Thursday's Diet TBPN

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Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00John Coogan?

  There is a bunch of breaking news. The big news out of OpenAI, of course, the OpenAI show continues. Sarah Fryer had some comments about ChatGPT's growth potentially slowing, and it's unclear. It's not in decline. It's maybe deceleration. We'll have to dig into that. It had me thinking about debt, and I was thinking about just the fact that the debt has come to to tech for the first time, really. And this was sort of my take, and I'm a little bit. This is an area that I know the least about, and so I was doing some research, learning about a different industry,

• 0:38John Coogan?

  since it's just so abstract. We keep going back and forth on the debt is coming to tech narrative as like, it's very scary. We lived through the global financial crisis, and there's a lot of jitters when debt is around. It's like, oh, you could get wiped out. You could blow up. The backstop comes in. It just feels like all of a sudden we're talking about things with a much more serious consequence than like, oh, yeah, a startup raised some money and it didn't pan out and it was a zero and it wound up being a write down. Even when Theranos blew up, it was only equity holders that were lost. It wasn't this entire industry. And it didn't turn into this systemic issue, right?

• 1:19Jordi Hays?

  Yeah.

• 1:20John Coogan?

  But now it feels like with the 1.4 trillion of backlog that OpenAI has kind of opened up across a whole bunch of different deals, there is this worry that maybe the level of indebtedness could be risky. The level of risk in the system, the level of investment in the system could be something that's bigger than just, oh, if you're in this one name, you're taking a big risk. Now it's maybe like, hey, we're all taking a risk. And if we're talking about backstops at least. Data is the new oil. And back then in two thousand and six, his point was, uh, he was working at a data as a data scientist at Tesco, which is this British grocery store. I don't know if you know this story, uh, but he was working at this British grocery store chain.

• 2:04John Coogan?

  And his point was, we have all this data on a customer has or is in the rewards program. We see that they buy a Thanksgiving turkey before Thanksgiving. We see that they buy this type of paper towels or this type of uh, milk or whatever. We have this data, but we don't really do anything with it. The data is not valuable. We need to refine it, much like oil into gasoline. And once we refine it into gasoline, then we can do things like targeted advertising. And so it was basically just a generic call to action for taking data science seriously. People have been saying data is the new oil for, I guess, two decades now. Uh, and it never really sat that well with me because unlike oil, data is not, uh, perfectly fungible.

• 2:44Jordi Hays?

  Yeah.

• 2:44John Coogan?

  So one, one tranche of data is not equivalent to another, like Reddit is clearly very valuable since it kind of, you know, provided the backbone for GPT three, uh, though all the analytics data that flows out of some mobile game is.

• 2:59Jordi Hays?

  A lot of data is worthless.

• 3:00John Coogan?

  A lot of data is worthless.

• 3:01Jordi Hays?

  All oil is has at least some value.

• 3:05John Coogan?

  Essentially, I mean, I guess there are different levels of crude, right? There are different, different grades. And I was actually trying to play out the metaphor more and I was wondering like, uh, can we get to a place where, uh, you know, so we can wring intelligence out of raw data like the oil? And the result can be low octane gasoline, kind of like mid wit, you know, level like slop and AI slop. Or it can be jet fuel, like a deep research report that's actually pretty great, um, or some code that's really reliable and really useful. Um, but it all depends on the processing methodology. Um, but the more interesting data is the new oil take that I don't think was considered in two thousand and six is that, uh, maybe the tech industry is going to look like the oil and gas industry soon. Like I was looking up what, how much debt is in the oil and gas industry?

• 3:50John Coogan?

  It's over a trillion dollars of debt. It was two trillion, a lot like, you know, a decade ago, and then it went down and then went up. And it's like, it's all just a function of like, how much oil and gas is going on? How many, what are the new projects? How big are the projects? How much debt goes in?

• 4:03Jordi Hays?

  The difference is that if you identify. Oil in the ground and you figure out how much it's going to cost you to extract it. And how long you think you'll be able, like basically estimating like the how much, how much oil is actually available in this, in this site.

• 4:20John Coogan?

  Yeah.

• 4:21Jordi Hays?

  Then you can lend against that pretty predictably because you know that the price of oil is going to fluctuate. But in general, as long as it's in a, in some range, it will be like profitable operation to pull it out of the ground. And I think it's a little bit easier to lend against that than GPUs today. The big debate is around depreciation schedules and we have a sense that a data center that has power. And basically a box with a lot of power will be valuable in the future. But if you're, if a lot of the cost of a new data center is GPUs. It's harder to gauge on what the value of those GPUs will be in four years than, than it is, okay. It will this oil, like production site still be producing oil in five years.

• 5:06Jordi Hays?

  I think that's a bit easier to answer and easier to lend against.

• 5:09John Coogan?

  The fact that you're walking through that math is very different than what the venture capitalists in 2000 were doing. Like Google was like the most pure play, just beautiful software business. So Google in, uh, from, from 2001 to 2004 grew from 86 million in revenue to 3.2 billion in revenue. And net income over that period went from 10 million to 400 million and that includes stock based comp. So they were still making 400 million in profit with the stock based comp. Googlers made a lot of money. They gave away a lot of stock. And so it was, it was not, it didn't look like an oil business. There was not this big capex build out. There was not this big, or even this crazy R and D phase.

• 5:53John Coogan?

  There was just not, there was, there wasn't that much capital that went into Google before it became this monster cash flow machine. It was sort of an infinite money glitch. It was this beautiful algorithm that was just discovered and it was so elegant. And it just produced this monopoly insane like growth rate for so long. But for a long time, like tech just meant. Take a bet on a company and it's either a zero or trillion dollars or something like that. And so it's a lot different. And I wanted to dig into like the actual structure of one of these deals. You remember the Hyperion release? Zuck went on threads and announced that he was going to be building a five gigawatt data center. It was going to be as big as Manhattan.

• 6:31Jordi Hays?

  It's like somewhat of a Manhattan project.

• 6:33John Coogan?

  Somewhat of a Manhattan project. Exactly. The crazy, crazy thing about that deal. So, so he spins up the, the, he's, he puts out the announcement post on, on, on threads, says, hey, we're going to build this five gigawatt data center campus. It's going to be online in a few years. It's going to be as big as Manhattan. And he, and he shares some of like where it's going to be, how many racks are there going to be, uh, square footage, stuff like that. But he's basically just announcing that like, hey, the project's financed. We're ready to go on this. Like you would expect that when that it's a $27 billion deal. You would expect that, okay, Meta went down. They, they spent $27 billion. It's worth it. They're gonna, no, they got paid three billion. They got paid three billion. And the reason is

• 7:18John Coogan?

  because Blue Owl financed it with external debt and they are basically paying Meta upfront for the right to have them as a, as a tenant, as a leaser for a very long time. And so you have this massive data center project that's going to be paid for, even if it's not producing any valuable tokens, Zuck's still gonna, he's not just gonna default and be like, yeah, take the company. No way. He's gonna pay. And so in exchange for that, they got three billion upfront. This feels deeply important to the current AI build out boom, the tech story. It feels like an entirely new piece of the puzzle to understand where this technology is going. And I don't feel equipped to, to understand it at all. Private asset star Blue Owl has been flying high. Is it too close to the sun? Uh, so the article

• 8:01John Coogan?

  says, suddenly Blue Owl Capital is everywhere. This past Tuesday, uh, the upstart alternative investment firm with an aptitude for private credit, announced a financing deal for Meta Platforms, $27 billion AI data center in Louisiana. That is Hyperion that I was mentioning earlier. The week before, at the PAC CAIS Alternative Asset Summit in Los Angeles, Blue Owl's co-CEOs. Co-CEO Mark Lipschitz called JP Morgan Chase's CEO Jamie Dimon cockroach warning about risk in private credit, an odd kind of fear mongering. So basically, private credit has been growing a ton. We've talked about this a few times. Ares is massive now. Blue Owl is really big. And there's basically been this little bit of a fight emerging between where the debt is coming from.

• 8:46John Coogan?

  Do you do private credit or do you go with the traditional bank route? And so Jamie Dimon, at least I'm pretty sure he's going head to head against Blue Owl in a bunch of these deals. Jamie Dimon was cautioning investors about potential risks in the credit market by invoking a proverb, when you see one cockroach, there are probably more. And so he was referring to recent loan defaults, such as the bankruptcy of auto parts maker First Brands and subprime lender Tricolor Holdings, as warning signs of broader credit issues. So Dimon noted that JP Morgan took losses on some bad loans and implied that trouble in one corner of the credit market could mean undiscovered problems elsewhere, implicitly casting doubt on the booming private credit sector.

• 9:28John Coogan?

  And so Mark Lipschitz fires back and he says, I guess he's saying that there might be a lot more cockroaches at JP Morgan. During a recent private call, OpenAI's investors asked about external signs that ChatGPT's growth is slowing. CFO Sarah Fryer-

• 9:42Jordi Hays?

  This, the external signs were, I think, like App Store data, there was some data out of Europe.

• 9:48John Coogan?

  Oh, yes, yes, yes.

• 9:49Jordi Hays?

  That's right, that's right. And it was hard to read into the European data because Europe, Europeans-

• 9:54John Coogan?

  They don't work ever.

• 9:55Jordi Hays?

  No, I mean, it was coming off of summer, right? And, and, you know, ChatGPT is populated with students-

• 10:01John Coogan?

  But European summer hasn't ended yet. There's been, there's been early warning signs. Well, yeah, walk me through some others.

• 10:06Jordi Hays?

  So I can walk through Alex's coverage. Sarah Fryer held a private quarterly earnings call with the company's biggest investors. As usual, the numbers she shared were mostly up and to the right, but behind the strong top line figures, a quieter question hung over the call. Was ChatGPT's momentum starting to slow? During the Q and A portion of the call, sources say Friar was asked to reconcile ChatGPT's meteoric growth and weekly users from 250 in September 2024 to over 800 million now, with external signs that the app's growth has slowed in recent months. Closed followers of OpenAI's business have been whispering about these signals from research firms since late summer, but this was an opportunity for company backers to hear directly from leadership on the matter.

• 10:48Jordi Hays?

  After telling the investors to take third-party estimates with a grain of salt, Friar acknowledged a chink in ChatGPT's armor. She said time spent had declined slightly in response to, quote, "content restrictions" the company rolled out in early August. She then referred to the loosening of those restrictions that CEO Sam Altman has said will be implemented for adults in December. So, and Sarah says that OpenAI expects the decline in time spent to reverse. And so I don't think them announcing that they're getting into erotica is a sign of strength. Felt like something that you, that they would do in order to stimulate growth while they get a bunch of other monetization online, right?

• 11:32Jordi Hays?

  So like commerce, ads, et cetera. The reason I reacted strongly to it was that there had been messaging, you know, around the same time of, I don't want to be in a world where we have to decide between curing cancer and free education for the world.

• 11:46John Coogan?

  Yes.

• 11:47Jordi Hays?

  And so then at that same time, deciding we're going to do erotica.

• 11:50John Coogan?

  It was very weird timing. It was very weird. It was very weird timing that those two statements like came out one after another. OpenAI has decelerated revenue before because they, I think they tripled and then they went to a doubling or they went, or they were quadrupling and then they went to a, to a tripling. And so they actually decelerated in 2024 and then they re-accelerated in 2025. And so I was kind of saying like, well, you know, there's a good chance that you could see deceleration in the future. It's happened before. Like to be accelerating forever is, is basically impossible. But it would be interesting to track exactly how.

• 12:28John Coogan?

  How ChatGPT's growth is slowing, there certainly feels like there's just a level of saturation.

• 12:34Jordi Hays?

  And a month over month change in total visits to leading gen AI tools. ChatGPT is at the bottom of a list that includes Gemini, DeepSeek, Perplexity, Grok, Claude, Copilot and Meta AI. The key difference here is that like ChatGPT is just so much bigger than these other platforms. They could still be adding more users on a, on a, on a to, on a, on a per user basis than these other tools, even if their growth is slower.

• 13:04John Coogan?

  Like Meta is not accelerating top line, uh, top line users. They have like three billion users, like no one's expecting them to accelerate top line users. Maybe like randomly one quarter they accelerate, but not continually. And so I don't, I don't know. It, it just feels like an odd thing. It's going to be very funny when LLM's plateau around 120 IQ. What we've created is just a digital guy, not a god.

• 13:31Speaker 02

  This doesn't make any sense. If we have like infinite digital guys, that's like literally a guy is just like a worker.

• 13:37John Coogan?

  Yeah.

• 13:38Speaker 02

  If we have infinite workers, that's like insanely bullish.

• 13:40John Coogan?

  He didn't say it's gonna, it's gonna collapse the economy when we just get a digital guy. He said it's gonna be funny. And I agree. If you get a digital guy, that's pretty powerful because guys can do a lot of stuff.

• 13:51Jordi Hays?

  You need a guy for everything.

• 13:52John Coogan?

  Yeah.

• 13:53Jordi Hays?

  The middle class has apps.

• 13:54John Coogan?

  Yes.

• 13:54Jordi Hays?

  The wealthy have guys.

• 13:56John Coogan?

  Tyler, did you get a chance to read Fiji CMO's latest blog post, moving beyond one size fits all?

• 14:02Speaker 02

  Yeah, nothing I would say super substantive in it. I think with the, with 5.1, they were going.

• 14:09Jordi Hays?

  Like we made our digital guy faster, better.

• 14:12John Coogan?

  I mean, it is, it is crazy following this company so closely because uh, in, in here, there's a line that says, with more than 800 million people using ChatGPT, we're well past the point of one size fits all. And 800 million sounds amazing, except I feel like I heard the 800 million number like two months ago. And I feel like they have been accelerating so fast.

• 14:31Jordi Hays?

  You'd expect them to be at 900.

• 14:32John Coogan?

  900, exactly. And so the fact that they're repeating the 800 number is like.

• 14:37Jordi Hays?

  They're like, sorry, we can't add a third of the United States every month.

• 14:41John Coogan?

  ChatGPT is officially in its Fiji CMO phase. If you're wondering why the upgrade doesn't come with benchmarks, have fun. Rune says, you're, you're, you are confidently wrong about the internal dynamics of this. It could be better summarized as an infra cleanup. And Nier says, "The source for my top tweet is Fiji's blog post from today, when, which discusses the release and its goals. I don't really know what else to say." Is there hunger for benchmarks anymore? I, I, I might actually take the other side of this here. I like that they're getting away from benchmarks. I don't, I wish they didn't do a 5.1. Just make it better and don't do a release. And certainly don't tell people because what if people imagine-

• 15:23Jordi Hays?

  Easy for you to say because you're not in love with a specific version, John.

• 15:26John Coogan?

  I'm in love with five. I'm in love with five, Rune. Bring back five. I don't like 5.1.

• 15:32Speaker 02

  When GPT-4, like, GPT-4, like, not 4 or anything? When that was the, the best model, they would do updates? And they, they wouldn't like say, oh, this is a new model?

• 15:39John Coogan?

  Yeah.

• 15:40Speaker 02

  And people could definitely tell.

• 15:41John Coogan?

  Oh, sure, sure.

• 15:42Speaker 02

  Okay, they released a model, it's worse.

• 15:44John Coogan?

  So, so you think, you think putting a, putting a version number actually helps like fight back against that?

• 15:49Speaker 02

  I think it's more, um, i- i- it's just like easier for people to tell that it was actually a change. When they're noticing something that they've been depending on.

• 15:57John Coogan?

  Yeah, yeah, yeah, yeah.

• 15:58Jordi Hays?

  Sources say that sources say-

• 16:01John Coogan?

  Okay.

• 16:01Jordi Hays?

  Sources says that sources say CEO Mark Zuckerberg joined an internal employee Q and A and shared a warning about the AI bubble. First, he shared a breakdown of how different players from startups to big tech names like Meta should think about timing their bets. He described three camps in the industry: optimists, who see superintelligence emerging within two to three years; moderates, who expect breakthroughs by the end of the decade; and pessimists, who think it'll take well into the 2030s. Each outlook, he said, dictates how aggressively a company invests. Then he expound, uh, expounded on a version of the answer he gave me recently in our last interview. He noted that while unprofitable startups like OpenAI and Anthropic risk bankruptcy if they misjudge the timing of their investment, Meta has the advantage of strong cash flow.

• 16:42Jordi Hays?

  He also made the point that while big tech has historically been relatively debt, debt-free compared to large companies in other sectors, the AI infrastructure race is leading Meta and its peers to start using leverage in a more normal way relative to their size. Uh, like he told me in September, Zuckerberg acknowledged to employees that Meta's market cap could suffer if his timing is wrong and the bubble bursts. But the message was clear: we'll have the balance sheet to survive and emerge stronger than most on the other side. Super Dario was quoting that and said, "The obvious end game in the next two to three years is that Microsoft acquires OpenAI, Google acquires Anthropic, and Tesla acquires XAI. Only the large caps survive."

• 17:21John Coogan?

  That's a nuclear hot take. In contrast, OpenAI employees stayed for two plus years, sold 6.6 billion dollars of equity last month. Many hit the 20 million dollar cap. Morale and vibes are high, but so is the turnover rate. New OpenAI hires are often shocked by how many Slack accounts get deactivated each day. There are dozens, or perhaps a couple hundred ex-OpenAI, XAI, Google DeepMind researchers founding companies in the current climate. And Liang Chen says the simple answer, the liquidity of Anthropic options is the worst among those frontier labs.

• 17:54Jordi Hays?

  This is talking about how a lot of people have been leaving various labs. Less people have been leaving Anthropic. And so Liang Chen is saying the simple answer.

• 18:05John Coogan?

  What would be interesting is if, is if companies started offering liquidity in the form of annuities.

• 18:13John Coogan?

  But I, I don't know, there, there, there's some way to, to, to deal with this, like, you know, if you don't get, if you don't get employee liquidity, like they'll leave for something else. They'll just go somewhere else that pays them a higher salary. If you give them too much liquidity, they'll leave and start new companies. Very, very tricky to manage the, manage the team. But that is the nature of these, these companies.

• 18:36Jordi Hays?

  One of my strongest beliefs is that it's going to take 20 plus years to get AI penetrated into the real economy. I filled out a piece of paper at the doctor's office last week.

• 18:45John Coogan?

  I filled out a piece of paper at the doctor's office last week too. I finally realized why DocuSign has so many employees. Because you need to go to every doctor's office in person, apparently for decades, to get them to use online form filling technology. Like, general SaaS really does not, has not, has not permeated as much of the economy as people think. There's a company that makes paper receipts that's worth 20 billion dollars, 20 billion dollars. There are fax machine companies, the fax machine industry is still over a billion dollars. Still billion dollar industry. In my opinion, the entire AI field switched from explore to exploit two years early. Everyone convinced themselves, no, this isn't the case. Look at our exploration and it's like watching someone go on a 50 foot walk and find a cool

• 19:29John Coogan?

  tree when the entire continent is still covered in fog of war. Now that the terrain seems known, it should be harder to convince yourself. Um, I suppose this makes sense, given a lot of people hint at being good as gone as soon as they have enough money, but no, not me. I've been gone for ages already. Weren't we talking about this yesterday? This idea of like, of like, where will the next innovation come from? Where will the next breakthrough come from? Will it come from, uh, any of the, any of the, the, like, will it come from XAI?

• 20:00Jordi Hays?

  Well, it come from DeepMind. Yeah, I mean, it's really tough right now. You can stay in a university system and be a student and be taking on debt, or you can go work at a lab and make, have a good shot, at least if you did this a few years ago, have a good shot at making $20 million in a few years. And it's hard to give up that kind of opportunity.

• 20:19John Coogan?

  This Wall Street Journal article has given more context on the AI boom. Says the AI boom is looking more and more fragile. AI stocks have swung downward as doubt rises about sustainability and payoff. Perfect isn't good enough and any sign of weakness is a disaster. This is what's happening. It's like you double revenue and your stock trades down. It's very, very odd, but everything's been priced to perfection.

• 20:39Jordi Hays?

  Corey Weave, who again is the only NeoCloud in the platinum tier semi-analysis is down 45%.

• 20:47John Coogan?

  Recent history suggests that the gloom won't last, but the shakeup serves as a strong reminder that the early years of AI pose a challenge for investors. Companies at the heart of the, of AI are now talking about years, plural, of all major investments still ahead. Uh, there is of course, real reasons to worry about the sustainability of the boom. Chief among them is that there is far more AI computing infrastructure spending. Then there is AI revenue, a gulf widening by the day. OpenAI says it's planning to spend 1.4 trillion dollars in the next eight years, but is only pulling in around 20 billion of annual revenue today. Has the mood become that CEO Sam Altman felt the need last week

• 21:27John Coogan?

  to defend the company on X, saying the spending was understandably causing concern? Wow, he says he understands your concerns, Jordy. If you're down today, you're a certified beta bubble boy, you literally bid up SanDisk WTF. Alternatively, you can call yourself a bad beta, B I T C H.

• 21:48Jordi Hays?

  The White House last night tweeted, "We are so back" in all caps.

• 21:52John Coogan?

  What was that? What did that mean?

• 21:54Jordi Hays?

  What did they mean by that? In what way were we back? In other news, Anthropic disrupted a highly sophisticated AI-led espionage campaign. The attack targeted large tech companies, financial institutions, chemical manufacturing companies, and government agencies. We assessed with high confidence that the threat actor was a Chinese state-sponsored group. I guess they were using Claude, I think is.

• 22:18Speaker 02

  Yes, I think they were using Claude code, actually.

• 22:21John Coogan?

  Hmm, weird.

• 22:23Jordi Hays?

  So they were vibe coding espionage?

• 22:25Speaker 02

  Yeah, it was pretty funny. I read through some of the blog posts, and it was like some of the interactions of like the hackers, and it was like, this is what they were saying to them. They're like, okay, good job Claude, but I think this part is wrong. You can see like the actual transcript. Very bullish for Anthropic.

• 22:40John Coogan?

  Michael Burry appears to be shutting down Scion Asset Management. He said, "Dear investors, with a heavy heart, I will liquidate the funds and return capital, but for a small audit/tax holdback by year's end. My estimation of value in securities is not now and has not been for some time in sync with the markets. With heartfelt thanks, but also with apologies, I wish you well in your future investments. I do suggest investors contact my associate PM."

• 23:10Jordi Hays?

  Did he really, did he really quit right before the markets started correcting? Is this one of those like, you know, 90%, 90% quit right before, 90% of gamblers quit right before they finally call the top correctly?

• 23:25John Coogan?

  Yeah, it does seem odd.

• 23:26Jordi Hays?

  His memory will. Live on through meme images from The Big Short. Vine is being rebooted

• 23:33John Coogan?

  No way.

• 23:34Jordi Hays?

  under the name Divine with funding from Twitter's former CEO, Jack Dorsey. The app plans to feature more than 10,000 previously archived vines and does not allow AI-generated content.

• 23:47John Coogan?

  That's remarkable. There have been so many Vine revival attempts. Elon was talking about bringing it back at one point. I believe the founder of Vine was talking about bringing it back and did a number of different projects. There was a project called V2. We will see you tomorrow.

• 24:04Jordi Hays?

  Can't wait.

• 24:04John Coogan?

  AM, Pacific. Sure. Goodbye.