Subscribe
Share
Share
Embed
Exploring the frontiers of Technology and AI
Josh:
Everyone's asking, are we in a bubble? When is the bubble going to pop?
Josh:
How big can AI get before it all comes crumbling down?
Josh:
And yesterday, the OpenAI CFO may have delivered some hints as to how and why this happens.
Josh:
She used the word, and I'm ashamed to say it out loud, this feels like a bad
Josh:
word, she used the word backstop.
Josh:
And if you're familiar with the word backstop, it's what a lot of banks were
Josh:
experiencing in 2008, where the government kind of sits there to fund any sort
Josh:
of negative repercussions that happen as a result of this build out.
Josh:
And then after seeing this interview, it kind of begs the question, are these circular
Josh:
economics we've been seeing among NVIDIA, Microsoft, AMD,
Josh:
is it really a capitalist efficient thing or
Josh:
is this is are we really starting to see early signs of a
Josh:
bubble starting to burst so we're going to get into all that we are also talking
Josh:
about a deal that was just confirmed with apple where
Josh:
they are paying google a tremendous amount of money to actually offload their
Josh:
ai compute to build a new model so we have an official deal there we have a
Josh:
new hardware device in the world of ai and we have just a bunch of cool space
Josh:
related stuff so you just let's get into the big news of the day which is open
Josh:
ai asking for a backstop that sounds scary walking That's exactly what happened.
Josh:
Because I feel like some things get lost in translation here.
Josh:
What exactly did they say and what does it mean for us?
Ejaaz:
Yeah. So let me set some context. Sarah Fryer is the current CFO at OpenAI.
Ejaaz:
And she did this interview with the Wall Street Journal, where obviously they
Ejaaz:
get into the economics of OpenAI's revenue model and how they're going to pay
Ejaaz:
for all these trillions of dollars worth of compute. And she had a few choice words.
Ejaaz:
The most choicest was around this backstop that you're talking about,
Ejaaz:
josh um let me let me kind of paint it out for you so
Ejaaz:
open ai has currently signed 1.4 trillion
Ejaaz:
dollars worth of compute deals this is open ai agreeing to pay compute providers
Ejaaz:
or chip providers or gpu providers like nvidia amd hundreds of billions of dollars
Ejaaz:
in order to buy their gpu so that they can train the next best ai model agi
Ejaaz:
there's one massive problem,
Ejaaz:
they don't have enough cash. They don't have enough money. In fact,
Ejaaz:
they are currently running at a loss.
Ejaaz:
There's no plan or near-term kind of goal that they can achieve to pay for this stuff.
Ejaaz:
So then the question becomes, what happens if they can't pay for this stuff?
Ejaaz:
What happens if Chachupiti stops becoming profitable in the future as they're
Ejaaz:
projected? What happens then?
Ejaaz:
And Sarah had one simple answer to that, which was the government can bail us out.
Ejaaz:
And so specifically what she described was an ecosystem where the government
Ejaaz:
basically pays OpenAI and gives them the money that they need to buy these GPUs
Ejaaz:
if they happen to default,
Ejaaz:
if they happen to not have enough money to pay for these things.
Ejaaz:
This, in turn, will give the private equity firms and the banks that are agreeing
Ejaaz:
to loan OpenAI money in the first place to buy these GPUs, the sanctity and peace of mind that
Ejaaz:
ah, I'm going to be okay. I'm going to get my money back if OpenAI doesn't deliver through.
Ejaaz:
The craziest part about this, Josh, is I feel like I've just been ricocheted
Ejaaz:
across the room for two weeks straight.
Ejaaz:
Because Sam Altman went from operating a non-profit to operating a non-profit
Ejaaz:
that is kind of a private company, where they kind of turned a part of their
Ejaaz:
company into a for-profit, so they're kind of like lying about it.
Ejaaz:
Then kind of breaking rumors around doing a $1 trillion IPO.
Ejaaz:
What is your immediate gut reaction to this? Is it lies? Is it real? What's happening?
Josh:
I just like, I keep repeating the words too big to fail in my head,
Josh:
too big to fail, too big to fail.
Josh:
It seems like that's what I want to get to. And I'm like, I'm of two minds of
Josh:
this. One is that, well, AI is a matter of national security.
Josh:
It is very important to get this right and to move as fast as possible.
Josh:
If that requires some government help, that probably make sense to an extent.
Josh:
And then the second thing is, well, if you are asking for government help,
Josh:
that's probably not a good thing in this instance.
Josh:
And government help really means taxpayer help. Like we fund this stuff.
Josh:
And to pay a backstop for Sam Waltman when we don't even get public stock exposure
Josh:
because it's still privately held.
Josh:
And another thing is she admitted here that they actually have little to no
Josh:
interest in IPO-ing anytime soon.
Josh:
So now there's no real trajectory for the public being able to own any upside
Josh:
and only participate in the downside.
Josh:
After they've been signaling that they are not for profit since inception,
Josh:
it's just like these really horrifically mixed signals with no clear intention.
Ejaaz:
It's exhausting.
Josh:
Um, it's a lot. Yeah. I guess the, the way that you described it being like
Josh:
ricocheted across a room, it like, it kind of feels that way.
Josh:
And it's a little disturbing, but I wonder if this is kind of at the core of
Josh:
what we've been seeing with this circular economic thing happening where opening,
Josh:
I sent to deal with Google with Microsoft.
Josh:
It's all very, it feels very incestual, but maybe it's because it really is
Josh:
a matter of national security and the government's just kind of allowing them
Josh:
to do a lot of things that wouldn't traditionally have been acceptable.
Josh:
But it looks like we have some qualifications, right? Yeah, I mean,
Josh:
maybe we should take this as a grain of salt.
Ejaaz:
Yeah, so a grain of salt being that Sarah Fry, the same CFO that kind of made
Ejaaz:
these claims, walked back her claims in the interview, specifying that OpenAI
Ejaaz:
is not seeking a government backstop for our infrastructure commitments.
Ejaaz:
And she goes on to give this official statement about, you know,
Ejaaz:
OpenAI, you know, being profitable and going to be able to pay their way through
Ejaaz:
this all. The issue that I have with this, Josh, is I don't think it's an honest statement.
Ejaaz:
Why don't I think it's an honest statement? Because her boss.
Ejaaz:
CEO Sam Altman, has claimed so many times in interviews and his own blog posts
Ejaaz:
that he's written that he has no issue asking the government for a bailout, for a backstop,
Ejaaz:
to help him kind of like cover his deficits and his debts if he's not able to pay for it.
Ejaaz:
I have an excerpt from an interview pulled up here where he goes,
Ejaaz:
at some level, when something gets sufficiently huge, whether or not they are
Ejaaz:
on paper, the federal government is kind of an insurer of last resort.
Ejaaz:
As we've seen in various financial crises and insurance companies screwing things
Ejaaz:
up, they basically cover us.
Ejaaz:
And so this is again, and this is the second time we've spoken about this this
Ejaaz:
week, about Sam Altman's character inconsistencies, where he says one thing and means another.
Ejaaz:
We did an episode earlier this week where we covered a 52-page deposition,
Ejaaz:
where his co-founder and former chief science officer, Ilya Sutskeva,
Ejaaz:
basically says that Sam was like incessantly lying and that's what led to his
Ejaaz:
ousting, his firing in November, 2023.
Ejaaz:
Fast forward to present day, it seems like Sam's still at it, Josh.
Josh:
There's a lot of character inconsistency. And what's certainly not helping the
Josh:
case is all of his co-founders from day one to up until a few years ago,
Josh:
they're all testifying against him. Elon strongly disagrees with Sam.
Josh:
Ilya and Mira, they strongly distrust Sam. So this is not, this is poor signal
Josh:
coming from the public perception, but also from people who know him personally,
Josh:
which is not really making a good case.
Josh:
So we'll see. We'll continue to monitor the situation. That's kind of where
Josh:
we're at with OpenAI News.
Ejaaz:
I just want to... Sorry, I think we need to just...
Ejaaz:
Look at the other side very quickly, Josh, and I'm curious of your take here
Ejaaz:
specifically. Yeah, let's get into the bubble.
Ejaaz:
So the take from this is, oh my God, we're doing circular investing.
Ejaaz:
This is a massive bubble. It's so obviously going to pop.
Ejaaz:
They're asking for a literal government bailout before the crash actually happens.
Ejaaz:
We've seen this with COVID. We've seen this in 2008. What are we doing here?
Ejaaz:
And the counter argument to that is, if you look at every other hyperscaler,
Ejaaz:
maybe not put open AI side for a second.
Ejaaz:
If you look at Meta, if you look at Google, if you look at Microsoft,
Ejaaz:
although they're spending hundreds of billions of dollars and committing to
Ejaaz:
do that over the next couple of years, they still haven't made a crazy enough
Ejaaz:
dent where you should be getting worried on their profit and loss sheet.
Ejaaz:
Remember, these companies all have other businesses that are massively profitable
Ejaaz:
and they're making tons and tons of money.
Ejaaz:
The money that they're investing in compute right now, technically,
Ejaaz:
if you weigh it up against that, isn't too crazy.
Ejaaz:
It is crazy. It is a bigger dent that we've seen them spend on anything else
Ejaaz:
over the last decade, but it's still not overcompensating for what they're earning right now.
Ejaaz:
And that's the only argument against it, which is like, hey,
Ejaaz:
we're seeing demand with our enterprise customers.
Ejaaz:
We're seeing demand with our retail customers. And so it makes sense for us
Ejaaz:
to invest in this compute. I don't know what you think about this.
Josh:
Yeah. Like in the case that AI scaling laws stop tomorrow,
Josh:
where suddenly we figure out oh oh no like this this isn't actually
Josh:
going to work spending more money the market gets harmed very
Josh:
badly but it's not catastrophic it is not a recession level bubble um in the
Josh:
case that this continues to prolong companies like open ai that don't have a
Josh:
cap table like companies like microsoft and google who exist outside of ai and
Josh:
are now using their balance sheet to pay this off i think that's probably when
Josh:
you start to see problems so
Josh:
I kind of agree with you in the sense that we're still good.
Josh:
Like things are still good. I'm not particularly concerned of a short-term bubble happening here.
Ejaaz:
I want to emphasize that like OpenAI isn't just kind of sitting on their hands
Ejaaz:
and not coming up with other ways to turn on revenue.
Ejaaz:
One other thing that she revealed in this interview, Josh, was I think it's
Ejaaz:
number six on the screen here.
Ejaaz:
Additionally, they will do creative commercial deals.
Ejaaz:
What they mean by that is if there's a company, say a pharmaceutical company
Ejaaz:
that uses ChatGPT and finds a cure for cancer using ChatGPT,
Ejaaz:
they're signing a deal with that pharmaceutical company such that they get a
Ejaaz:
percentage of profits from that drug that they create using their AI intelligence
Ejaaz:
that will occur for God knows how long after that.
Ejaaz:
And so taking a percentage of profit or revenue share from people who are using
Ejaaz:
it as a product to create other products, or if you're a company that sells products via ChatGPT,
Ejaaz:
Etsy is a common example that is live on chat gpt right now um they get a percentage
Ejaaz:
of profits um and then there's the obvious one which is chat gpt is going to
Ejaaz:
open air is just going to turn on ads and when they turn on ads who knows how
Ejaaz:
much money that's going to bring in so they are making efforts towards i don't
Ejaaz:
want this to be like a hey like
Ejaaz:
bad open ai thing but it's just unlikely given the amount that they've committed to spend.
Josh:
That first point you mentioned around like health breakthroughs
Josh:
through chat gpt getting a percentage that sounds like a train wreck waiting
Josh:
to happen that's a very messy monetization structure so a lot still to be evaluated
Josh:
but you just i want to talk about apple now we had an episode yesterday with
Josh:
apple um and google and how they kind of relate to each other particularly around
Josh:
a deal in which apple kind of sucks at ai they're really just not good at it and they need help.
Josh:
And here is Gemini coming to the rescue. We officially have a deal that is unofficially
Josh:
official, and it looks like they're going to be paying $1 billion a year,
Josh:
Apple, to Google in order to get a 1.2 trillion parameter Google Gemini model custom for Apple.
Josh:
This is a really big deal. Apple is struggling.
Josh:
Apple has not done anything in the world of AI. And suddenly they have this really powerful model.
Josh:
So this seems like it's going to be very important for the case of the bull case for apple at
Ejaaz:
Least so i'm happy about this uh for a few reasons normally i'd be laughing
Ejaaz:
right i'd be like haha this obviously apple's failed they're.
Ejaaz:
In Apple's sense, it's kind of a smart move. Think about it, right?
Ejaaz:
They haven't spent hundreds of billions of dollars trying to invest in GPUs
Ejaaz:
and train a complex AI model.
Ejaaz:
They haven't taken on any of that risk. They just tap Google on the shoulder,
Ejaaz:
who's done all the hard work and say,
Ejaaz:
yo, are you down if I pay you a billion dollars per year and you make our own
Ejaaz:
custom version of an Apple AI model that I can plug into Siri and will run on
Ejaaz:
our private cloud instance?
Ejaaz:
So, you know, Google won't necessarily get access to all of it,
Ejaaz:
but they just get the payment every year.
Ejaaz:
That sounds like a pretty sweet deal. The other thing I like about this is this
Ejaaz:
isn't just any kind of like model.
Ejaaz:
It's a 1.2 trillion parameter model.
Ejaaz:
That is like up there with like one of the biggest models that would be out there.
Ejaaz:
And to combine that with the kind of personalization that I'm presuming Apple
Ejaaz:
is going to integrate into Siri and in the consumer experience with using text
Ejaaz:
and other apps on the phone, that's pretty attractive to me.
Ejaaz:
The other thing that I thought was super cool on the Google side here, Josh,
Ejaaz:
is to be able to run a 1.2 trillion parameter model at an economically viable
Ejaaz:
cost, aka they're making money from that, just goes to show that there's some
Ejaaz:
pretty crazy engineering that Google has achieved.
Ejaaz:
This indirectly tells me that they have absolutely nailed their chip design
Ejaaz:
and their TPU architecture to be able to pull this off. Just super cool.
Josh:
There's a lot more info if you
Josh:
want to find out about Apple on our episode that we released yesterday.
Josh:
And also I am publishing an essay in the newsletter today when you're watching
Josh:
this all about the economics and why this makes sense for Apple to do.
Josh:
So if you're interested in hearing more of these takes, like more thoughtful
Josh:
takes, check it out on the newsletter.
Josh:
I'm like very proud of this article. I think it'll do really well.
Josh:
It's just really fascinating to see the Apple strategy kind of accidentally step into this
Josh:
amazing situation for them um where it was
Josh:
certainly not by design but they somehow managed to put themselves in a
Josh:
really good place but on the topic of google i also want to talk about the new
Josh:
hardware that they just announced which is their new ironwood tpus now again
Josh:
in yesterday's episode this is a good one we talked about what a tpu was and
Josh:
how it relates to a gpu and today in some new news we got new tpus ej so can
Josh:
you walk us through what these ironwoods are what they do why they're impressive so
Ejaaz:
Ironwood is google's latest tpu tpu stands for tensor processing unit.
Ejaaz:
All you need to know is that the TPU of Google is the equivalent of the GPU
Ejaaz:
from NVIDIA, but with some additional perks.
Ejaaz:
It is more specialized and custom fit towards Google software and AppSuite, right?
Ejaaz:
It's the thing that has powered and trained all their models.
Ejaaz:
They've never actually relied on NVIDIA at all to kind of train and inference
Ejaaz:
a bunch of their models. They've been kind of like this lone entity.
Ejaaz:
And why this is so cool, and we explained this on yesterday's episode,
Ejaaz:
which you should check out,
Ejaaz:
is Google's been super independent and they've been able to make several breakthroughs,
Ejaaz:
which have allowed them to train the same type of models that OpenAI and Microsoft produce,
Ejaaz:
but much cheaper or cost efficient and can scale massively with a greater number
Ejaaz:
of models that they build.
Ejaaz:
And now they've released this new model called Ironwood, which is basically
Ejaaz:
the next generation of their TPU.
Ejaaz:
It is four times faster than the prior version, and it can basically clamp together
Ejaaz:
as one singular stack in a much more feasible way, which means that training
Ejaaz:
larger models at scale is going to be much easier.
Ejaaz:
But the biggest news about this for me, Josh, is they're going to start selling
Ejaaz:
these TPUs and making it more accessible for anyone else to buy their TPUs and
Ejaaz:
train or influence their own AI models.
Ejaaz:
Why this is such big news is this means they're formally stepping into the ring to compete with NVIDIA.
Ejaaz:
Now, don't get me wrong. They're not doing this at the scale that NVIDIA is currently doing it.
Ejaaz:
But currently, there has been no feasible challenger to NVIDIA.
Ejaaz:
And now you have Google entering the ring, which has a lot of distribution and technical expertise.
Ejaaz:
It's notable and probably a hint that the Google market cap should be much, much higher.
Josh:
Yeah, I wouldn't say no one is competing with NVIDIA. There are AMD chips.
Josh:
China's creating their own alternatives. So I'd say it's at that level where
Josh:
it's trying to compete, but there is going to be a very steep mountain in order
Josh:
to get there, to become a real NVIDIA competitor.
Josh:
In other news, we got a new AI hardware device this week, and it goes by the
Josh:
name of Sandbar. And it comes in the form factor of a ring.
Josh:
Now, I have an Oura ring on it. I love my Oura ring. It's a great non-intrusive sleep tracker.
Josh:
This is a totally new take on a ring because it gets into these things that we call edge nodes.
Josh:
And when you deal with ai systems there there are
Josh:
sensors that can then send requests back to the
Josh:
actual ai system and this is a new sensor so what
Josh:
we're seeing on screen is a promo video of this person who has a ring you press
Josh:
a button on the ring and you can speak into a microphone now this microphone
Josh:
acts as an interface between yourself and the ai system and you could ask it
Josh:
to do things like remind you to query questions against it to record conversations and it's this really
Josh:
unique and I guess somewhat novel form factor in the world of AI hardware devices.
Josh:
This was interesting to me, Ejaz, at least because
Josh:
I'm so fascinated about what OpenAI is going to make next year with Johnny Ive in terms of AI hardware.
Josh:
And this is an interesting experiment to kind of see how the ring form factor would work.
Josh:
So the way this kind of exists is it's a microphone that has passive audio back
Josh:
to your earbuds, or I assume back to your phone.
Josh:
And it's this really fun and somewhat intuitive way of using AI without AI getting in the way.
Josh:
So I think a lot of the things that we're going to start to see in this
Josh:
removal of the smartphone is this the suite of
Josh:
ambient devices where you can just kind of engage with ai wherever you
Josh:
are at any time and a ring is a really neat form factor for
Josh:
this because it's it doesn't really get in the way it's just kind of
Josh:
always there if you want to engage with it you summon it if you don't you don't
Josh:
even think about it and i think this is this is an interesting experiment and
Josh:
it's something i'd kind of want to try this not that i think it's a successful
Josh:
product but i think it's an it's
Josh:
an interesting take on what the future ai devices could look like yeah
Ejaaz:
Well where my mind immediately leaps when i
Ejaaz:
i look at this is um her holding up
Ejaaz:
her hand to speak into the ring it either looks like
Ejaaz:
she's about to cough or like you know in the movies where
Ejaaz:
the the bodyguards are like touching their ear when they need to speak
Ejaaz:
into the secret service it kind
Ejaaz:
of seems like something like that so habitually i'm kind of curious as to how
Ejaaz:
this kind of integrates into society but i agree with you i think like the ring
Ejaaz:
is super subtle and kind of non-obtrusive and it makes it super convenient to
Ejaaz:
kind of engage with this technology without needing to stare at another screen
Ejaaz:
and whilst maintaining the ability to kind of interact with real life.
Josh:
Yeah, this led me down a rabbit hole because we were on the topic of Apple and
Josh:
it really, I'd love for Apple to start doing things like this.
Josh:
Like for example, Apple has a hundred billion dollars in cash. They go acquire Aura.
Josh:
Now they get the custom Gemini model from Google. Suddenly they have AI. They ship this
Josh:
this ai ring that is compatible with these new gemini models they ship a new
Josh:
set of airpods that have visual sensors on them so you could collect data from
Josh:
the outside world and you start to get this suite of devices that isn't an iphone
Josh:
but is increasingly capable and more powerful and approaching what we can do
Josh:
with an iphone so i hope this is a trend that we see where the next
Josh:
iphone level device isn't a device it's a suite of devices maybe the ring is
Josh:
one of them maybe it's not but it's an interesting experiment to see what it
Josh:
could look like if that became the case I
Ejaaz:
Want to talk about the dark horse of the AI race, which is Anthropic.
Ejaaz:
Now, I'm going to hold my hands up here, Josh. I have given Anthropic a lot
Ejaaz:
of flack, and I've kind of called them the narc AI model.
Ejaaz:
They follow the rules, they go to the government, they run to the government
Ejaaz:
and say, hey, can you give us this deal or whatever?
Ejaaz:
And I've kind of looked down on Claude since they kind of maintained their parity
Ejaaz:
at the coding agent level. So I was kind of like, whatever, Why would I use Claude?
Ejaaz:
Turns out I was very wrong. So the information leaked a report on projected
Ejaaz:
revenue for Anthropic, and it basically puts them at the same level as OpenAI,
Ejaaz:
in some cases, better, Josh.
Ejaaz:
So the major takeaway from this is they're projecting $70 billion worth of revenue
Ejaaz:
by 2028 and a $400 billion valuation.
Ejaaz:
Bear in mind that OpenAI is currently valued at, I think, $500 billion.
Ejaaz:
So to make that leap from where they are currently, which I think is $200 billion, is a crazy jump.
Ejaaz:
But number two, this would assume they then become profitable way earlier than OpenAI.
Ejaaz:
OpenAI at the same time, 2028, will be making technically more money than Anthropic,
Ejaaz:
but won't be profitable.
Ejaaz:
And so the immediate question that I asked myself was, well,
Ejaaz:
how are they planning to do this?
Ejaaz:
So far, they're losing on the retail sales. So Like, do they have a Hail Mary?
Ejaaz:
And the answer I connected to the dots, Josh, comes right here.
Ejaaz:
In the enterprise AI market share, where Anthropic has sneakily surpassed OpenAI.
Ejaaz:
They currently command, I think this chart is a little outdated,
Ejaaz:
but they currently command around 25% of the enterprise API share.
Ejaaz:
And why this is super important is, although there may be fewer enterprise customers
Ejaaz:
in terms of numbers, like so, you know, OpenAI has 800 million weekly active users.
Ejaaz:
Anthropic might have, I don't know, a couple hundred thousand enterprise users.
Ejaaz:
Each enterprise user pays way, way, way more than the average retail user.
Ejaaz:
And so it's just something that I didn't see, Josh.
Ejaaz:
They're like engaging with a lot of enterprises behind the scenes.
Ejaaz:
They're signing these multi-billion dollar contracts and they're actually like
Ejaaz:
translating these contracts into useful products that these businesses are using
Ejaaz:
behind the scenes. How we prove that, I don't know.
Ejaaz:
Maybe it's like the economic GDP over time from a bunch of these different companies
Ejaaz:
that they've signed deals, but I thought this was cool to point out.
Josh:
Yeah, this to me intuitively makes sense. It's like when you think of coding,
Josh:
you think of Claude. And I think that's kind of the universal truth amongst corporations.
Josh:
And when you want a bot to write code for you, you are using Claude.
Josh:
And if you're pinging an API that is writing code for you, odds are you're using Claude.
Josh:
So while the retail general public facing sentiment isn't that optimistic around Claude and Anthropic,
Josh:
because it's just not as useful as ChatShapute or Gemini, The reality is that
Josh:
if you're writing code and if you are a company that wants a model that writes
Josh:
fantastic code, you are using Claude and Anthropic.
Josh:
And Anthropic is just collecting a lot of the upside without a lot of the public
Josh:
facing noise because those are just private entities. They're just swiping their
Josh:
credit cards and they're getting all their tokens and they're just happy and they're on their way.
Josh:
So, yeah, I mean, I'm happy for Anthropic.
Josh:
I hope this is durable. I like the fact that we're starting to see each of these
Josh:
companies kind of slot themselves into a portion of the market.
Josh:
So I like that Anthropic is just working on code. I think that's great.
Josh:
Don't try to be the best at everything. Try to make the best coding model and
Josh:
look how much money you could print from it. This is a positive sum game.
Josh:
The pie is continuing to grow so quickly.
Josh:
So if you could just own a small corner of it, like Anthropic is doing,
Josh:
all the power to them. Keep it going.
Josh:
Someone who's not faring as well as Anthropic is our good friends over at Meta and Mr. Zuckerberg.
Josh:
They got absolutely crushed this week after earnings for a series of reasons.
Josh:
This doesn't really come as a shock. I think we've been pretty bearish on Meta as a whole.
Josh:
After that whole glasses debacle, I became increasingly bearish on Meta as a
Josh:
company and their ability to execute in this world of AI.
Josh:
But Ejaz, do you have any takes on what happened after the Meta earnings report?
Ejaaz:
I do. So we put out an episode, I think two weeks ago, on the Meta bull case.
Ejaaz:
And so the question a lot of you might have is like, you know,
Ejaaz:
do you still maintain some of that?
Ejaaz:
The short answer is yes, but over a longer time period.
Ejaaz:
Like here's the facts. So earnings came out for Meta last week and it wasn't
Ejaaz:
as great as they'd hoped for one particular reason.
Ejaaz:
Their spend on AI was ludicrous for the quarter.
Josh:
The company spending tens of billions on employees is overspending.
Josh:
I would have never guessed.
Ejaaz:
Exactly. So they had spent billions and billions of dollars,
Ejaaz:
in some cases, in crazy ways, just to hire a couple of people,
Ejaaz:
but also to pay for CapEx investments for their Hyperion data center,
Ejaaz:
to invest in different apps being built, to fire a bunch of people,
Ejaaz:
just ludicrous amounts being spent. And I think that...
Ejaaz:
Meta shareholders had a bit of PTSD from the Metaverse days in 2022,
Ejaaz:
where they renamed their entire company from Facebook to Meta based on this
Ejaaz:
Metaverse theory and ended up not panning out, right?
Ejaaz:
NFTs weren't a thing. And so they have a bit of PTSD where they're seeing Zuck
Ejaaz:
spending all this money, but no real ROI.
Ejaaz:
One clear example is they launched an AI assistant and no one really uses it.
Ejaaz:
No one's really on Facebook and it's not really integrated well into their existing
Ejaaz:
products. People just use ChatGPT.
Ejaaz:
They then launched a Sora competitor called the MetaVibes app.
Ejaaz:
No one uses that either. Do you remember that, right?
Ejaaz:
And then they launched, they pioneered, they said, listen, we're going to stop
Ejaaz:
copying people. We're going to do our own thing. And they launched their own
Ejaaz:
hardware device, which is the AI glasses.
Ejaaz:
The reception and feedback from their diehard fans was the worst they've ever
Ejaaz:
heard it. They hated the entire experience.
Ejaaz:
They think it is a lesser product than anything else on the market.
Ejaaz:
So for all of these reasons and much more.
Ejaaz:
People just don't have faith in Zuck's ability to spend and deliver on this.
Ejaaz:
And it's reflecting in the share price.
Ejaaz:
They lost $250 billion in 24 hours, Josh, on market over.
Ejaaz:
Just completely insane, down 15%. So now going on to the bull case,
Ejaaz:
I do think they picked themselves out.
Ejaaz:
I actually think Meta is probably like a really good buy at this point.
Ejaaz:
And for one solid reason, which is I don't think Zuck wants to lose this race.
Ejaaz:
And he's willing to figure any and all out to get himself to a point.
Ejaaz:
Is he able to produce like a bunch of really cool apps that leverage kind of
Ejaaz:
like the distribution that he has using AI, like Google has,
Ejaaz:
like OpenAI has? I don't know. TBD.
Ejaaz:
But yeah, Josh, do you have any thoughts?
Josh:
There's this interesting phenomenon happening where
Josh:
I feel absolutely zero inclination to use any of Meta's products.
Josh:
And that doesn't exist with any other company.
Josh:
Like I've experimented with pretty much everything.
Josh:
There is not a single part of any of Meta's AI product stack that I'm remotely interested in.
Josh:
In fact, the only touch point I have with Meta is Instagram because Facebook
Josh:
is such a disaster and it's cluttered and it just doesn't, I haven't used it in years.
Josh:
So the Meta ecosystem as a whole is not interesting. the meta hardware delivery
Josh:
is horrific at best like ijaz you you wanted the glasses you ordered the glasses
Josh:
you still don't have the glass dude
Ejaaz:
I couldn't order the glasses i couldn't walk into the.
Josh:
Store yeah so so that's my point is to have
Josh:
a flagship product like that um be that
Josh:
despicable it's it's really it's it's high signal that there is
Josh:
some sort of lack of care in terms of what's being delivered and
Josh:
perhaps move fast and break things worked early on in the days of
Josh:
facebook but in a fully formed meta that is
Josh:
a huge behemoth now that doesn't work as
Josh:
well because the costs are so high i don't like
Josh:
anything about it the hardware even if
Josh:
it was exceptional even if meta released true augmented reality glasses today
Josh:
and they locked me into the facebook meta ecosystem i'm not a user so they could
Josh:
have the best product in the world the product that they hope to release five
Josh:
years from now even if they released it today i'm not a user because i don't
Josh:
care for that ecosystem and they don't care to unlock the ecosystem.
Josh:
So I think they have a lot of hard problems to solve.
Josh:
One is actually building a product people like in the hardware world.
Josh:
One is building a software stack that people like, and one is shifting these
Josh:
billions of users that they have over to something more meaningful than a social
Josh:
media feed. And maybe they don't do it.
Josh:
I don't know how they monetize in the case that they don't, but there's a lot
Josh:
of questions that need to be solved from Zuck and the Facebook team that remain to be
Josh:
unknown.
Ejaaz:
Josh, are you, is it hot where you are? You look to be, you're sweating a little bit.
Ejaaz:
Like, very, very interesting, because
Ejaaz:
in this next and final topic of the episode, I am pleased to announce,
Ejaaz:
Google is launching GPUs into space.
Josh:
I feel like I need boxing gloves every time I bring this up,
Ejaaz:
My God. To create an AI data center in space, which Josh hates so viscerally.
Ejaaz:
But one of the richest mans in the world is going to give you his argument as
Ejaaz:
to why it's an important thing to explore.
Ejaaz:
So termed Project Suncatcher, a moonshot attempt to launch GPUs into space by
Ejaaz:
Google to harness the power of the sun,
Ejaaz:
solar energy, which equates to 100 trillion times humanity's total electricity production.
Ejaaz:
These are Sundar Pichai's words, the CEO of Google, not mine, right?
Ejaaz:
He then goes on to explain how he would attempt to do that.
Ejaaz:
You know, he says like, listen, I know that there are problems in space.
Ejaaz:
There's radiation, but we're working on that.
Ejaaz:
We're running trials and tests right now, which actually proves that our TPUs
Ejaaz:
can survive in that radiation.
Ejaaz:
Okay, checkpoint number one. But of course, the question remains,
Ejaaz:
how on earth are you going to harness the energy that comes from the sun in
Ejaaz:
an efficient manner? Maybe that's easy to solve.
Ejaaz:
And then the obvious one is, it's so expensive to send stuff into space.
Ejaaz:
How are you going to pay for that? And actually, if you dig into his report and his announcement,
Ejaaz:
he argues and he makes the point that like, you know, if you extrapolate the
Ejaaz:
cost of space going forwards, it should end up being equivalently pretty cheap
Ejaaz:
for us to send GPUs where it makes sense to create a data center in space.
Ejaaz:
I'm going to pause there before I start gloating. But Josh, any feedback on this?
Josh:
OK, one thing that I do like is they're readjusting these timelines here.
Josh:
These timelines are starting to feel a little more realistic.
Josh:
Launch two prototypes by 2027.
Josh:
So we're pre-prototype now. This makes me happier.
Josh:
We are going to launch prototypes in two years. We are hopeful that SpaceX and
Josh:
Starship will be able to get the cost per kilogram to orbit down low enough where it makes sense.
Josh:
Fine. Okay. If you want to experiment with these moonshots and you want to take your time with it,
Josh:
all right i guess i give up like i'm i i got nothing else
Josh:
to say this seems like do it like you
Josh:
got the billions of dollars you put it into r&d you do it
Josh:
um i think it's like go go to
Josh:
space i don't care i'm just done i'm done fighting about this i got nothing
Josh:
else and also i'm running out of out of arguments because he is
Josh:
like methodically um removing the constraints by
Josh:
um i guess just just taking more time and assuming
Josh:
the unit economics makes sense the problem with doing it right now
Josh:
is the cost per kilogram to orbit is so unnecessarily high um
Josh:
and the technology is so difficult to prove as prototypes
Josh:
that it doesn't seem worthwhile i hope that
Josh:
they can figure it out i guess is what i have to say but anyway that that's
Josh:
all we got for this week there was a lot of craziness a
Josh:
lot of chaos all across the board all of our favorites open ai meta
Josh:
google apple they all got some screen time
Josh:
this week because they're all up to no good well
Josh:
i guess some some are up to some good it's a it's a mixed bag this week uh
Josh:
there was a good a circular good there was one last
Josh:
bit of news um on the topic of space and uh
Josh:
that is that jared isaacman has been nominated for head of nasa which
Josh:
is exciting because nasa i'm not sure if you realize this nasa at one point
Josh:
they sent people to outer space like they actually had rockets that went up
Josh:
into outer space and it functioned it was a functioning part of society uh which
Josh:
has unfortunately degraded over the years and the space program has kind of
Josh:
faltered to nothing which is i think where a lot of the enthusiasm around SpaceX come from.
Josh:
Thankfully, Jared is someone who is really passionate about space.
Josh:
In fact, he has been there twice.
Josh:
So he has a lot of experience. He understands how this works.
Josh:
And I'm hoping we'll provide a jolt into NASA to just make the space program more exciting again.
Josh:
They have the Artemis II program, I believe, which is supposed to be taking the
Josh:
a rocket to the moon fairly soon. So I'm just excited to see this new ambition happening with space.
Josh:
Congrats to Jared on a nice, a nice win.
Josh:
And that's pretty much it. That's everything for this week. If you enjoyed,
Josh:
as always, please do not forget to share with your friends, like,
Josh:
subscribe, drop a comment about what you want to hear about next.
Josh:
We are doing slightly better on Spotify. Thank you for subscribing.
Josh:
If you have not gone to Spotify and watch there and followed us there and consume
Josh:
content there please we do
Ejaaz:
Not have a government bailout so we need you we need you to bail us out when
Ejaaz:
you are the back stars you are the backstop turn on your notifications subscribe
Ejaaz:
to us wherever you are tell your friends to do it even if they don't listen
Ejaaz:
it would help us out so much.
Josh:
So with that i think we're done for the week um we're gonna go take a nice show
Josh:
weekend we'll be back bright and early next week for whatever hot news happens
Josh:
to come over the weekend so stay tuned and as always we will see you guys in
Josh:
the next one until next time peace
Ejaaz:
See you guys.