone. 1121 00:49:07,104 --> 00:49:07,464 Yeah. 1122 00:49:07,524 --> 00:49:10,163 I, I found that crypto has been looking for a business 1123 00:49:10,163 --> 00:49:14,784 model that is not fraud or fraud adjacent, uh, for 15 years. 1124 00:49:14,784 --> 00:49:16,314 At this point, it doesn't seem to have one. 1125 00:49:16,464 --> 00:49:18,384 It's, uh, liquidity for venture capital. 1126 00:49:18,413 --> 00:49:19,764 That's what it actually is. 1127 00:49:19,884 --> 00:49:21,174 At, at least ai. 1128 00:49:21,174 --> 00:49:22,044 I could point at that. 1129 00:49:22,044 --> 00:49:24,654 I could make a robot say something funny very quickly. 1130 00:49:25,148 --> 00:49:25,688 Okay. 1131 00:49:25,688 --> 00:49:26,648 Is there value to that? 1132 00:49:26,648 --> 00:49:27,219 I don't know. 1133 00:49:27,219 --> 00:49:29,108 Not a trillion dollars worth, but yeah. 1134 00:49:29,108 --> 00:49:29,379 Okay. 1135 00:49:29,379 --> 00:49:30,759 It amuses me for 10 minutes 1136 00:49:30,908 --> 00:49:34,118 and I have the grand business idiot theory, which is that the people 1137 00:49:34,118 --> 00:49:38,648 in power who have the money and the power and the hands of the media, 1138 00:49:38,799 --> 00:49:42,009 they don't understand much of what's going on they never did before. 1139 00:49:42,249 --> 00:49:46,118 And AI is this kind of mystical thing where it kind of has value, it kind 1140 00:49:46,118 --> 00:49:49,479 of has something you can point to and said outcomes you can point to and 1141 00:49:49,479 --> 00:49:54,009 go, well, to extrapolate from what this does now, it will do this next year. 1142 00:49:54,009 --> 00:49:54,608 Why? 1143 00:49:55,538 --> 00:49:56,438 I don't know. 1144 00:49:56,469 --> 00:49:58,868 But these people have a lot of money and this 1145 00:49:58,868 --> 00:50:01,148 much money can't be wrong this much money. 1146 00:50:01,148 --> 00:50:03,339 Ha ha ha. 1147 00:50:03,639 --> 00:50:03,999 Damn. 1148 00:50:03,999 --> 00:50:05,078 Can it be freaking wrong? 1149 00:50:05,408 --> 00:50:05,528 Yeah. 1150 00:50:05,528 --> 00:50:07,749 But that's bet's Howard's big enough that when 1151 00:50:07,749 --> 00:50:09,759 it falls, it takes a lot of other people out. 1152 00:50:09,999 --> 00:50:13,209 And I mean, if, what happens when people don't buy GPUs? 1153 00:50:13,209 --> 00:50:14,139 'cause here's the other thing. 1154 00:50:14,528 --> 00:50:18,339 Whether or not you agree with me on ai, maybe you want to think about 1155 00:50:18,339 --> 00:50:22,749 something which is NVIDIA's, uh, data center revenue in the last quarter. 1156 00:50:22,749 --> 00:50:24,219 So the one where GPUs live. 1157 00:50:24,249 --> 00:50:27,069 It was, uh, $39.1 billion. 1158 00:50:27,069 --> 00:50:28,059 Pretty big, right? 1159 00:50:28,299 --> 00:50:31,389 Except they missed estimates by a couple hundred million, 1160 00:50:31,538 --> 00:50:35,229 which, you know, that's one I, it happened to me yesterday. 1161 00:50:35,379 --> 00:50:36,009 I knew a guy. 1162 00:50:36,459 --> 00:50:38,349 Um, here's the problem. 1163 00:50:38,948 --> 00:50:43,538 That number is the single most economic important economic indicator right now. 1164 00:50:44,559 --> 00:50:48,669 That number is, I think, 80 something percent of NVIDIA's revenue. 1165 00:50:48,759 --> 00:50:51,309 It is the reason that Nvidia grows every quarter. 1166 00:50:51,549 --> 00:50:55,899 If that number does not continue growing, because for me to be wrong, 1167 00:50:56,078 --> 00:50:59,559 for this to keep going, everyone needs to keep buying Nvidia GPUs. 1168 00:50:59,559 --> 00:51:02,679 Nvidia will need to, like in a, in a year or so, they'll need 1169 00:51:02,679 --> 00:51:06,729 to sell 60 to a hundred billion dollars of GPUs a quarter. 1170 00:51:06,879 --> 00:51:10,599 And then after that, they will need to sell 80 to $150 billion a 1171 00:51:10,599 --> 00:51:13,868 quarter, and then they will need to sell a hundred to 180 billion. 1172 00:51:14,229 --> 00:51:16,569 They will need to keep growing exponentially. 1173 00:51:16,569 --> 00:51:21,219 The rate that the market is requiring Nvidia to grow is too high. 1174 00:51:21,894 --> 00:51:24,983 At some point that growth has to run out because we 1175 00:51:24,983 --> 00:51:28,344 don't have the physical space for all of these GPUs. 1176 00:51:28,554 --> 00:51:30,743 And at some point, if we don't have the returns 1177 00:51:30,743 --> 00:51:32,934 coming out of them, in fact, we're losing money. 1178 00:51:33,474 --> 00:51:35,304 Maybe it's time to not buy them. 1179 00:51:35,573 --> 00:51:37,403 What if Google's TPUs help? 1180 00:51:38,153 --> 00:51:40,794 What if go Google actually can move to TPUs? 1181 00:51:40,913 --> 00:51:41,934 What would happen then? 1182 00:51:42,354 --> 00:51:44,754 What if we find out that the training paradigm we're 1183 00:51:44,754 --> 00:51:47,363 under does not work, which we're already finding out? 1184 00:51:47,604 --> 00:51:50,663 Okay, that means we don't need to buy all of the GPUs because the GPUs 1185 00:51:50,663 --> 00:51:54,863 are really most useful for having a lot of them allows you to train. 1186 00:51:55,854 --> 00:51:58,794 If training isn't helpful, why would you need that? 1187 00:51:58,794 --> 00:52:02,094 Because inference is not as demanding on a GPU. 1188 00:52:03,113 --> 00:52:06,924 So it's like what do we, what do we do here? 1189 00:52:06,953 --> 00:52:08,033 What are we doing? 1190 00:52:08,033 --> 00:52:08,874 There's not much money. 1191 00:52:08,874 --> 00:52:12,294 There's a lot of expenses and I think the. 1192 00:52:13,284 --> 00:52:15,699 It is funny that I'm on this podcast 'cause I think it's probably 1193 00:52:15,699 --> 00:52:20,288 the most germane to my art, the actual way for AI to be sticky. 1194 00:52:20,288 --> 00:52:23,529 The actual way for AI to have made it was the enterprise. 1195 00:52:23,589 --> 00:52:24,759 It was never consumer. 1196 00:52:25,364 --> 00:52:27,639 It, it was going to be API access. 1197 00:52:27,729 --> 00:52:28,599 That's where the money is. 1198 00:52:28,719 --> 00:52:33,578 It is it it, but it was gonna be selling big seat SaaS 1199 00:52:33,578 --> 00:52:38,859 contracts, basically combining the way it should have worked. 1200 00:52:38,859 --> 00:52:41,199 If OpenAI would've been a functional business, would've been, it 1201 00:52:41,199 --> 00:52:45,639 would've looked a little like Microsoft 365 plus a, uh, Azure. 1202 00:52:45,939 --> 00:52:48,399 It would've been, we make a shit ton of money from selling 1203 00:52:48,489 --> 00:52:51,369 enterprise subscriptions, not consumer, but enterprise. 1204 00:52:51,699 --> 00:52:54,099 And we will make a shit ton of money on API. 1205 00:52:54,519 --> 00:52:57,578 They make a decent amount of money on both, because everyone 1206 00:52:57,578 --> 00:53:00,639 talks about AI and everyone mentions open AI every time 1207 00:53:00,879 --> 00:53:02,379 They won the branding marketing war. 1208 00:53:02,619 --> 00:53:03,339 Exactly. 1209 00:53:03,983 --> 00:53:07,733 And on top of that though, they're having, there's multiple stories, journal 1210 00:53:07,733 --> 00:53:10,644 and the information this week that say they're having trouble, they're having 1211 00:53:10,644 --> 00:53:14,033 to hit, actually you'll know this one, no one else would agree with me on this. 1212 00:53:14,033 --> 00:53:16,434 They're like, yeah, they're changing from a 1213 00:53:16,554 --> 00:53:19,344 subscription based model to a usage based model. 1214 00:53:19,584 --> 00:53:21,533 And I'm like, that's a bad sign. 1215 00:53:21,594 --> 00:53:24,684 That's a, if you know anything about SaaS, that's a bad sign. 1216 00:53:25,044 --> 00:53:27,983 That means that they're, they do not have product market fit. 1217 00:53:28,644 --> 00:53:30,894 OpenAI, the biggest name in the fracking game 1218 00:53:30,953 --> 00:53:33,294 does not have enterprise product market fit. 1219 00:53:34,044 --> 00:53:35,063 They don't have it. 1220 00:53:35,273 --> 00:53:36,474 That is doom. 1221 00:53:36,533 --> 00:53:38,514 That is certain doom. 1222 00:53:38,993 --> 00:53:42,413 If you, do you think a usage based model is gonna No, it'll probably 1223 00:53:42,413 --> 00:53:46,733 bring down, it will hopefully allow you to sell to scale more, but 1224 00:53:46,733 --> 00:53:49,644 it's not like it's gonna increase the amount that people are spending. 1225 00:53:49,794 --> 00:53:51,353 'cause if people wanted to increase the amount 1226 00:53:51,353 --> 00:53:53,334 of the spend, they use the subscription. 1227 00:53:54,189 --> 00:53:55,359 They'd use the subscription. 1228 00:53:55,899 --> 00:53:56,318 Right. 1229 00:53:57,129 --> 00:53:58,959 Uh, the problem too is you have a psychological issue, 1230 00:53:58,988 --> 00:54:01,059 especially in the consumer land when you do that, where people 1231 00:54:01,059 --> 00:54:03,399 feel that when everything you do is metered, then every time 1232 00:54:03,399 --> 00:54:05,408 you use it for anything, it feels like an investment decision. 1233 00:54:05,589 --> 00:54:07,719 Well, cons, they're not doing it for consumers, 1234 00:54:08,198 --> 00:54:09,639 they're just doing it for the enterprise. 1235 00:54:09,729 --> 00:54:10,389 Mm. 1236 00:54:10,568 --> 00:54:12,219 And they're having to, they're also having to 1237 00:54:12,219 --> 00:54:14,679 already deep discount to compete with Microsoft. 1238 00:54:16,359 --> 00:54:20,408 It's like these are on a SaaS and enterprise sales level. 1239 00:54:20,499 --> 00:54:25,988 These are terrifying stories, but most people, it's just really bad. 1240 00:54:26,379 --> 00:54:31,658 I built a dumb blue sky bot, uh, the, uh, AWS snark bot where it effectively 1241 00:54:31,658 --> 00:54:34,389 just tracks the, the news that it comes outta their, what's new feed, 1242 00:54:34,419 --> 00:54:37,929 summarizes it with inference and then puts it out there and that's it. 1243 00:54:38,198 --> 00:54:40,778 It's, I, it's, I haven't yet made it to anything funny on it, but 1244 00:54:40,778 --> 00:54:44,019 that costs me something like a dollar a month to run that thing 1245 00:54:44,019 --> 00:54:46,929 for the many hundreds of things that come across that RSS feed. 1246 00:54:47,379 --> 00:54:49,028 And it's okay. 1247 00:54:49,028 --> 00:54:51,549 That's an interesting toy, but it costs me nothing. 1248 00:54:51,939 --> 00:54:55,029 And if it started costing me something, I probably wouldn't do it. 1249 00:54:55,209 --> 00:54:56,974 And that is, it. 1250 00:54:56,979 --> 00:55:00,099 It, it fuels a bunch of fun, interesting toys like that. 1251 00:55:00,399 --> 00:55:02,559 But this does, I don't see that I could build a business 1252 00:55:02,559 --> 00:55:04,839 around that and I wouldn't be bold enough to try. 1253 00:55:04,989 --> 00:55:07,929 And even then, right now we're at the height of the mania. 1254 00:55:08,529 --> 00:55:10,989 If this was going to be the world's stickiest 1255 00:55:10,989 --> 00:55:14,229 business, there would be metrics that showed that. 1256 00:55:14,754 --> 00:55:16,119 It is very simple. 1257 00:55:16,119 --> 00:55:18,009 However anyone feels about ai. 1258 00:55:18,578 --> 00:55:20,769 Where is the actual business? 1259 00:55:20,769 --> 00:55:27,099 Because Perplexity, for example, uh, rag Search, their whole thing is they 1260 00:55:27,129 --> 00:55:31,389 re, I think they gave away $35 million last year, like discounts and refunds. 1261 00:55:31,719 --> 00:55:33,489 They're a massively lossy business. 1262 00:55:33,489 --> 00:55:34,059 It's just. 1263 00:55:34,403 --> 00:55:37,254 Instead of a three hour keynote where Randy Chassis gets up there and 1264 00:55:37,254 --> 00:55:40,014 talks about how great AI is, he would basically get on the earnings 1265 00:55:40,014 --> 00:55:44,903 call and like, okay, this past quarter we've posted 300% annual growth. 1266 00:55:45,084 --> 00:55:47,903 Uh, I will now be taking no questions. 1267 00:55:47,934 --> 00:55:48,983 Have a nice day. 1268 00:55:49,104 --> 00:55:51,384 Like that's what success story looks like. 1269 00:55:51,533 --> 00:55:53,004 And they would be kissing his ass. 1270 00:55:53,033 --> 00:55:55,554 They would be saying, Chassis, they, any of these ones, 1271 00:55:55,554 --> 00:55:57,863 they would be like, Satya Nadella has changed the world. 1272 00:55:57,863 --> 00:56:00,413 If this w this is the greatest investment ever. 1273 00:56:00,413 --> 00:56:04,613 Because he would say, AI revenue, blah, blah, profit, blah, blah. 1274 00:56:04,674 --> 00:56:05,519 He'd be like, beep, beep. 1275 00:56:05,618 --> 00:56:08,964 It would be, I don't need like, it's like Jensen Wong, Jensen Wong. 1276 00:56:09,424 --> 00:56:12,484 Goes up there and just like, sounds like he has a stroke. 1277 00:56:12,514 --> 00:56:14,554 He just goes and is like, yeah, we will have a computer. 1278 00:56:14,554 --> 00:56:17,163 They'll control AI with a computer that goes like this. 1279 00:56:17,613 --> 00:56:20,014 He will scream at someone that works for him and then he leaves 1280 00:56:20,014 --> 00:56:24,004 and everyone's like, yay, I love you Jensen sign my baby. 1281 00:56:24,064 --> 00:56:26,163 Well, for a year he was the one, he was 1282 00:56:26,163 --> 00:56:28,354 with doled out who got the GPU allocations. 1283 00:56:28,354 --> 00:56:31,024 He just made an entire year's study out of just, I'm 1284 00:56:31,024 --> 00:56:33,453 gonna go and speak at other people's, uh, keynotes. 1285 00:56:33,604 --> 00:56:34,504 Uh, why? 1286 00:56:34,533 --> 00:56:35,974 Because I choose to do so. 1287 00:56:36,004 --> 00:56:36,904 What are you gonna talk about? 1288 00:56:36,964 --> 00:56:38,554 Whatever I damn well, please. 1289 00:56:38,554 --> 00:56:39,573 Because what are they gonna do? 1290 00:56:39,573 --> 00:56:40,564 Risk of setting me? 1291 00:56:40,774 --> 00:56:42,424 And that's because he had a good business. 1292 00:56:42,424 --> 00:56:44,044 I think he sounds like a huge asshole. 1293 00:56:44,134 --> 00:56:46,624 Oh, but you see a gold rush sell a pickaxe. 1294 00:56:46,624 --> 00:56:47,194 My God. 1295 00:56:47,254 --> 00:56:50,944 But also, but also he, he performed scoreboard. 1296 00:56:51,573 --> 00:56:53,044 Like that's the thing, scoreboard. 1297 00:56:53,194 --> 00:56:56,584 Really like whether or not you like Nvidia, they got the fracking numbers. 1298 00:56:56,674 --> 00:56:57,124 Yeah. 1299 00:56:57,334 --> 00:56:58,863 Why doesn't anyone else? 1300 00:56:58,984 --> 00:57:01,203 In fact, here's a real weird question. 1301 00:57:01,474 --> 00:57:03,964 Why is it that everyone who buys GPUs from NVIDIA 1302 00:57:03,964 --> 00:57:06,184 installs them and then immediately starts losing money? 1303 00:57:07,419 --> 00:57:10,029 Is that not a li This is another thing that worries me. 1304 00:57:10,029 --> 00:57:14,439 It's like, not only is our economy built on buying GPUs, when you install 1305 00:57:14,439 --> 00:57:18,879 them, you start losing money like immediately because the costs are too high. 1306 00:57:19,059 --> 00:57:22,658 This feels like a corollary of something that I said the client might observed 1307 00:57:22,658 --> 00:57:25,779 years ago, and they're right, which is your AWS bill is not a function of 1308 00:57:25,779 --> 00:57:28,658 how many customers you have, but rather how many engineers you've hired. 1309 00:57:30,069 --> 00:57:30,549 Okay. 1310 00:57:30,759 --> 00:57:32,319 They're not entirely wrong. 1311 00:57:32,589 --> 00:57:34,899 Like once, once you have a very expensive hammer, 1312 00:57:35,139 --> 00:57:37,328 every problem starts to look like your thumb. 1313 00:57:37,569 --> 00:57:39,399 And that's the thing, the automation thing. 1314 00:57:39,399 --> 00:57:42,279 Software engineers are always gonna try and automate stuff. 1315 00:57:42,309 --> 00:57:44,559 Like it's just, that's what, that's what software. 1316 00:57:44,559 --> 00:57:45,639 They love that shit. 1317 00:57:45,819 --> 00:57:49,479 Like the containerization fest where everyone's like, we got containers now. 1318 00:57:49,479 --> 00:57:49,809 Why? 1319 00:57:49,868 --> 00:57:50,019 Ah. 1320 00:57:51,114 --> 00:57:55,374 I, as someone screamed Docker at me on the street and I'm just freaking out. 1321 00:57:55,493 --> 00:57:56,724 I need to install Docker. 1322 00:57:56,724 --> 00:57:57,234 What is it? 1323 00:57:57,234 --> 00:57:58,284 Do you work that out? 1324 00:57:58,434 --> 00:57:59,453 I need Docker now. 1325 00:57:59,663 --> 00:58:02,574 But even that did not work out so great for Docker because 1326 00:58:02,574 --> 00:58:04,794 it turns out that when people don't really know why they're 1327 00:58:04,794 --> 00:58:07,074 buying your shit, eventually, they go, why am I buying this? 1328 00:58:07,434 --> 00:58:09,084 They, they sold their enterprise business off. 1329 00:58:09,084 --> 00:58:13,044 My comment, the Morant, and my comment was to congratulate them on, 1330 00:58:13,044 --> 00:58:15,413 uh, getting rid of that pesky part of their business that made money. 1331 00:58:15,474 --> 00:58:15,924 Yes. 1332 00:58:15,924 --> 00:58:17,453 Uh, good work, everyone. 1333 00:58:18,084 --> 00:58:20,993 It's just, it's such a fantastical time. 1334 00:58:20,993 --> 00:58:24,924 And what's f what I'm finding is the conversations I have are more 1335 00:58:24,924 --> 00:58:28,614 like this one where people are just like, yeah, that is pretty weird. 1336 00:58:29,304 --> 00:58:30,114 What are we gonna do? 1337 00:58:30,203 --> 00:58:31,074 I don't know. 1338 00:58:31,134 --> 00:58:32,334 We'll watch and learn. 1339 00:58:32,484 --> 00:58:34,284 Oh, there's no next step for me. 1340 00:58:34,284 --> 00:58:37,734 I, I keep poking at the bear, but it turns out no one asked my 1341 00:58:37,734 --> 00:58:40,794 opinion before investing a hundred billion dollars into bullshit. 1342 00:58:40,974 --> 00:58:45,413 Well, that's the, my favorite thing here though, is no one, I mean, 1343 00:58:45,413 --> 00:58:48,984 people will mention it, but no one really wants to talk about the open ai. 1344 00:58:49,479 --> 00:58:50,169 Revenues. 1345 00:58:50,288 --> 00:58:51,879 No one wants to talk about the costs. 1346 00:58:52,029 --> 00:58:54,549 They will glance at 'em and be like, oh, they lost 1347 00:58:54,549 --> 00:58:57,729 $5 billion in a larger paragraph about some staff. 1348 00:58:57,819 --> 00:59:01,419 Well, I don't believe they have any formal reporting requirements, do they? 1349 00:59:01,749 --> 00:59:02,169 No. 1350 00:59:02,169 --> 00:59:03,279 They're private company. 1351 00:59:03,309 --> 00:59:04,538 I'm just saying the, 1352 00:59:04,779 --> 00:59:07,719 I'm trying to remember what the nonprofit reporting, uh, rules were around them. 1353 00:59:07,868 --> 00:59:08,439 Uh, no. 1354 00:59:08,439 --> 00:59:10,509 There's, they, no, they don't have to because 1355 00:59:10,509 --> 00:59:12,368 the for-profit entity is a separate wing. 1356 00:59:12,519 --> 00:59:13,689 Oh, that's, that's right. 1357 00:59:13,689 --> 00:59:19,149 But I mean, journalists, I mean, analysts, they don't want to touch this. 1358 00:59:19,328 --> 00:59:21,368 I, there are other people that have talked about these 1359 00:59:21,368 --> 00:59:23,679 numbers in passing, but no one else has sat down and gone, 1360 00:59:24,038 --> 00:59:26,649 Hey, look, I'm writing something properly like today. 1361 00:59:26,649 --> 00:59:29,049 That's called, why did Microsoft Invest in Open ai? 1362 00:59:29,559 --> 00:59:32,859 I've written open AI is a systemic risk to the tech industry. 1363 00:59:33,009 --> 00:59:34,448 Open AI is a bad business. 1364 00:59:34,448 --> 00:59:36,459 And what, how does OpenAI survive? 1365 00:59:36,549 --> 00:59:39,219 That headline feels like something Satya Nadella as saying to himself, 1366 00:59:39,219 --> 00:59:42,669 his head in his hand at his desks, like, why did Microsoft invest in this? 1367 00:59:42,908 --> 00:59:44,259 I'm asking it because. 1368 00:59:44,634 --> 00:59:46,794 The deal suggests many different things could be the 1369 00:59:46,794 --> 00:59:49,374 reason, such as maybe they invested hoping they'd die. 1370 00:59:49,884 --> 00:59:51,864 But no one wants to talk about this stuff. 1371 00:59:52,163 --> 00:59:56,514 And if I'm right and I believe I am, I very much, very much do. 1372 00:59:57,743 --> 00:59:59,993 I think this is one of the greatest failings 1373 00:59:59,993 --> 01:00:02,304 of financial journalism of all time. 1374 01:00:02,394 --> 01:00:05,934 I think it's only beaten by the great financial crisis. 1375 01:00:05,934 --> 01:00:07,674 I think the great financial crisis would be 1376 01:00:07,674 --> 01:00:09,654 much worse than what what's gonna happen here. 1377 01:00:10,134 --> 01:00:11,214 But it is. 1378 01:00:11,364 --> 01:00:13,854 And even then, I think had the great financial crisis happened 1379 01:00:13,854 --> 01:00:16,884 today, people would've noticed because you would, you had people 1380 01:00:16,884 --> 01:00:18,594 with the internet who could go and look at these things like 1381 01:00:18,594 --> 01:00:21,144 Michael Borough and is like, they had privileged information. 1382 01:00:21,324 --> 01:00:26,634 The proliferation of available internet services was large but not as large. 1383 01:00:26,634 --> 01:00:28,884 And you didn't have the proliferation of social 1384 01:00:28,884 --> 01:00:30,774 media at the scale that you didn't have Twitter. 1385 01:00:30,804 --> 01:00:33,714 We had Twitter was out, but it wasn't Point I'm making is 1386 01:00:35,064 --> 01:00:39,354 you have the biggest company in the ai, open ai, the most 1387 01:00:39,354 --> 01:00:43,074 well-known one, funded by the next biggest company in ai. 1388 01:00:43,449 --> 01:00:46,599 Microsoft, Microsoft's biggest customer is open 1389 01:00:46,599 --> 01:00:50,769 ai and the core finances of open AI are bad. 1390 01:00:50,769 --> 01:00:51,159 Bad. 1391 01:00:51,339 --> 01:00:52,599 They are so bad. 1392 01:00:52,659 --> 01:00:53,859 They are so awful. 1393 01:00:53,979 --> 01:00:58,149 This company burned, I think they spent $9 billion to lose $5 billion last year. 1394 01:00:58,509 --> 01:01:01,359 And this is something that modern journalists do not want to talk about. 1395 01:01:01,359 --> 01:01:03,339 They don't wanna write about it, they don't wanna read about 1396 01:01:03,339 --> 01:01:06,159 it, don't wanna hear about it in passing conversations. 1397 01:01:06,159 --> 01:01:09,369 They all say the same thing, which is, yeah, I just don't wanna think about it. 1398 01:01:09,489 --> 01:01:10,869 Yeah, that's not, that's uncomfortable if 1399 01:01:10,869 --> 01:01:12,279 I have to actually deal with any of it. 1400 01:01:12,459 --> 01:01:16,659 But it's, the problem is, is that, and I understand why they 1401 01:01:16,659 --> 01:01:19,569 don't wanna do it, because it starts justifying you in real time. 1402 01:01:20,109 --> 01:01:24,819 You start thinking, okay, well this is the biggest company in the industry 1403 01:01:24,819 --> 01:01:29,649 and they're burning billions of dollars and Microsoft needs them to 1404 01:01:29,649 --> 01:01:32,859 live, but Microsoft owns all their ip and this company can't go public 1405 01:01:32,859 --> 01:01:36,009 unless they become a, not a for-profit, which is in Microsoft's hands. 1406 01:01:36,249 --> 01:01:39,759 Even if they do though SoftBank has to keep funding them forever. 1407 01:01:40,299 --> 01:01:44,078 This company says they're gonna burn, what, 40, $50 billion? 1408 01:01:44,078 --> 01:01:46,509 By 2030, I think it's gonna be more. 1409 01:01:46,959 --> 01:01:47,889 Where are they getting that money? 1410 01:01:47,889 --> 01:01:48,879 'cause they lose money. 1411 01:01:48,879 --> 01:01:49,959 They lose money all the time. 1412 01:01:49,959 --> 01:01:51,009 They're constantly losing money. 1413 01:01:51,339 --> 01:01:52,689 And then when you think all those things you 1414 01:01:52,689 --> 01:01:57,069 go, is the entire AI industry built on sand? 1415 01:01:57,189 --> 01:01:58,839 And the answer is no. 1416 01:01:59,169 --> 01:02:01,389 The actual AI industry is built on dreams. 1417 01:02:02,319 --> 01:02:04,149 It's, it's on unicorn farts. 1418 01:02:04,479 --> 01:02:05,049 It is. 1419 01:02:05,229 --> 01:02:07,719 The only way for you to rationally look at this and 1420 01:02:07,719 --> 01:02:10,959 believe that it will keep going is fantasy Fanta? 1421 01:02:10,959 --> 01:02:12,009 I was gonna say fantastical. 1422 01:02:12,009 --> 01:02:12,459 It's fan. 1423 01:02:12,639 --> 01:02:13,719 Fantastical thinking. 1424 01:02:13,719 --> 01:02:14,379 Magical thinking. 1425 01:02:14,379 --> 01:02:14,889 There we go. 1426 01:02:15,609 --> 01:02:16,839 Could have delivered that point better. 1427 01:02:16,839 --> 01:02:20,528 But nevertheless, less you have to start engaging in fantasy. 1428 01:02:21,189 --> 01:02:21,459 You do. 1429 01:02:21,698 --> 01:02:24,908 That's the only, it's the only, it is an irrational approach to 1430 01:02:24,908 --> 01:02:28,269 this, to approach this from the perspective that OpenAI will survive. 1431 01:02:28,314 --> 01:02:33,444 Yeah, because SoftBank had to borrow $15 billion in a one year loan, a 1432 01:02:33,444 --> 01:02:39,324 bridge loan from, and they took 21 banks, 21 to get that $15 billion. 1433 01:02:39,654 --> 01:02:43,344 Note that SoftBank has also promised $19 billion to the Stargate Project. 1434 01:02:43,584 --> 01:02:46,224 The Stargate project is yet to incorporate, but Oracle is 1435 01:02:46,224 --> 01:02:49,044 already agreeing to put $40 billion of chips inside it. 1436 01:02:49,614 --> 01:02:51,533 They are being built by a company called Cruso 1437 01:02:51,533 --> 01:02:53,184 that has never built a data center before. 1438 01:02:53,844 --> 01:02:55,134 How hard could it possibly be? 1439 01:02:55,224 --> 01:02:55,913 But that's the thing. 1440 01:02:55,913 --> 01:03:02,724 It's like, it, it reminds me of the, one of the best threats of all time. 1441 01:03:02,724 --> 01:03:06,144 The IRA sent, uh, to Margaret Thatcher and 1442 01:03:06,144 --> 01:03:08,663 they said, you have to be lucky every time. 1443 01:03:08,663 --> 01:03:13,584 We only have to be lucky once it's for OpenAI to survive. 1444 01:03:13,764 --> 01:03:17,634 They will have to raise more money than anyone has ever raised 1445 01:03:17,754 --> 01:03:21,804 before, then raise it again, then likely raise it again. 1446 01:03:21,804 --> 01:03:24,624 They need to raise another $17 billion in 2027. 1447 01:03:24,624 --> 01:03:25,464 They fracking said it. 1448 01:03:25,464 --> 01:03:25,524 It. 1449 01:03:26,274 --> 01:03:29,214 They will then need to build a massive data 1450 01:03:29,214 --> 01:03:31,913 center that is moving along decently well. 1451 01:03:31,913 --> 01:03:34,254 But I've heard reports that it's having some issues. 1452 01:03:34,584 --> 01:03:37,974 They will also have to keep being able to 1453 01:03:37,974 --> 01:03:41,064 broker deals with various companies to pay them. 1454 01:03:41,064 --> 01:03:42,894 'Cause OpenAI is a Banana Republic. 1455 01:03:43,374 --> 01:03:45,474 They don't make enough money to run them. 1456 01:03:46,014 --> 01:03:47,663 All of their money has to come from outside. 1457 01:03:48,534 --> 01:03:51,774 SoftBank also has to keep getting that money and SoftBank does not have it. 1458 01:03:51,774 --> 01:03:54,504 They had to sell four and a half billion of T-Mobile stock. 1459 01:03:55,254 --> 01:03:57,953 And this is just to get a little bit, they need to give 1460 01:03:57,953 --> 01:04:01,524 open AI unless they don't convert another $30 billion. 1461 01:04:01,854 --> 01:04:03,564 Now they could syndicate $10 billion of 1462 01:04:03,564 --> 01:04:05,244 that, but still that's another $20 billion. 1463 01:04:05,244 --> 01:04:07,134 They do not have, they don't have the cash. 1464 01:04:07,314 --> 01:04:12,684 The 15 that they just borrowed, uh, six to seven of that went to amper. 1465 01:04:12,744 --> 01:04:16,524 Another company they're buying, the numbers are crazy, man. 1466 01:04:16,703 --> 01:04:19,913 When you sit and look at the numbers, they, they are crazy. 1467 01:04:20,244 --> 01:04:25,404 And I don't know what's wrong with the tech media, but they are missing this. 1468 01:04:25,779 --> 01:04:28,569 And when this blows up, I'm gonna look cool. 1469 01:04:28,599 --> 01:04:30,249 I'm gonna look cool as fracking shit. 1470 01:04:30,489 --> 01:04:31,899 This is gonna be very fun for me. 1471 01:04:31,899 --> 01:04:32,288 I'm 1472 01:04:32,408 --> 01:04:33,099 And everyone else is. 1473 01:04:33,099 --> 01:04:33,368 Very good. 1474 01:04:33,368 --> 01:04:34,929 Well, how could we have possibly known? 1475 01:04:35,139 --> 01:04:39,459 Oh, and I am not going to let anyone say that a moment anyone says that. 1476 01:04:39,609 --> 01:04:40,419 I will have link. 1477 01:04:40,449 --> 01:04:41,828 I have links ready to go. 1478 01:04:41,828 --> 01:04:42,969 I'm gonna be like, quick shot. 1479 01:04:43,809 --> 01:04:46,059 Oh, oh, oh, you, how could you have known? 1480 01:04:46,059 --> 01:04:47,739 You follow me, you follow me, cupcake. 1481 01:04:47,949 --> 01:04:48,759 Talk to me baby. 1482 01:04:48,759 --> 01:04:49,538 You have my cell. 1483 01:04:50,019 --> 01:04:51,519 I am going to be annoying. 1484 01:04:52,328 --> 01:04:53,469 I'm gonna be trotting around. 1485 01:04:53,469 --> 01:04:55,149 I'm gonna find the exact level of annoying 1486 01:04:55,149 --> 01:04:56,919 I can get before I start losing credit. 1487 01:04:57,489 --> 01:05:01,479 And what I think you're gonna see is you're gonna see a major outlet. 1488 01:05:01,479 --> 01:05:02,513 You're kind of already seeing it. 1489 01:05:02,513 --> 01:05:07,989 Deirdre Boer of CNN did a video to CNBC, even did a video today, uh, 1490 01:05:08,169 --> 01:05:11,049 talking about how the AI trade is in trouble 'cause the lack of revenue. 1491 01:05:11,409 --> 01:05:16,539 CNN's Alison Morrow has been on this ship for oh years now, just saying like, 1492 01:05:16,539 --> 01:05:22,058 Hey, this is rotten like this, this is a marketing scheme, but if I am wrong. 1493 01:05:22,989 --> 01:05:25,058 Something insane is gonna have to happen. 1494 01:05:25,058 --> 01:05:26,799 Something just completely unprecedented. 1495 01:05:26,979 --> 01:05:28,119 And I'll admit I'm wrong. 1496 01:05:28,209 --> 01:05:29,409 I'm not though. 1497 01:05:29,409 --> 01:05:32,319 It feels like Cassandra has never appreciated in her own time. 1498 01:05:32,558 --> 01:05:35,049 Ed, I, I really wanna thank you for taking the time to speak with me. 1499 01:05:35,289 --> 01:05:35,919 My pleasure. 1500 01:05:35,919 --> 01:05:36,699 Thank you for having me. 1501 01:05:36,939 --> 01:05:39,009 People wanna learn more about what you, uh, 1502 01:05:39,039 --> 01:05:41,109 what you espouse and I argue that they should. 1503 01:05:41,259 --> 01:05:42,969 Where's the best place for them to find you? 1504 01:05:43,089 --> 01:05:44,619 Go to be offline.com. 1505 01:05:45,129 --> 01:05:49,089 Just B-E-T-T-E-R-O-F-F-L-I-N-E. 1506 01:05:49,209 --> 01:05:50,379 I nearly didn't spell it. 1507 01:05:50,619 --> 01:05:51,279 Dot com. 1508 01:05:51,759 --> 01:05:52,719 Uh, it has everything. 1509 01:05:52,719 --> 01:05:53,679 It has links to everything. 1510 01:05:53,679 --> 01:05:55,569 Newsletter, podcast, PR firm. 1511 01:05:56,289 --> 01:05:57,668 Socials, all the good stuff. 1512 01:05:57,729 --> 01:06:00,008 And we'll of course put a link to that in the show notes as well. 1513 01:06:00,069 --> 01:06:01,058 And your snark bot. 1514 01:06:01,058 --> 01:06:02,048 I wanna see this. 1515 01:06:02,138 --> 01:06:04,508 I will include a link to that in the show notes as well. 1516 01:06:04,569 --> 01:06:08,918 Because the funny thing is, is like, I'm like a PR person, I'm a writer. 1517 01:06:09,098 --> 01:06:11,798 People don't know me like I'm a SaaS freak baby. 1518 01:06:11,798 --> 01:06:16,088 I, I know these companies, I know these economics and I feel like 1519 01:06:16,088 --> 01:06:19,029 maybe I'm just the only monster that could look at this stuff and make 1520 01:06:19,029 --> 01:06:23,319 sense of it because of the hours of SaaS related content I've consumed. 1521 01:06:23,499 --> 01:06:25,928 Oh, the, we like, um, Roger Auer at the 1522 01:06:25,928 --> 01:06:28,088 end of Bladerunner talking about webinars. 1523 01:06:28,388 --> 01:06:30,008 I've seen things you people wouldn't believe. 1524 01:06:31,418 --> 01:06:34,058 It's just, it's three hour long reinvent keynotes, 1525 01:06:35,258 --> 01:06:37,539 burning, burning me in Las Vegas, Nevada. 1526 01:06:37,928 --> 01:06:39,459 Ed, thank you again for your time. 1527 01:06:39,459 --> 01:06:40,539 I deeply appreciate it. 1528 01:06:40,749 --> 01:06:44,499 Ed Zitron, host of better Offline, writer of Where's Your 1529 01:06:44,499 --> 01:06:47,678 Ed at Newsletter, and I'm cloud economist, Cory Quinn. 1530 01:06:47,919 --> 01:06:50,258 If you've enjoyed this podcast, please leave a five 1531 01:06:50,258 --> 01:06:52,419 star review on your podcast platform of choice. 1532 01:06:52,419 --> 01:06:55,838 Whereas if you've hated this podcast, please leave a five star review on 1533 01:06:55,838 --> 01:06:59,468 your podcast platform of choice along with an angry, insulting comment. 1534 01:06:59,619 --> 01:07:02,229 Uh, be sure to let me know in that comment, 1535 01:07:02,258 --> 01:07:04,869 which pony you've bet your AI horse on.