Subprime AI Crisis, Mr. Beast’s Guide For Excellence, Amazon’s Culture Problems

Ranjan Roy from Margins is back for our weekly discussion of the latest tech news. We cover 1) The 'subprime' AI crisis 2) Will companies building on AI persist if prices increase? 3) OpenAI funding news update 4) Do the research houses not care about the business side, and only want AGI? 5) iPhone16 releases to mild enthusiasm 6) Huawei's trifold phone is a hot seller 7) Mr. Beast's leaked guide to excellence at his production company 8) Amazon's culture has problems, says CEO Andy Jassy --- Enjoying Big Technology Podcast? Please rate us five stars ⭐⭐⭐⭐⭐ in your podcast app of choice. For weekly updates on the show, sign up for the pod newsletter on LinkedIn: https://www.linkedin.com/newsletters/6901970121829801984/ Want a discount for Big Technology on Substack? Here’s 40% off for the first year: https://tinyurl.com/bigtechnology Questions? Feedback? Write to: [email protected] Learn more about your ad choices. Visit megaphone.fm/adchoices

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

• 0:00Alex Kantrowitz?

  Is AI in a subprime crisis as spending mounts without returns? The iPhone 16 goes on sale today. Are we supposed to be excited? Mr. Beast has an internal guide to excellence that we'll talk about. And is Amazon's culture in trouble? All that and more is coming up right after this. This episode is brought to you by Genesis. What does it actually take to put a Gentic AI to work across an entire enterprise? I recently spoke with Genesis chairman and CEO Tony Bates about why orchestration is emerging as a competitive advantage in customer experience and what companies need to get right in the AI era. Then I sat down with Adam Mitchell, head of enterprise business solutions at Voya Financial

• 0:41Alex Kantrowitz?

  to go inside a large scale agentic CX transformation, including the business decisions, trade offs, and lessons along the way. You can watch both conversations now on my YouTube channel today. It's never been more challenging to get frontier compute. How do you know where to look, who to trust, or how much to pay? Akash is an open cloud that provides easy access, flexibility, and peace of mind. That's how companies like Razer were able to cut their inference cost by 15 times. Visit akash.network/alex for a free consultation. That's akash.network/alex for a free consultation. Welcome to Big Technology Podcast Friday Edition, where we break down the news in our traditional cool-headed and nuanced format.

• 1:26Alex Kantrowitz?

  So much is going on. OpenAI is fundraising. Apple's releasing new phones. Mr. Beast's Large Internal Guide to How to Be Great at His Company has leaked and it's fascinating. Meanwhile, Amazon has employees going back to work five days a week. And Andy Jassy has some very revealing comments about the culture potentially going south. So we're going to break that all down. Joining me as always is Ron John Roy of Margins. Ron John, welcome.

• 1:52Speaker 01

  It's good to see you back in New York as well. I see your Brooklyn apartment right behind you. And I think after all of our summer travels and, and podcasting, technical complexity, it's good to both be back in New York right now.

• 2:07Alex Kantrowitz?

  I've never been happier to have exposed brick behind me. Good Wi-Fi around me and a solid mic in front of me. This is, this is it. This is Nirvana for podcasting right here.

• 2:21Speaker 01

  This is all you need in life.

• 2:23Alex Kantrowitz?

  Exactly.

• 2:24Speaker 01

  Exposed brick, a shore microphone and good Wi-Fi.

• 2:27Alex Kantrowitz?

  And what a week to talk about artificial intelligence because there's been this thing that we've been talking about for a while, which is that some of the math doesn't seem to add up when you have the amount of money that OpenAI is losing and the amount of money it's trying to invest and still dubious sort of application of the technology within companies. And a piece from Ed Zitron put it all together this week. Now, let me be the first to say that I don't agree with this post completely. I think that it is wrong on a number of facts, but it's interesting to discuss because I think it very clearly articulates the bare case on AI and it's worth picking apart.

• 3:11Speaker 01

  Yeah, I think the Ed Zitron piece, and I agree that it's definitely, and a number of his pieces have been very, very aggressive against OpenAI, but I think they echo a number of the things that we've been saying. And one of the most interesting parts of this piece was it actually brought me back to that Goldman Sachs report from, I think, three months ago that we were saying could be the canary in the coal mine for generative AI. Because the biggest question is going to be when people actually have to pay for things. When companies, you know, they invest the budget upfront, but when they actually have to start renewing, when they have to start actually extending the contracts beyond just proof of concepts and small innovation group type contracts.

• 3:55Speaker 01

  And I think we're starting to see it. He lays out a lot of really good detail around what the cost structure looks for OpenAI and companies like that in that category. And then what the economics look like from the client side. And they just don't match up. They don't match up in any way.

• 4:13Alex Kantrowitz?

  Absolutely. So let's go through some of the numbers because he does do a very good aggregation of lots of numbers that have been reported. And I feel like it's valuable to just speak them out loud and we can talk about them. So he says OpenAI is paying Microsoft an estimated $4 billion in 2024 to power ChatGPT and its underlying models, and that's with Microsoft giving OpenAI a $1.30 per GPU hour cost as opposed to the regular $3.40 or $4 that other customers pay. So basically, what he's saying is that OpenAI is basically paying Microsoft a third of what you would pay typically.

• 4:52Alex Kantrowitz?

  And he said, "Training costs are currently $3 billion for the year and certain to increase." The information has reported that OpenAI's revenue meanwhile is 3.5 to 4.5 billion a year. And this is, this is sort of the, oh, here's another point. The Microsoft, so if you think about the AI being, providing value to enterprises, this was a pretty stunning stat that he shared. With Microsoft's 365 suite, which has Word, Excel, PowerPoint, Outlook, he says that companies are barely adopting the AI-powered Copilot with, with somewhere between 0.1%

• 5:36Alex Kantrowitz?

  and 1% of its 440 million seats doing so. What do you think about when you hear all these stats?

• 5:43Speaker 01

  Yeah, I think, so there's three parts, as you kind of outlined there. There's the economics for OpenAI, the fundraising for OpenAI, and then the adoption within the enterprise. Let's start with the adoption with the enterprise. So that stat between only 0.1 to 1% of Microsoft's, Microsoft Office 365 subscribers have actually signed up for Copilot, which is an additional $30 to $50 a person. I think one of the biggest miscalculations that Microsoft and Google are making is starting by anchoring the price at a per-seat basis like this before they have shown genuine

• 6:25Speaker 01

  value for these products, for these add-ons essentially, and made them so good and so, you know, where people are addicted to it. Every user is like, I can't live without this. But everyone I know who's tried out these products, some of them work pretty well, some of them don't. And it's not the magic that you're just going to go in Excel and they just release something where you can actually, you know, there's like a Python compiler that you can actually integrate with in Excel. But that was just released as a demo and that could work pretty well at some point, I'm sure. But in the meantime, we will all just upload our CSVs into Claude and ask it to do basic analyses for us.

• 7:07Speaker 01

  Like, they came out so strong and I get the business logic of anchoring the price at a high enough point because you see at some point the value will get there. But when it's not there and suddenly you ask people, companies that have 20 to 50,000 seats, imagine you're a CIO and you have like 50,000 seats with Microsoft Office 365. And they're asking you to add $30 to every single seat and I'm sure you'll get a little bit of a discount. When only a few of your people even know how to use generative AI. So to me, the adoption part, I think is going to be very rough for on the enterprise side. And again, we've talked about it, that it's that first renewal period that's kind of the

• 7:51Speaker 01

  where the rubber meets the road and we're getting there right now.

• 7:54Alex Kantrowitz?

  Before you move on, I just want to note that like they sold $30 a seat licenses back when the hype was at its height. And you basically would get a yes to say, we want to pilot AI in any organization, in any environment. And if you didn't pilot AI, or if you said, we are not going to use this stuff, your job was at risk. And now they've tried it and the number of people getting value from it is so low. And you're right, it's the first renewal that comes up. Okay, so that is the enterprise application.

• 8:27Speaker 01

  Now, let's talk about OpenAI's economics. As you said, as the numbers are laid out, it starts to get so much weirder. And actually, I think the most valuable part of this piece, again, as you said, it took all these different bits of reporting and really laid out a very strong case. The fact that OpenAI is getting a significantly discounted rate from Microsoft, that means that its economics aren't even being truly reflected in whatever it's showing to investors, and we'll get into the funding. Then, that 3.5 to 4.5 billion dollars a year in July number that was reported, we talked about this. It was a bit fishy because it was actually even from a few months before. And then again, it was extrapolating a run rate

• 9:10Speaker 01

  out for the entire 12 months, which is never a good sign for any kind of revenue projection. When you're actually talking about where is this going to go, especially when generative AI's hype has already been at its peak and is starting to wane a little bit. And then there was additional reporting from the New York Times that said it's actually only above $2 billion, that it's going to be at the lower end of the year to date. So it's definitely going to be at the lower end of the estimate. So the company is going to definitely keep burning money. And as there, there's two ways to make this, you know, approach this business strategy. Take the models you have as of today and try to get more people using and paying for them. And I don't think that's an unreasonable

• 9:54Speaker 01

  business strategy, because ChatGPT Plus is pretty good, chat using 4.0, 4.0 mini. But instead, they're going all in. I'm sure they're investing heavily in Sora. I'm sure they're, I mean, they've released 0.1, they're trying to say reasoning is the next level, agentic AI, et cetera, et cetera. So rather than just focusing on the actual adoption and conversion of users, they're still going out in this all out AI arms race mentality that we just have to build the biggest models possible, and the most advanced models possible before the actual like, business case is proven in the near term. So I think it is a reminder on the actual OpenAI's intrinsic economics, not separate from their ability

• 10:39Speaker 01

  to fundraise. They are so far from making any possible sense right now. And again, we don't have great numbers or reporting on a Claude and how Anthropic is doing with it, or even Perplexity or any of the other competitors in the space. But it seems to me that any company that's going AI arms race, builds the next generation of models rather than let's just actually build out this business, is at least not on a good trajectory right now.

• 11:11Alex Kantrowitz?

  I think Ron, John, this might be why we haven't had any OpenAI guests on the show, but I'd rather speak to these issues truthfully and not tell, not sugarcoat them in the hope that Sam Altman might come on the podcast. Like, we're here to tell the truth to listeners and this is the truth. And we're going to talk about it. And if OpenAI doesn't want to come on and face tough questions and speak about this stuff, then that's fine. And can I, I do think, though, this is a good place for nuance, which is that there's two things here that we're discussing, right? So obviously, we talked about the low adoption of Microsoft. That might just be a, of the Microsoft co-pilot. And that might just be a business situation.

• 11:50Alex Kantrowitz?

  But we can both agree that the underlying product, generative AI, is actually extremely valuable. And we've both found super valuable use cases in our day to day using ChatGPT, using Claude. I had a crazy thing that I started this week where, you know, you would have needed an app for this previously. But I like told Claude, Claude, I'm going to go on a Whole Foods diet. I'm going to update you with all the meals that I'm eating. And you give me a Whole Foods score and give me coaching on how I'm going to get to more Whole Foods type meals. And I'm just like typing in, taking pictures of stuff. It reads the labels, gives me feedback, it gives me Whole Foods score. It's like an unbelievable nutritional coach. And of course, like, does it hallucinate a little bit? Probably, but you can still see through that and.

• 12:37Alex Kantrowitz?

  It's just been, it's unbelievable. Like this, this is a better application quote unquote than any fitness app, you know, I would have used previously and it's all built within Claude and I'm paying $20 a month for it. So

• 12:49Speaker 01

  Wait, sorry. What is a whole foods diet?

• 12:52Alex Kantrowitz?

  Whole foods diet is you want to eat basically food that's not processed. And going back to my interview with Johann Hari about Ozempic.

• 13:00Speaker 01

  I was just gonna say, I listened to your Ozempic episode and I, I, much more than that Netflix documentary, that interview that you had with, on the Ozempic topic, I think almost radicalized me against processed food more than

• 13:18Alex Kantrowitz?

  Oh, yes. Yeah. Reading the book, speaking with Johann left a lasting impact on me. And yeah, so I'm trying to reduce processed foods and I'm using Claude to do it. And I'm paying $20 a month for Claude, the premium version. And that's just one use case that I have with it. So obviously, it's a great deal for me. And obviously, there's great value in this technology. Like, people who are like, this technology is worthless and just a party trick are absolutely wrong. But I think the question that we're getting at here is, are the economics feasible in the long term? And I think that really is the deeper question.

• 13:53Speaker 01

  No, that's a good point. I mean, any longtime listener knows very well that I'm actually incredibly bullish on generative AI. And I think it's the most transformative technology in the world. And I think before the big technology podcast becomes a health and nutritional podcast and we start selling supplements, this is what we focus on. The actual business and nuance of the, like, how this is playing out rather than just getting too hyped up in the actual technology. And I agree. And my question there is, is $20 the actual, you know, optimal price for Anthropic to charge you for using Claude? Or is it still underpricing its product

• 14:37Speaker 01

  in order to increase adoption? And they're actually losing money based on the compute that you're requiring? These are the kind of things that we don't know yet. And it seems like, at least from the OpenAI numbers we have, that the business model side of it, these companies are not, they're not paying attention to. They're not even, I know, like, OpenAI For myself, I've had when even paying a reasonable amount for API access essentially on the enterprise side, they don't have built out customer success teams in the way that Microsoft or Google do like they're not building out the business the way a

• 15:17Speaker 01

  traditional enterprise company would even a SaaS startup that's scaling and growing that's worth like $50 million will have a more built out infrastructure traditionally to serve the enterprise. So the way they're building out these businesses is it's different. It's still more research lavish, which is a good segue into the funding side of it.

• 15:39Alex Kantrowitz?

  Yes, but before we get there, I think that like this sort of this is an important part to stop on, which is that this could be the subprime issue, which is that you have AI companies building on top of this software, not just AI companies, everyday companies. And I mean, I'll shout out some of the companies that we think have like pretty constructive approaches on AI, companies like ServiceNow and Box. And are they just going to get so used to these low prices that when and build their products around them that when the rubber meets the road and these companies need to justify themselves financially, the prices go up and it becomes challenging for the business models and the companies that have gotten used to building with AI and the clients that have gotten

• 16:21Alex Kantrowitz?

  used to using the products built within the system. I mean, that's basically the idea of subprime here. I'm just going to read it from Ed's piece. My concern is that I believe we're in the midst of a subprime AI crisis where thousands of companies have integrated generative AI as prices that are far from yeah, as at prices that are far from stable and even further from profitable. Almost every AI powered startup that uses LLM features is based on some combination of GPT or Claude. The models are built by two companies that are deeply unprofitable. Anthropic is on course to lose 2.7 billion this year and have the pricing designated to get more customers rather than make any kind of profit.

• 17:02Speaker 01

  Actually, okay, yeah, this is a good point to stop on. I agree because, again, having worked in trading at a big bank during the 2000s and sitting front row for the subprime crisis that drove the global financial crisis, that is what I thought was the most powerful part of this piece. And I think the phrase subprime AI for readers, get used to it because I think you're going to be hearing it for listeners, you're going to be hearing it a lot, lot more. Because, yeah, it's the it's this idea that there's been no true price discovery around the businesses being built on generative AI. And when everything is subsidized, anything

• 17:43Speaker 01

  that goes wrong, OpenAI, if they don't raise this next funding round, suddenly they have to jack up prices, the downstream effects of that will put any number of startups out of business, it'll completely transform what a box or whoever else has to charge different clients. And like the downstream effects will be so significant that, again, it can completely derail the type of progress that we're at least all hoping for. And yeah, I think that's my biggest regret about this. And as someone who is very proud of the tech or very excited about the technology is this idea that because people are ignoring the actual business fundamentals around it, and simply just trying to grow at all costs and

• 18:27Speaker 01

  assume it'll be subsidized, that we're not going to build the proper business like case for generative AI.

• 18:35Alex Kantrowitz?

  And you know how we like always talk about how this stuff is kind of weird and doesn't fully make sense when you think about the structures and the goals and the mission and what's happening? I just want to read this one thing that I found was very interesting from this person on Twitter, Rune, who apparently or yeah, Rune, who apparently works for OpenAI. I'm just going to read it because I think this does really get the mindset within the company, right? He says, unfortunately, I don't think building nice AI products today or making them widely available matters very much. Minor improvements in daily active users or usability especially doesn't matter. Close to 100% of the fruits of AI are in the future from self improving intelligence.

• 19:14Alex Kantrowitz?

  Every model until then is a minor demo pitch deck to hopefully raise capital for even larger data centers. People need to look at the accelerating arc of recent progress and remember that core algorithmic and step change progress towards self improvement is what matters. One argument that has been that products are at a steady path towards generality, general intelligence, not sure that's true. So basically, this is what's going on in the minds of the research houses. Basically, that they're making money right now is an accident. And let me actually put that point, a finer point on that from Ethan Mollick from Wharton.

• 19:54Alex Kantrowitz?

  So he posts this photo of the tweets from Ruin on LinkedIn and comments. This is an important thing to understand. The major AI labs, including OpenAI, are very much focused on racing for the future. It is almost accidental that the early products are making billions of dollars. Their goal is explicitly AGI, artificial general intelligence, not your use case. They are not spending much time commercializing because most of their effort is going to be, is going toward building more powerful AIs.

• 20:28Speaker 01

  So this is one of those cases where I thought I was making a potentially an original point by talking about them ignoring the business case and actually building out business infrastructure. And then someone just tweeted it out. They said, we actually don't care about the business side of it. And your daily active users and profitability are not even worth spending time on because it's just about AGI. And yeah, I think Ethan Mollick summed it up well. This is exactly it, that they're, and it's interesting because they were nonprofit, research oriented companies to start. So they just never converted. So at least even if you start to convert some of it and you start to get a different

• 21:12Speaker 01

  cap table, in the end, the core culture of the company is not. You're not Oracle, you're not like Salesforce, you are still research at your core.

• 21:25Alex Kantrowitz?

  Man, this is just so fascinating. It's the thing about this, this is the biggest technological development of the decade. It is being driven by folks who don't really care. I mean, if taking this at face value, I think there's truth to it, who don't care as much at about the current moment as you might imagine, who are working towards this mythical goal of AGI. And the economics don't make sense. I mean, that's, that's one way to look. The other way to look at it is, of course, they're all about economics and, you know, they're, they're using the AGI thing as hype, which we heard about last week from Parmi from Bloomberg. But, I mean, if they were just kind of ruthless business people, you'd think they'd be better at commercialization. So where, where do you think this is going, man?

• 22:08Speaker 01

  Ah, I wish I knew. I mean, I, well, I know where this is going. We're going to trough, trough of disillusionment. It's going to be there. It's already kind of starting to get there. And there has to be a shakeout. There has to be some event that forces companies to be more realistic, forces an OpenAI or Anthropic to say, actually, it's not about AGI. Let's actually increase our daily active users and try to understand how to commercialize this technology. There, there, there has to be something. But as long as the money keeps flowing in, it's going to keep pushing that back. And the money does certainly appear to be flowing

• 22:50Speaker 01

  in, given OpenAI's latest fundraising. There's reporting yesterday that it's oversubscribed and people are clamoring to get into it and they're going to get to choose who gets to actually allocate capital into the round. So it appears that the interest is still there.

• 23:08Alex Kantrowitz?

  Right, but there's also another interesting detail, which is that, first of all, they've already gotten a billion from Thrive Capital, which is Kushner's VC fund, the FT reports. But Andreessen Horowitz and Sequoia, not part of the new round. Now, the FT says they're sitting out. So I'm curious, this is potentially interesting from two ways, right? Okay, they're trying to, OpenAI is trying to raise at a $150 billion valuation. So do these companies, sorry, do these VC firms think that it's just not going to work from a business point of view and that's why they're sitting out? I mean, think about Andreessen, which is so public relations oriented, deciding that they don't want to be in on the next round of OpenAI. Like, that's a pretty interesting decision.

• 23:52Alex Kantrowitz?

  Or is OpenAI telling, you know, picking and choosing and being like, eh, you know what? We're not going to go with you this time.

• 23:58Speaker 01

  Yeah, actually, so in the funding, some of the news that came out, like, again, Sequoia, Andreessen Horowitz on the sidelines, maybe you can make the case that, the more generous case would be, they have so many competing investments now that they don't want to come at this late stage with an OpenAI, generous interpretation. But then, to me, the more interesting part is, so you have strategic investors, Oracle, Apple, Nvidia, Tiger Global has shown up again, even the United Arab Emirates MGX Fund is supposedly one of the big investors for this latest round.

• 24:38Speaker 01

  So suddenly, you're getting back into this world where the most on-the-ground investors are stepping back, and then it's all the outside money, whether it's a strategic corporate, whether it's a sovereign wealth fund, whether it's Tiger Global, who's become quite famous for late-stage momentum-style investing, and I've written about it numerous times. So we are definitely at that moment where it's gone from pure tech investment, like promise on the technology, to let's just try to keep growing this thing by just funneling more money into it.

• 25:15Alex Kantrowitz?

  If this goes up in flames, how do you think it happens?

• 25:17Speaker 01

  I think something falls through in this round. And actually, one thing that you've seen in the way every OpenAI funding, OpenAI for, as we've been saying, a research house. Well, one thing they're very good at is fundraising PR. Cause and this is something again.

• 25:34Alex Kantrowitz?

  Have you tried SearchGPT? It's like Google, but with OpenAI and therefore the valuation should be trillions.

• 25:41Speaker 01

  And here is O1, which is reasoning and agentic, because everyone is saying agentic AI. So, so I actually think, again, maybe when we said ruthless business people, the one thing they are is ruthless marketers. Cause they are very two investors, two investors. Cause the one thing they're very good at is one, as you just said, kind of dangling the next big phase of growth in front of investors. But I honestly think the other thing is these leaks around fundraising. Cause again, in the good old days, when an actual fundraising round meant that every investor tried to avoid talking to journalists about it.

• 26:20Speaker 01

  And it would only maybe come out after the funding was done through a press release and they wouldn't even disclose the valuation. Now every day, there's more news that makes it seem positive. Suddenly it's oversubscribed and this information comes out and everyone's clamoring to get into it. So I think on both counts, they're very good at spreading the word around their fundraising needs and kind of pushing that narrative. But yeah, I think that's if something goes wrong this round, I think this is going to be a huge problem in the industry. Some indication that the money is not infinite would completely change the entire course of where generative AI is going.

• 27:03Alex Kantrowitz?

  Fascinating. Okay. So let me ask you this, because I hate starting a segment with a question and then not answering it. Is there a subprime AI crisis going on right now?

• 27:12Speaker 01

  Yes.

• 27:13Alex Kantrowitz?

  Hundred percent.

• 27:14Speaker 01

  I a hundred percent believe it because we've, we kind of walked through this entire thing that the economics don't make sense. No one at these companies is actually trying to make them make sense. And I mean, and they don't make sense even from the client side in terms of pricing, what a Microsoft is charging for Copilot. So I'm not just putting OpenAI and Anthropic and the likes in this. And then the downstream effects, no one knows what the real economics of the products they're building are. Maybe your Suno AI music creation app actually needs to cost seventy dollars a month instead of ten to make it make sense for the company.

• 27:53Speaker 01

  There's so many downstream apps and products and like services that are being created right now that could just completely get upended the moment someone at the foundation model companies has to actually turn a profit.

• 28:09Alex Kantrowitz?

  Okay, and I'm gonna say maybe not, because the one argument that you can make on behalf of the research houses is that the product that they've delivered has just gotten so much better at a point where we expected it to slow down. And if you think about like early ChatGPT compared to where the models are now, early ChatGPT compared to where the latest Claude model is, it's crazy. Things like artifacts, like you've talked about here on the show, where you can build, you know, different games or even like have it write up documents for you and then alter the documents based off of prompts. I think this stuff is especially powerful and I think that yes, we're getting a good deal on it.

• 28:48Alex Kantrowitz?

  But the prices have also been coming down, at least from the APIs, and there's probably a happy middle that they can live in. So that would be the optimistic take, although I don't, having walked through the subprime argument, I don't fully rule it out. It's possible that Ed is right.

• 29:07Speaker 01

  All right.

• 29:07Alex Kantrowitz?

  I'll admit it.

• 29:09Speaker 01

  I'll take that. I'm sticking with 100% yes.

• 29:12Alex Kantrowitz?

  And where I'm going from here, the place that could really save artificial intelligence, I'm going to go online to the Apple Store and see whether I can get my hands on an iPhone 16. No, I'm just kidding.

• 29:26Speaker 01

  Speaking of overhyped artificial intelligence, let's move on to the iPhone.

• 29:32Alex Kantrowitz?

  I will not be online. In fact, it doesn't even seem like there are lines for this phone. Not that there have been lines for a phone in quite some time, but the iPhone 16 is on sale today. I was looking at the reviews. Let me just read you a line from The Verge. It says, "The iPhone 16 Pro is one of the most unfinished products Apple has ever shipped." That's the first line of the review. The phone is shipping without Apple intelligence, I believe. The Siri looks like the same old Siri. So, sorry, Ron John. Hate to rub salt in the wound. But that's what we're dealing with.

• 30:10Speaker 01

  Oof. I was all excited for the weekend. Now, now, no more.

• 30:15Alex Kantrowitz?

  And now the data is coming from some of the third parties. So, this is from Reuters about talking about an Apple share slip, although Apple's up this week, like, pretty dramatically. And a very good week for the market, but Apple is outperforming. This is from Reuters. "Some analysts say delivery times for the new iPhone 16 indicate weaker-than-expected demand, possibly due to the delayed rollout of key artificial intelligence features." Okay, surprise, surprise. "Early pre-ordered data from Bank of America Global Research revealed shorter global shipping times for the iPhone 16 models compared with last year's 15 Pro models." And the... Okay, I won't go through the actual ship days. That's boring.

• 30:57Alex Kantrowitz?

  But basically, you can get your phone much faster than you could get the previous generations. Is it... Are we gonna hit the panic button on Apple here? Or should we wait?

• 31:07Speaker 01

  I think in terms of Apple's short-term business, I'm not hitting the panic button yet. But in terms of Apple's long-term business that was built around the iPhone, I would definitely hit the panic button. I have not seen as little excitement out of all my Apple-obsessed friends around the iPhone 16. No one even mentioned it. No one even, like, the only thing I heard people talking about was, is the camera better? No one is even thinking about Apple Intelligence. But I think it's just, everything they're promising is not here yet. So why would you buy it? Like, it just doesn't make any sense unless you're maybe an iPhone 12 owner

• 31:51Speaker 01

  and it's just time to upgrade anyways. Nothing they have sold is compelling in any way. And no one's even talking about it because, you know, even the Siri Intelligence features that were demoed aren't that incredibly revolutionary or exciting. And maybe if they just worked, then it would still be pretty amazing. But they don't even just work.

• 32:16Alex Kantrowitz?

  And you know what's making Apple look especially bad is this week Huawei has a Trifold phoned that they're releasing also today. It's a phone, it's called the Mate XT. The pre-orders have topped 5 million and it's the world's first Trifold smartphone. So it folds in two places into three panels. And on the secondary markets, it is selling at over $7,000, which is more than twice the top-end model price. So the Huawei Trifold is running away with unbelievable hype. People excited to buy it while Apple Intelligence isn't even shipped with the iPhone 16.

• 32:59Alex Kantrowitz?

  And this brings me to a thread that I wrote that got a nice pile on for the first time in a while. It was nice to feel the wrath of the Threads users where I screenshotted the, Nicky.

• 33:14Alex Kantrowitz?

  Article about the trifold and I said, instead of Apple Intelligence, maybe they should have built a trifold. Turns out this is what people want. And all these people are like, that's not what they want, you idiot. And I'm just like, come on, this was tongue in cheek, but also just like,

• 33:29Speaker 01

  No, but it's not. I honestly, the one thing that kind of makes me jealous is when I see people with foldable phones. I think it, I really think it's a thing. I think Apple, three to five years from now will make a big deal about Apple's first foldable phone, but it just makes sense. It's just more portable. It's, I mean, it's the iPad mini, it gets rid of it and it just turns the phone into a combination. And I was pretty skeptical. I still haven't actually used it on. This is just me kind of seeing people in the wild, pulling them out, opening them up, watching a show or a video in a slightly bigger format. Even I saw someone, they had it split screen. So they're checking their email on one and,

• 34:15Speaker 01

  and yeah, and it was on two different screens. It was almost like multiple monitors on a flip phone, or I mean, on a foldable phone. It was amazing.

• 34:23Alex Kantrowitz?

  True nirvana.

• 34:24Speaker 01

  Yeah. Better than wifi in a, in a microphone.

• 34:28Alex Kantrowitz?

  Exactly. Give me, give me a phone that folds into three screens.

• 34:33Speaker 01

  Um, but, oh, sorry. To me, the, okay, so Apple, I think they released this advertisement. Have you seen it?

• 34:43Alex Kantrowitz?

  No, I haven't.

• 34:43Speaker 01

  This week. All right. So I'm gonna, I'll walk you through it quickly, but to me, this is actually my biggest worry for Apple right now is seeing this advertisement because we all know that Apple, actually, I guess, other than that smashing all creative instruments into the iPad, little kerfuffle.

• 35:04Alex Kantrowitz?

  Jesus, I forgot about that one.

• 35:06Speaker 01

  Yep. But this one, so Bella Ramsey of Game of Thrones and Last of Us. Did you watch that on HBO or?

• 35:12Alex Kantrowitz?

  No, not yet, but I will.

• 35:14Speaker 01

  Very good. Very, highly recommend. So for Apple Intelligence, their first two commercials, the first one is so odd. She is at dinner and then she's meeting someone from a creative agency who's pitching her.

• 35:29Speaker 01

  And she is too famous to have actually read the email. So she pulls out her phone and it's like, oh, of course I've read your pitch. And then hit summarize this email. And then start saying, yeah, you are talking about X and I think that's a great idea because of Y. And basically I am like presenting it as I am too good to actually read your email. And that's why I'm going to summarize it and basically talk down to you.

• 35:59Alex Kantrowitz?

  How relatable.

• 36:00Speaker 01

  Maybe I'm reading too much into it, but yes, it's not relatable. First is the whole point is show like a busy mother running around who is just trying to keep up with her day. And this helping her like that human connection that Apple's advertising and marketing has been so powerful for so many years. Completely flops here. And it, it, it actually worried me more than everything else, just how bad and unrelated, unrelatable. And again, you have Bella Ramsey, who's like, uh, I love from all of her shows. I mean, it's just, no one is going to hate on Bella Ramsey. And they, they flopped it.

• 36:39Speaker 01

  And that to me, when, when you're missing that part of the product marketing, which has been among as well as their technological prowess. Like their strongest suit, something is, something is rotten.

• 36:50Alex Kantrowitz?

  Yeah, no, that's bad.

• 36:51Speaker 01

  I don't want to make jokes at the core, but yeah.

• 36:54Alex Kantrowitz?

  Yeah, no, it's the second, the second moment in a short period of time where Apple has had this happen. And there's a temptation to read too much into marketing. It's just marketing after all, but it really does go to speak to the way the company believes about itself. Like marketing is a way where a company shows its values. And for this to happen, you know, twice again, after you, like, like you mentioned, all of the beloved things smashing into an iPad. Uh, and as the, one of the latest memorable Apple ad, it's just bad.

• 37:24Speaker 01

  This is also, if you remember Google's generative AI ad where in the Olympics about like using Gemini to write a letter for a little girl to her favorite athlete. And the backlash against that, I remember I'd seen some comment where someone said, every one of these companies just needs one full time. Normal person who just sits there and does nothing else, but is shown these advertisements and just says.

• 37:50Speaker 01

  Yes or no, like weird or not weird, relatable or not relatable. And they don't seem to have that person right now.

• 37:56Alex Kantrowitz?

  No, that's desperately a need. This episode is brought to you by AVPoint. Everyone's racing to roll out AI right now. Co-pilots, chatbots, agents doing real work. But here's the part nobody loves talking about. All that AI runs on your data and most teams have no single way to see it, secure it and prove it's under control. That's exactly what AVPoint does. For 25 years, they've been the trusted layer beneath the world's most demanding data, now extended across your entire AI estate. Your data, your cloud and the agents acting on your behalf. It's how more than 28,000 organizations deploy AI with confidence. So innovation scales without scaling risk.

• 38:39Alex Kantrowitz?

  AVPoint, the unifying trust layer for AI. Head to AVPoint.com to see how enterprises deploy AI with confidence. Learn more at AVPT.co/bigtechnologypodcast. That's AVPT.co/bigtechnologypodcast. Violent threats against executives are growing at an alarming rate. When a company experiences backlash, executives are the first people blamed. When their address and other personal details are sitting online, this backlash can lead right to their front door. The team at Ironwell knows this better than anyone. They've protected some of the most targeted executives and individuals on the planet for almost two decades. As a white glove enterprise security service,

• 39:22Alex Kantrowitz?

  they protect your people with continuous personal data removal, proactive prevention tools and human-led emergency support. So when someone goes looking for your executives, Ironwell ensures they hit a dead end. So here's what to do. Go to ironwall.com/bigtechnology, fill in the quick form and request your free risk assessment. Their team will show you just how exposed your executives are and how to lock it down before a threat reaches their front door. That's ironwall.com/bigtechnology. Learn how to stop online threats before they become real world attacks. The link's in the show notes.

• 39:58Alex Kantrowitz?

  Okay, so, speaking of YouTube or good marketing, Mr. Beast, have you seen the Mr. Beast PDF?

• 40:07Speaker 01

  Ah, yeah, no, I thought it was, it was an incredible document. It was 36 pages outlining like every trick and technique he uses to go viral. And as someone who does a lot of work in marketing, I found it incredibly fascinating because it's, it's funny to me because it lays things out that to anyone over a certain age might feel and sound so ridiculous, but actually are what works. Like my favorite one was he, so anyone who's seen any Mr. Beast video, the preview image on YouTube matters a lot, and that's why they all have this very specific aesthetic to it.

• 40:48Speaker 01

  But then he said, I spent, so the video title, "I spent 50 hours in my front yard," is lame and you wouldn't click it, but you would click "I spent 50 hours in ketchup." Both are relatively similar in time and effort, but ketchup is going to be 100 times more viral. And then put an image of someone sitting in ketchup in a bathtub. That's more interesting than someone sitting in their front yard. As you read that out, you're like, is this reality? Is this, is this where the world is right now? But it's, it's very correct and he obviously has executed this well.

• 41:24Alex Kantrowitz?

  Yeah, and so he does go over, I mean, it's fascinating because he goes over, you know, so Mr. Beast, for those who don't know, he's the biggest YouTuber in the world, I believe. And he does all these like crazy videos that millions and millions, 60 million people watch or even more. Like for instance, he'll put somebody in a circle and say, "If you can stay in the circle for a week, then you can win a million dollars." And the videos are excellent. And

• 41:53Alex Kantrowitz?

  I think that this guidebook that he gives for his employees, basically, it's not like a sort of blog post for the web about how to go viral, but it's just basically like, I am not able to scale my time to tell you everything I know about YouTube. And so I'm going to tell you what I know in this document. And if you read it, and he says, if you read it and you can pass a quiz about it, I'll give you a thousand dollars. And so I found it interesting, not only because it goes into his YouTube strategy. Another interesting thing about his YouTube strategy, I think we could talk about in a bit, but he tries to condense in the beginning of the video, like if it's like 30 days in a 13 minute video, he tries to convince, condense like the first five days into the first two minutes. So you already become invested in the journey and then you can

• 42:36Alex Kantrowitz?

  go a little slower as you go on to sort of figure out what happens to the people. And it's a way he's sort of mastered taking our short attention spans, but also stretching them out for longer amounts of time as you go, as he does these challenges and things like that. And he goes in this document, which is clearly meant for internal eyes only, but leaked. He goes through his analytics. He talks through about click through rate and the amount of time people stay and how important the first minute of the video is, because that's where the most drop off happens always. But to me, the thing that I found most interesting in this was the cultural foundation of the company that he works on,

• 43:19Alex Kantrowitz?

  works at, and him trying to explain what he expects from his employees. And it's just like a real interesting window into a driven CEO, because that's effectively what Mr. Beast is, trying to get things done and trying to instill sense of urgency and accountability into all of his employees. And there's some like fascinating sections here.

• 43:44Alex Kantrowitz?

  Just keeping people's eyes on what they're doing. What's your goal here? Your goal here is to make the best YouTube videos possible. That's the number one goal of this company. It's not to make the best produced videos, not to make the funniest videos, not to make the best looking videos, not the highest quality videos. It's to make the best YouTube videos. That's everything that we're doing. And he says, pardon the bluntness, but if you're, but this is not Hollywood and I do not want to be Hollywood. And if that sense is a turn off for you, then you're probably at the wrong job. He also says things, I think this is just great, like cultural, culture setting for a company. He says, the hours, the amount of hours you work is irrelevant. He says, does it really matter how many hours people work?

• 44:29Alex Kantrowitz?

  Obviously we want grinders that put in the hours and love you guys to death that do it. But at the end of the day, you'll be judged on results, not hours. We're a results based company. Talks about the type of people that he wants to, wants to work there. You're either an A player, B player, or a C player. The only room in this company is for A players. He says, the way that he describes A players, they're obsessive. They learn from mistakes, they're coachable, intelligent. They don't make excuses. They believe in YouTube. They see the value of this company and they're the best in the goddamn world at their job. B players, he says, are people that need to be trained into being A players. And C players are average employees. They just exist, do whatever and get a paycheck. They aren't excessive about learning.

• 45:13Alex Kantrowitz?

  And he says, C players are poisonous and should be transitioned to a different company immediately. It's okay. We give everyone severance. They'll be fine. And a couple more mistakes. I hate excuses and I despise with my entire soul when people just try to save face instead of learn how they messed up. Mistakes are okay. Genuinely, they, they are, and I expect you to make a lot. It's perfectly fine. Every veteran here has cost me millions of dollars, dollars at one point. Cost me a million dollars at one point or another. And you can ask them yourself if I ever held it over their heads. The reason I'm okay with F ups is because I know that's how you learn. Uh, this is another good one. No does not mean no. When dealing with people outside Mr.

• 45:58Alex Kantrowitz?

  Beast Productions, never take no at face value. If we need a store to buy everything inside, and you call the local Dollar Tree and the person that answers says, "No, you can't film here," that literally doesn't mean shit. Talk to other employees and see if there are any are fans or have kids that are fans. Try talking to their boss, their boss's boss. Have me DM them on Twitter and try their social team. And then lastly, this, well, actually, no, let's pause there, and then I'm going to go to the one that I think is also very interesting. Okay, I think, and I know I've rambled a lot reading this PDF, but I think it's so interesting because that even more than the analytics that Mr. Beast shares, shows why he's so

• 46:39Alex Kantrowitz?

  successful. He wants people to be accountable, to be smart in the ways that they ask questions, to feel genuinely that they are able to make mistakes within that company, and it's okay, and to learn, and to be obsessed with the format. I mean, part of what he writes is just like, you need to watch YouTube, and if you watch YouTube, you're going to be better at your job. And I think coming into it, if I were coming into a job inside his company, reading that document would give me like a true understanding of exactly what's expected of me. And because he's able to communicate this to his company, I think that's why he's able to do what he does.

• 47:13Speaker 01

  Yeah, no, I completely agree that what was so fascinating to me is it was such a reminder that those, his videos seem a bit, I don't know, I'm older, so I don't want to say childish, but just ridiculous at least. But like underneath it, it's literally like you're reading a document from Peter Thiel, or I don't know, like it's just any business leader, hardcore, hard ass business leader that's like, "This is how we do it. This is how we win. This is what you need to do." And, and behind those ridiculous YouTube videos is actually a very, very, I mean, professionally run organization, and that's what actually drives the success. And it's

• 47:56Speaker 01

  almost, it's almost kind of, for me, it was almost kind of cathartic to know that, that like, okay, you know, getting 100 million views on YouTube is not actually just, you just do something ridiculous and it just works and it's luck and this person has more luck than the other, that it's actually an operation and a very well-oiled one at that.

• 48:18Alex Kantrowitz?

  Definitely. And there's like also fun moments in the document where he just like clearly gets tired of writing long form and just like writes a bunch of sentences with like principles that he believes. Like here's one of those sections. We don't, we don't fake things. I want famous people in our videos. Don't ever put me in a situation where I have to lie because I won't and it will screw them. It will screw the video. No dull moments in videos. You can't fake intensity in videos. The video endings is fascinating. The video endings must always be abrupt to protect retention. And now people understand that when we, when we end this podcast abruptly at the end, it's because we want you to stay for the entire thing. So Spotify and Apple sees people here for the whole show and will

• 49:00Alex Kantrowitz?

  show it to more people. That matters so much for the algorithm, so much. And, and yeah, just like general sense of urgency. This isn't really creative thing, but in general, when on set, be attentive and engaged. Filming days are stressful enough. Be useful, please. And then he ends with like a, like a sort of statement of what you can do. There's infinite room for you to grow here. This isn't a stepping stone. It's your final destination. And I hope to give you incredible experiences, a fun place to work and more money than you could ever dream of making at another company. And then he ends, now read this all over again because I guarantee you didn't retain enough.

• 49:40Speaker 01

  I think this is a document. Yeah. No, I think anyone who's involved in marketing, any kind of content creation, writing, anything, if you post, you should read this document.

• 49:52Alex Kantrowitz?

  Okay. One last part of it that I want to read too, because we like talking about consultants on this show. I don't know why, but they always come up. And I guess everybody has a love hate relationship with consultants, except for Mr. Beast. Cause this is one of the things. He says, use consultants. He says consultants are literally cheat codes. Need to make the world's largest slice of cake? Start off by calling the person who made the world's previous largest slice of cake. He's already done countless tests and can save you weeks worth of work. I really want to drill this point home because I'm a massive believer in consultants. I spent almost a decade of my life hyper obsessing over YouTube. I can show a brand new creator how to go from a hundred subscribers to 10,000 in a month. On their own, it would take them years to do it. Consultants, Mr. Beast's word

• 50:37Alex Kantrowitz?

  here. Consultants are a gift from God. Please take advantage of them.

• 50:41Speaker 01

  Yeah, but note there, I think when usually when we're talking about consultants, it's management consultants and McKinsey and that whole model versus, I mean, he's kind of talking about freelancers here. And I actually agree that I think businesses like a great freelancer is a cheat code because it's someone who's already completely honed their craft usually is good enough that they don't, they actually have the confidence that they can be a freelancer and get all the work they need and can bring value instantly to your company. So I think that I actually agree with that. But I think I'm still reading consultant there is more kind of expert freelancer, like the guy who built the second largest slice of cake.

• 51:24Alex Kantrowitz?

  Exactly. Yeah, no, it's just fascinating that that's a call out. Okay, let's before we end, I want to talk a little bit about Amazon culture because Amazon, as we know, is back in the office, as we know, news this week broke that Amazon is going to be back in the office five days a week, starting January. And this is basically like from Andy Jassy directly, we decided that we're going to return to being in the office the way we were before the onset of COVID. We continue to believe the advantages of being together in the office are significant. Okay, so that's the top line. That was the headline everyone paid attention to. On our show, we like to go a little bit deeper. And as you read Jassy, you're just like, oh, God, does Amazon have a problem? He says, keeping

• 52:07Alex Kantrowitz?

  your culture strong is not a birthright. You have to work at it all the time. When you consider the breadth of our businesses, their associated growth rates, the innovation required across each of them, and the number of people we've hired in the last six to eight years to pursue these endeavors, it's pretty unusual and will stretch even the strongest of cultures. Strengthening our culture remains a top priority for the senior leadership team and me. And I think about it all the time. We want to operate like the world's start largest startup. That means having a passion for constantly inventing for customers, strong urgency for most big opportunities. It's a race, high ownership, fast decision making, scrappiness and frugality, deeply connected collaboration, and a shared commitment to each other. Man, has Andy Jassy been reading the Mr. Beast document for

• 52:51Alex Kantrowitz?

  success and what was going on inside Amazon that made him think that he needed to write that? The fact that you needed to write that, Andy Jassy, I think is the most telling thing in the entire document.

• 53:03Speaker 01

  I agree, but it's clear that they reached an inflection point where For years, out of people I know, a lot of the other big tech giants, for people I know who work there, they say they are these kind of like very political machines. But everyone I know who worked at Amazon for a long time said it really did operate like a startup with high accountability and small teams. You could get stuff done quickly, but at large scale. And that has to be fading away for him to actually write this. My favorite part of this, I still think is the most brutal line I've ever read in a corporate memo, because it's so like backhanded. So they're saying, so the return to office is one whole side, but also announcing that

• 53:48Speaker 01

  they're going to start streamlining, as the corporate buzzword is, middle management. And he says, "We're asking each S-team organization," which is, I think, senior, but it's one of the ways... Senior leadership team. Yeah, senior leadership, "to increase the ratio of individual contributors to managers by at least 15%." Instead of just saying, "We're going to get rid of a bunch of useless middle managers, we're going to increase the ratio of individual contributors to managers by at least 15%." Winter is coming at Amazon. Yeah, winter is coming. And I'm convinced, and I read a lot of kind of similar sentiment, but the return to office is kind of like a de facto layoff.

• 54:33Speaker 01

  They're basically looking for people to walk away. They overhired, they overhired a lot of the wrong people, and they're looking for people to start leaving. I think it raises a much bigger issue, I'm sure we'll be discussing in weeks to come, around what is the optimal return to office? Are they doing this too aggressively? But I think, I saw a lot of complaints that were posted from like internal slacks, people saying, "But I work in an office where there's no one else there, and my team isn't there." And I was like, "Ah, I don't think you read the memo correctly." Like, you kind of missed the memo. Yes, you do. And that's the point.

• 55:13Alex Kantrowitz?

  And he is like, he like spells things out that I've, I've never seen from Amazon leader. And of course, like startup culture, I can attest definitely existed. I mean, the book behind my right shoulder is called Always Day One because of that. But now listen to what Amazon is like. Jassy says, there's things that we'd like to change. Pre-meetings for the pre-meetings for the decision meetings. A longer line of managers feeling like they need to review a topic before it moves forward. Owners of initiatives feeling less like they should make recommendations because the decision will be made elsewhere. Whoo, that is big company culture. That is bad. That is a definitely a different Amazon than we're used to seeing and hearing about.

• 55:54Speaker 01

  Yeah, for him to just say that out loud is pretty dramatic. It almost some, the one thing that worries me is the moment you have to say, we are a startup culture, when you're a multi-trillion dollar company, it almost means you're not. And

• 56:09Alex Kantrowitz?

  Yep. And they're at that point now.

• 56:10Speaker 01

  And they're at that point. Yeah, I think this, this is going to be Amazon, where they go and where they are as a company. I think this is just beginning. For this to come out like this, this is going to be a story for the next months. I mean, the months to come.

• 56:24Alex Kantrowitz?

  And they've already laid off tens of thousands of people. So you just wonder where they go from here. Okay. So that's going to do it for us this week. On Wednesday, we're going to have a little debate about Elon. Ryan Mack and Kate Conger, the authors of Character Limit about Twitter are coming on. And so is Zach Koleas. He's a VC who's been on the show before and has sonnier views of Elon. So let's debate Elon on Wednesday. And then Ranjan and I will be back here next Friday, breaking down the week's news. So Ranjan, thank you. Great to see you again.

• 56:54Speaker 01

  Let's end it abruptly.

• 56:55Alex Kantrowitz?

  But we'll end abruptly. We'll see you next time on Big Technology Podcast.

• 57:32Speaker 02

  Every mile matters. Whether you're driving your dream car or your daily commuter, the Mobile One team knows that. It's why we created Mobile One Advanced Clean Motor Oil. It cleans your engine in one oil change and helps extend engine life, delivering performance, protection, and cleanliness for vehicles of all ages. All to help keep your engine running like new, whatever you're driving. Visit mobileone.com/advancedclean to learn more.