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Technology's daily show (formerly the Technology Brothers Podcast). Streaming live on X and YouTube from 11 - 2 PM PST Monday - Friday. Available on X, Apple, Spotify, and YouTube.
Meta missed earnings. Meta reported record revenue in the third quarter, but the technology company warned of accelerating capital expenditures around artificial intelligence, sending its stock down 7%. Now a $1,700,000,000,000 company. Not bad, but we are in the age of three, four, $5,000,000,000,000 companies now.
Speaker 2:Stand out for me, reels at north of a $50,000,000,000 run rate.
Speaker 1:Crazy. Which is more than all of TV combined.
Speaker 2:In 2024, television advertising spending in The US was expected to amount to approximately $60,000,000,000.
Speaker 1:Mean, they're within striking distance. So there was this onetime tax charge of 15,900,000,000.0 that crushed net income. Spending on AI researchers has also been crazy recently.
Speaker 2:So in between two stories, you can get up to
Speaker 1:Yeah.
Speaker 2:Five individual ads. So Yeah. Gotta pay for all that CapEx somehow.
Speaker 1:51,200,000,000.0 in revenue this quarter. They were up 26% year over year. My bigger question today is what happens to the advertising cash machine once you're two decades in? I don't think these businesses, at least most of them, would exist if they hadn't grown up in a cash rich environment. Like, I don't I it's just so hard to predict in 2009 how much capital is it gonna take us to build a self driving car network that we'll be able to launch in San Francisco and barely be profitable in the probably be another decade?
Speaker 2:Strange strange comp here
Speaker 1:Yeah.
Speaker 2:Is YC I don't know. It's some years ago at this point. It was trying to understand what what the factors that contributed to the breakout successes. Mhmm. And one factor was founders having wealthy parents.
Speaker 1:Mhmm.
Speaker 2:So the founders felt like they could just take these really massive high risk swings because they weren't going for a base hit. The founders like, I make a few million dollars, it doesn't change my life. Right? Trust is is is well beyond that. I gotta go big.
Speaker 2:And so I gotta go big, willing to like look silly for a long period of time, willing to, you know, just stumble around as long as it takes to hit it really big.
Speaker 1:Google was able to just hold on to Waymo from 2009 to today, sixteen years. They're probably still losing money on it. I wanted to look at some parallels between what's going on with with Google, who's been on a tear and now has this, like, all of a sudden pretty diversified business. The search giant, the cert the cash machine of the of the ads business is taking the other bets as their children. And now as search becomes less relevant potentially in the age of AI, well, what does Alphabet have?
Speaker 1:They have Google Cloud. They have Waymo. They have Maps, Gmail, Chrome, DeepMind, Google AI. Like, it's a stack lineup. And so, yes, even if search does get older
Speaker 2:how YouTube is doesn't even isn't even serving up its own Ninja Turtle. No. Right now, you're seeing more AI content on YouTube, but it's still created by independent channels. You know, YouTube pays out a huge amount of its revenue today to the creators on the platform. There's a world in the future where YouTube just generates the the the video, the content
Speaker 1:Yep.
Speaker 2:Itself through, you know, its its various AI products. It never actually has to pay out a creator.
Speaker 1:The Google story is very interesting. For the last decade, since 2015, when they rebranded as Alphabet, I feel like they were not getting a lot of credit. Now everyone's waking up to this idea that it's like, woah. They have, like, four monster businesses. And, yeah, there's a ton of gravestones in the graveyard from various note taking apps and chat apps and Google readers over there.
Speaker 1:But overall, they wound up building a very diverse, very valuable business where even if Waymo's not cash flowing a ton, is it worth $100,000,000,000 Facebook rebranded to Meta in October 2021. People, I think, overly narrow about framing that transition about specifically VR, specific specifically virtual reality, the metaverse, everything that Mark Zuckerberg was investing in.
Speaker 2:I feel like the name meta has aged pretty well.
Speaker 1:I agree.
Speaker 2:Even though it was ultimately embarrassing over investment. Totally. At the time.
Speaker 1:It was just important for, for Mark Zuckerberg to send the message that we're not any single app. We're not Facebook. Yeah. Yeah. And we're not even just social networking.
Speaker 2:People are using LLMs in social ways. And so as as people spend more and more time talking to LLMs, that is time that they are not in meta. I'm just saying, like, Mark certainly, like, sees ramping attention and use user minutes on total open AI products.
Speaker 1:Totally.
Speaker 2:And it's a concern. It's a risk.
Speaker 1:On the face of it, Google and Facebook have similar backstories, similar cultures, you know, young founders who who built up these tech companies only seven years, eight years apart from each other when they started. But Google had a very different culture. It's a PhD research project, sort of an academic campus when you're walking around. The mission is organizing the world's information. It's very nerdy, and that obviously translates to, hey.
Speaker 1:How do we organize the world's information? Let's create a mapping product, Google Maps. Okay. What do we do when we have all the maps? Let's try and drive around a car on it, and then they get self driving cars.
Speaker 1:Right? And it's, like, it's a little bit harder to jump from, like, our mission is to bring people together so we're generating AI or VR, which feels like the opposite direction.
Speaker 2:What's Meta's mission? Monetize the world's attention. I would love for Mark to just go supervillain mode again. Update on Halloween. Spooky.
Speaker 1:I like that. Are any of the side projects gonna become monsters because you're kind of in the side project era now that you're 20 years old?
Speaker 2:In the 2022, Reels was at a $1,000,000,000 run rate. Mhmm. By the 2022, a $3,000,000,000 run rate. '23, 10,000,000,000. And the 2025, 50,000,000,000.
Speaker 2:So the growth is absolutely incredible.
Speaker 1:Google's parent company reported a 16% surge in third quarter revenue with growth in its digital advertising and cloud computing units helping to finance robust artificial intelligence spending. Sales reached a record $102,300,000,000
Speaker 2:Is that good?
Speaker 1:Hey, we did our first $100,000,000,000 quarter. Net income was 35,000,000,000, a 33% increase from the same period a year ago. Like other large tech companies, Google is pouring tens of billions of dollars into AI development. I mean, what a remarkable result. Let's move on to some timeline.
Speaker 1:Let's move on to some news. Tyler, what's new in your world?
Speaker 3:I mean, most of the big news, I guess, was the OpenAI IPO.
Speaker 1:Yeah. OpenAI lays the groundwork for Juggernaut IPO at up to a $1,000,000,000,000 valuation. The company has looked at raising $60,000,000,000 at the low end and likely more. They cautioned that talks are early and plans, including figures and timing, could change depending on business growth and market conditions.
Speaker 2:Depending on where Meta's market cap is at the time of the OpenAI IPO will be, like, potentially, it will be an interesting comp because you're gonna be able to look at a business that's, like, very, you know, at scale Mhmm. Like, profitable Mhmm. Still growing very quickly, versus OpenAI, which we know will be losing, you know, tens of billions of dollars at the time of the IPO.
Speaker 1:Makes no sense what the f Meta is spending all this money on. You've spent 70,000,000,000 on reality reality labs to make the Ray Ban vision. Are you serious? I don't know. He does have one of the biggest cash machines in the entire world, in the entire history of business.
Speaker 1:Google has all this money. Why do they have this growing cash pile? Why can't they find something to do with it? They they truly had too much cash to do. They, like, they invested so much in Waymo and so much in DeepMind and so much in Google Cloud.
Speaker 1:And at the same time, they still had money left over.
Speaker 2:Meta Platforms is one of the greatest businesses of all time.
Speaker 1:Yeah.
Speaker 2:And the CEO's a little crazy. He's a bit of a wild card. Like, he has, like, obviously, has an incredible
Speaker 1:All of the big tech companies.
Speaker 2:And the last time that that Mark invested this heavily in something
Speaker 1:Mhmm.
Speaker 2:It did not deliver ROI.
Speaker 3:People were calling for Sundar to be basically fired for, like, a long time. I know. Until, like, basically this year. Yeah. So I I feel like you're you're exaggerating how much, like, Google has been, like, this, like, winner the whole time.
Speaker 3:Breaking news.
Speaker 2:Yes. This is gonna rock your world.
Speaker 1:No way.
Speaker 2:Taylor Sheridan and Peter Berg, team on Paramount and Activision's Call of Duty movie. Let's go. Let's go. Hit the hit the gongs with them. The creators that made Yellowstone, Hell or High Water, and Lone Survivor, Ants Cario.
Speaker 1:Basically, Taylor Sheridan left Allison's new empire, left Paramount and said, hey. I'm out, and I'm going over to NBCUniversal. I'm riding with the Comcasters. This AI stuff is so dumb. Zuck is repeating the 2022 sinking of a great money machine in meta with wasteful spend.
Speaker 1:The metaverse sucked, and AI is nearly as dumb.
Speaker 2:I think part of the blowback here is that the first AI product that Meta announced was MetaVibe. That does not inspire confidence. Yeah. Right? Because it was, they, if they had launched Sora, people would have been saying like, wow.
Speaker 1:It's not like you walked down the street and you were like, oh, wow. Like, this is actually breaking through with just, like, everyday random people in the way that Threads has. I don't know. Maybe in a year, we'll be like, oh, wow. They actually figured it out.
Speaker 1:They funnel a ton of people to Meta Vibes, and it's as successful as Threads. It won't. It seems like a tall order.
Speaker 2:Yep. It won't be.
Speaker 1:The Jensen video is only seven seconds, so look at this. He's having beers with some absolute dogs. He's hanging out with the CEO of Samsung, the CEO of Hyundai, hanging out in South Korea, just having some beers, crushing some beers with the boys. This is how you do it. People will call it a top signal.
Speaker 3:I think
Speaker 2:This is gonna go so hard in a top signal vibe real that we will definitely create. Yeah. When the time is right.
Speaker 1:Korea has the best fried chicken in the world taking shots at colonel Sanders.
Speaker 4:I don't know why Korea has the world's best fried chicken, but Korea has the world's best fried chicken.
Speaker 1:Let's go. The best fried chicken in in America is Korean.
Speaker 4:Nvidia investors. That's why Korea's so rich.
Speaker 1:He's got bits.
Speaker 5:He's feeling good right now. I mean, on on your 5,000,000,000,000 day, I mean I mean, come on.
Speaker 2:Let him let him have a little fun.
Speaker 1:The first trillion took them 6,138 days. The second trillion, they did it in one hundred and eighty days. The third trillion in sixty six days. Then the fourth trillion was in two seventy three days. And then the fifth trillion in seventy eight days.
Speaker 1:So from six thousand days, took him twenty years to make that first trillion. They say that the first trillion is the hardest.
Speaker 2:But they do say that. Amazon will sue me for leaking this. He says, worth it. New new
Speaker 1:This is so funny. Putting the tiny Amazon package in the missile launcher that just flies in. Me after loading the dishwasher instead of paying a robot $20,000 to do it for me.
Speaker 2:And I wonder Chrome hearts all over my knee. Yeah? He says 20 k to simulate the experience of a roommate with a ketamine problem.
Speaker 1:That's ridiculous.
Speaker 5:Now, this is what we
Speaker 1:were saying that the the, we were saying on the show yesterday.
Speaker 2:It's like, hey, Neo, you know, clean up all
Speaker 1:those wine glasses. And it's just like, yeah. Yeah. Just smashing everything.
Speaker 2:Neo with this got the Glock out. Now tell me where the seed phrase is. Gotta make sure that the, just another reason why they You put the experts
Speaker 1:definitely have to arm them. This is important.
Speaker 2:Every day I'm more bullish on one X. Yeah. They have a great understanding of the internet. Yeah. They're focused.
Speaker 2:They've been focused on like a specific use case, the home for a while. Yeah. They're focused on teleoperation, which is the right thing to be focused on. Yeah. Because even if it's only as good at teleoperation forever.
Speaker 1:Yeah.
Speaker 2:That still could be valuable. Wait till you find that MF 20 k clanker in your kitchen acting too friendly. It's ridiculous. Damn. After so long.
Speaker 1:Oh, that's funny. I got caught following him. But I did like this post and I was like, I gotta follow this.
Speaker 2:There's a dev. Eric Katana has a less not so PC post in here. Is it gay to have sex with a female robot teleoperated by a man?
Speaker 1:Elon Musk comes in with a crying emoji. I don't know. We'll leave that to the philosophers, I suppose.
Speaker 2:My sense is that selling Blackwell chips to China would quite possibly be the most unpopular tech policy move of the Trump admin, especially on Capitol Hill. It's plausible that the long term, really even near term result will be much more compute regulation.
Speaker 1:I like this guy, Dean Ball. Tyler, do you know Ball?
Speaker 3:I think you've already made this joke. Yeah. I don't think the capabilities right now merit the nationalization. Yeah. But I think a lot of people still think that, like, it's like, you know, two more years then we'll be at a point where, like, it would make sense for there to be, like, major geopolitical conflict just over the AI question.
Speaker 3:The people who were super, like, bullish on that idea, I think, are still, I don't think they've been fully, like, disproven yet.
Speaker 1:Yeah. Even if we wanted to sell Blackwell to China, would they even buy it? The more you buy, the less incentive you have to build local Zero Hash. We talked about this briefly yesterday. Mastercard is set
Speaker 2:to acquire crypto startup Zero Hash for nearly 2,000,000,000. Zero Hash powers most crypto to fiat on off ramps holding money transmitter licenses and MSB licenses across The US. Most on ramps you use today likely run through zero hash. This is a pretty big deal. So Mastercard getting into the game.
Speaker 2:Please vote your Tesla stock. There is no one remotely close to my brother and no CEO CEO on Earth that would accept this package. It is a massive win for you as a shareholder every way you look at it. Elon says, thanks bro. These are the original technology brothers.
Speaker 1:What is it? Oh, you're true.
Speaker 2:The EO gets 10% of the incremental value creation if they 10 x the stock with a two x hurdle. Those shareholders get a 900% stock increase, and the CEO gets an incremental 10%. The first Tesla plan incented Elon to 10 x the value of Tesla. He achieved all the milestones and may never be paid for this.
Speaker 1:There is no one remotely close to Elon for Tesla. Like, I'm totally in on that. I'm in on the idea of incentive packages. I like
Speaker 2:that as the structure are so aggressive that most CEOs don't think they would achieve them. Hence, they would
Speaker 1:accept that. Like, if I go to the CEO of of Target or something and say, like, okay. You won't make a dime unless you 10x the stock. They're gonna be like, what are you talking about? No way.
Speaker 1:He was the senior vice president, iPhone software. Thirteen years ago, he was apparently fired from Apple after the disastrous launch of Apple Maps.
Speaker 2:I am an Apple Maps guy.
Speaker 1:Apple Maps was this kind of disastrous launch where it it really didn't work as anywhere near Google Maps. But but eventually, they turned it around, and Apple Maps became a really great product for the iPhone. As someone with a bit of insider info, sorry for baiting, I can tell you that the current trajectory for Apple would likely have been better off if he ended up CEO
Speaker 2:than I wonder what he thinks about iOS 17. Keep getting ads for cocaine on Facebook.
Speaker 1:Oh, yes.
Speaker 2:Just using Linktree as a cloaking page kind of surprised this works. And to that, I would say, who's gonna pay for the CapEx? Right? You got
Speaker 1:Oh, okay. We will see you tomorrow. It's Halloween. We have a special show for you. Please tune in.
Speaker 2:Tomorrow's gonna be one for the books. Spooky, and I can't wait. Goodbye. Have a great evening.