Intel and the US Semi Future, Will Any Big Tech Incumbents Lose in an AI World?, Questions on Tea, Grok, and The Ringer

Intel's future in leading edge manufacturing looks more uncertain, while prospects for the US semiconductor supply chain are beginning to look more promising. Then: Google's earnings inspire a question about Big Tech in AI, who will win the entertainment space in AI, thoughts on doomerism and marketing, Apple's App store promises and a very bad week for the Tea development team, a question about The Ringer and Grantland, and a note on life coaching and Apple's 2TB storage plan.

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

• 0:04Andrew Sharp?

  Hello and welcome back to another episode of Sharp Tech. I'm Andrew Sharp and on the other line, Ben Thompson. Ben, how you doing?

• 0:16Ben Thompson?

  I'm doing okay, Andrew. I'm doing okay. How are you?

• 0:18Andrew Sharp?

  I'm doing well, you know, we're rounding the corner, rounding third on the end of July, headed into August later in the week and I'm excited to be back. We're gonna kick things off with some chip talk.

• 0:32Ben Thompson?

  That was just a really great articulation of where we're at in the calendar. Thank you for that.

• 0:35Andrew Sharp?

  Sleepwalking through the intro here.

• 0:39Ben Thompson?

  That was the most summer end of July intro ever. So I guess you captured the spirit both sort of literally and figuratively.

• 0:45Andrew Sharp?

  How are any of us doing? But no, I'm in a good mood. It's good to see you and we are going to begin with a chip check-in. Long overdue for a chip check-in. So last week on Intel's earnings call, Intel CEO Lip Bhutan said the following. "Up to and through Intel 18A, we could generate a reasonable return on our investments with only Intel products. The increase in capital cost at Intel 14A make it clear that we need both Intel products and a meaningful external customer to drive acceptable returns on our deployed capital and I will only invest when I'm confident those returns exist."

• 1:30Andrew Sharp?

  So Ben, as we take a look at the state of Intel, can you translate that message into English for people who care about the future of US semiconductor manufacturing?

• 1:42Ben Thompson?

  Well, let's step back from the specifics of particular node size and whatnot. What Ton is referring to in broad strokes is basically what I was warning about 12 years ago when I started Sishtery and first wrote about Intel, which is the problem with missing mobile is you're missing out on volume. And if you don't have sufficient volume, you're going to eventually not be able to invest in the leading edge as costs continue to go up. As costs do go up, you need to spread those costs over an increasing number of chips. And if the only chips you're making are Intel chips, you're not going to have enough chips to absorb all the costs.

• 2:24Andrew Sharp?

  Justify the investment, yeah.

• 2:26Ben Thompson?

  Right. And so this articulation is basically just what I said 12 years ago. And I think the challenge with chips and writing about chips, as we've discussed, is you can see stuff like this coming 12 years ahead of time. But it, it, it takes a long time for it to play out. And there's lots of money to be made or lost sort of in the meantime. And, you know, this is where you get a real, I think, separation between sort of the stock price and what's actually happening. Like the, um, Tyler Cowen, like one of his favorite critiques is always, well, are you shorting it? And this is one of those cases where I would use as a counter example to Tyler's favorite critique, which is, yeah, if I had shorted Intel, I would have been both right and bankrupt.

• 3:10Ben Thompson?

  So, uh, you know, there is, yeah, there, there is, there is a challenge there. I mean, the, so some things are, are just not very investable in the long run. Ultimately, the probably the way to have approached Intel in 2013. And I think a lot of smart investors did do this. Would have been to plow your money into TSMC, uh, like the company that did sort of win mobile. Uh, so, so just broad strokes, whether this is actually true or not, whether this is a negotiating tactic, whether Liputan just sort of always wanted to get out of manufacturing in general. Which by the way, I mean, it's interesting because I think on one hand, I and others probably gave Pat Gausse or too much benefit of the doubt in his statements.

• 3:53Ben Thompson?

  I will say my natural inclination is to look at Liputan with a bit of a side eye in that, at least from a manufacturing perspective. Because the sort of, when you go back to the stock market perspective, the most cogent thing for Intel to do has been to just get out of manufacturing. Like try to preserve, like sort of the slow decline, become fabulous like AMD did previously, outsource to TSMC like everyone else and maintain and double down on the product advantage that you have that do keep people in Intel. Because it's not just that manufacturing. It's become a millstone on their product group.

• 4:32Andrew Sharp?

  Right.

• 4:32Ben Thompson?

  Their products have been bad, not as good as AMD's, but also they were on slower processes as well. So it's sort of like exacerbated the problems that their product group had. And now AMD is over like 50% server market share, which is, you know, that was the segment that kept Intel so profitable and attractive as a stock throughout the 2010s.

• 4:49Andrew Sharp?

  Mm hmm.

• 4:50Ben Thompson?

  And so, and, and him being sort of a software guy was always,

• 4:57Ben Thompson?

  you know, as someone who cared about the manufacturing side, not just from an Intel perspective, but from a national security perspective, always a bit sort of, I've had a bit of a side eye for him. I would say from the beginning.

• 5:07Andrew Sharp?

  In terms of the direction this might go. Well, and I mean, stepping back, you mentioned the national security side. The rational business choice for Intel may be to step out of manufacturing, but for the last several years, there's been talk about how urgent it is to save Intel because it's important to have an American semiconductor manufacturer. And now it looks like they're one foot in, one foot out on the leading edge with the 14A.

• 5:34Ben Thompson?

  This is why nine months ago, I wrote the article saying, look, I had Intel right pre-Gaussinger, which is like, this company needs to split. And like, if you want to make this work, it's kind of implicit in this statement, which is Intel products do give Intel foundry the volume, or at least a huge portion of the volume they need to function. If Intel went completely to TSMC, this sort of foundry effort would just need one external customer. It would need a bunch of external customers. But my sort of contention then was, yeah, that would be very hard to split them for lots of good reasons. But it seems clear to me, and this was my take pre-Gaussinger, then I sort of gave Gaussinger a run. And then last fall, I'm like, nope, my initial take was right.

• 6:20Ben Thompson?

  Intel's culture is fundamentally incapable of becoming a foundry. They cannot not prioritize themselves. And no one is going to want to partner with them and go with them, given that reality. It has to be split up. And which is why I'm like, look, the US government, if it, if it actually is a national security concern, you're going to have to just suck it up and fund it, not expect Intel to do it themselves. And I think that's. Maybe so maybe my side eye with Luton is actually a side eye of yeah, we're on the same page here. Maybe for slightly different like from a shareholder perspective, it would probably be best for Intel to dump the manufacturing. Right. From a or that's debatable, but there's certainly a case to be made in that perspective.

• 7:04Ben Thompson?

  I would argue if you want this foundry to function, it has like I just. Intel's just not a customer service organization. That's what a foundry needs to be at the end of the day. It's not whether it's not just whether or not they have an advanced process. It's whether they're actually partners you can work with and deal with. And there was a lot in this call about Ton with very legitimate critiques of Intel. That were hilariously directly in line with the critiques of Intel for the last 30 years. Okay. All they care about is performance. They're not. Well, I think the big one is was like they were insufficiently focused on yield and only cared about performance. Which that's the way Intel's always been and they never really had to be as concerned about yield. So yield is like of the chips you make, how many are useful?

• 7:49Ben Thompson?

  And with logic, it's very challenging because in a logic chip, almost all parts of the chip are distinct. This is different than memory. We'll get to memory in a little bit. Something we're talking about Samsung. In memory, in memory, you're making the same sort of like memory cell again and again and again and again. So you make a huge sheet of memory. And if a bunch are defective, it doesn't really matter that or I mean, it matters, but not that much. Cause you just disable the ones that are effective. And then you still have a useful memory chip. Right. In logic, if part of it's defective, the whole chip's defective because every part is much more unique. So making memory, even though they're both fabbing, there's a reason why you generally have different memory companies.

• 8:31Ben Thompson?

  SK Hynix, Samsung, Micron, then you do logic companies, Intel, TSMC, sort of et cetera. Cause they're very different skill sets and there's a very different sort of appetite for risk. And the boom bust cycle and memory is insane. It's much more of a commodity. It's really sort of a money game in many respects. And in logic, it's really a. Uh, what's the word I'm looking for? It's like, it's a precision discipline game because you have to sort of get it right. And if you're a TSMC, you really have to get it right because your viability is a function of keeping those lines as full and as fast moving as possible. Yes.

• 9:13Ben Thompson?

  But Intel's been unique because Intel is fully integrated. So, sorry, I'm kind of rambling here, but I think this is sort of a broader, a broader point that's useful to understand because Intel is fully integrated. They're their only customer for their manufacturing. And so they've always had a little bit more leeway because they had larger margins in part because they were getting all the differentiated pricing. Like, like Intel was the Nvidia back in the day because they made their own manufacturing. So Nvidia has to pay TSMC a bunch. Nvidia, Intel had it all internal. That gave them a bunch of leeway. So they could sort of tolerate worse yields and they could also like tolerate just being slower. Like, like very, one of the areas where TSMC and ASML leapt ahead was in the shift from

• 9:57Ben Thompson?

  200 millimeter wafers to 300 millimeter wafers. And when you get a larger wafer, like kind of the physics of it are different, like the way it wrote, like it's moving through machines and around, like you kind of have to re-engineer from the beginning to get the full benefit of 300 millimeter wafers, which is the more area you have, the more chips you get per wafer, which means every wafer going through, you're making that much more money because there's that many more chips on the wafer. Nikon and Canon at the, at the time dominated, I believe dominated lithography and they just sort of like wanted to adjust their machines. Okay, now you can put a bigger wafer in. But that meant it was slower because it's to like control like the, the forces, the structural forces of rotating the, the wafer around and things like that.

• 10:41Ben Thompson?

  And Intel was fine with that. Intel wasn't, their focus was not on speed and efficiency. Right. What, what they wanted, what they liked is they had full control over Canon and Nikon. They were sort of like, like, you know, hand and glove and sort of working together. And what ASML did, ASML and TSMC worked together to completely re-engineer.

• 11:04Ben Thompson?

  Lithography around 300 millimeter wafers. And that's really when ASML became a force in lithography. This was before EUV. It was because they worked hand in hand with TSMC to re-engineer the entire process around the physics of a larger wafer. So that you would get the same throughput as a 200 millimeter wafer, but with a larger wafer.

• 11:28Andrew Sharp?

  Right.

• 11:28Ben Thompson?

  Which meant you got much more efficiency in your line. And so this is like, just, this is just a mindset of TSMC. It was a mindset of ASML. It left them ahead of Intel and Canon. I can, but what it speaks to and why it's pertinent to this discussion is Intel by virtue of its integrated model has never had to be concerned about efficiency.

• 11:46Andrew Sharp?

  Move with the urgency of somebody who's trying to serve customers as quickly as possible.

• 11:51Ben Thompson?

  That's right. And same thing with yield. They, they could be less concerned about yield because they had such huge margins to sort of like, you know, this need to be, and they had a, a super aggressive binning strategy. Right? That's why every Intel processor, there'd be like eight versions, like, which is really just compensating for their yield issues. Uh, and so, but, but that was fine because they were serving, you know, if you got your mini PC or what was the, what was the crap netbooks? The netbooks. If you got a netbook with an Intel processor, what that processor was, was just riddled with errors. And they're turning off huge chunks of it. But that's fine. They're still making money off it, selling it for 50 bucks or whatever, or, or whatever it might be.

• 12:25Andrew Sharp?

  But it speaks to the cultural point and you raised that you drew a distinction between Intel and Samsung's culture with the news that Tesla's signing a 16 and a half billion dollar deal with Samsung. And Samsung's going to fab AI chips for its autonomous driving dreams. And obviously TSMC has taken over the world in some ways by serving customers better than anyone else. And essentially it looks like Intel just doesn't have those muscle groups in order to thrive in this world.

• 12:57Ben Thompson?

  Right. No, that, that's my, that's my big takeaway is setting aside everything else. Intel just, they don't have it in them to serve customers. And so like, you go back to Liputan's comment, he's talking about, they didn't really care sufficiently about yield. They cared about performance. That goes back to the, like, I, I brought up the Tony Fadell discussion that I had ages ago, where, where his big bugaboo is, the reason why I got that interview in the first place is I wrote about Paul Adolini's comments about turning down the iPhone order. And he emails me and he's like, no, I'm so sick of this. They had no chance. That's great. Their chips were fundamentally uncompetitive because all Intel cared about was performance. They did not care about efficiency.

• 13:39Ben Thompson?

  And even though they had an ARM division at the time called X-Scale, their ARM chips were focused on performance, not on efficiency. This has been the Intel mindset, and this goes back to, again, this is one of those things where the things we view as rotten cultures today were great culture in the past. You go back to the eighties and nineties and a couple of things. Number one, you go back, which I brought up before, how Pat Gausseger was the one who fought for CISC over RISC, a less efficient architecture, because his point was we have a software moat, and by the time we rebuilt everything for RISC, number one, we're opening ourselves up to competition, and number two, our manufacturing, if we had just stayed the course, would have pulled us ahead so that our CISC-based chips would be faster anyway.

• 14:20Ben Thompson?

  So it just, it's core to Intel's culture that we'll make it up in manufacturing by just being faster, performance. Number two is the entire ethos of computing in the eighties and nineties, and we talk about this in the context of AI, where you shouldn't be optimizing your AI apps for the models of today, because you assume the next model is going to be way better and is going to solve a lot of your problems. That was computing in the eighties and nineties, which is any time you spend optimizing your application to run fast on current chips is a waste of time, because by the time you finish optimizing, new chips will come out that will solve your problems for you. Faster, better chips, yes. Right. Now, this is how we got bloat in software, but it was, it was a very rational way to build

• 15:04Ben Thompson?

  software in a world where chips just got massively faster, year after year after year, and Intel was the foundation of this. They were making their chips faster and faster, and this was in an era when all the computers were plugged into the wall. So Intel was fine, but this is just, so Intel is historically self-serving, totally optimized for performance over everything else, not sufficiently focused on yield. Like, they're, they're used to being fat. They're used to having big margins, and they're used to like, just making whatever chip they want, and people have to come and get it. This whole backside power thing is another example. And this is where I almost like, I lament the loss of Intel to a certain extent.

• 15:47Ben Thompson?

  Um, I'm sorry, am I monologuing too much?

• 15:50Andrew Sharp?

  No, no, it's good.

• 15:51Ben Thompson?

  I'm a bit of a red. I feel like I, no, this is what I feel like I should have, I should have written a big article this week to like summarize all this together. So you're sort of getting it right now.

• 15:57Andrew Sharp?

  There's never a time we discuss Intel without you launching into some 15 minute digression on Intel history, Intel's complicated future. I mean, I'm looking at Intel and it's like, this is not a specialty of theirs and they suck at customer service. It's not surprising to me in the slightest that they're struggling to find an external customer for the 14A node. And I, I mean, I'll let you finish, but I do feel like some finality in terms of Intel's manufacturing chops and Intel's manufacturing prospects on the leading edge. Might actually be healthy at this point in the process so that everybody could just move.

• 16:41Ben Thompson?

  I know, I should have written a big article.

• 16:42Andrew Sharp?

  With clarity.

• 16:42Ben Thompson?

  This is, this is a, this is a mistake on my part. I mean, if I'm writing an update over two days and then doing a 20 minute digression on a podcast, I clearly have it in my system. I need to get it out.

• 16:50Andrew Sharp?

  It's late July, let the people have it.

• 16:53Ben Thompson?

  Get an article next week where they want it or not. The, the, um, the backside power angle is I think very interesting.

• 17:01Andrew Sharp?

  Uh huh.

• 17:02Ben Thompson?

  So generally speaking, the way chips are laid out is there is the logic layer at the bottom. Then there is a communications layer that sort of links all the logic stuff together. And then there's power at the top and the power part is like electricity and it has to be piped down to the logic layer. And it's laid out this way for lots of historical reasons, but a very good reason, some of which is the logic layer is very complicated. That's where you could screw up. And so if you screw up, it's easier to screw up earlier in the process than later, you toss the chip. But remember a lot, the, the, this goes back to the efficiency time. The cost in chip making is not the wafer itself. A wafer is like a few hundred dollars.

• 17:41Andrew Sharp?

  Right.

• 17:42Ben Thompson?

  The, the cost is the time. And so the sooner you can discard a wafer because it's screwed up. That is actually yield accretive, even though you're losing a wafer, you're getting a newer wafer in that much sooner. And so yield is a function of the number of good wafers out of total wafers. If you have a bad wafer, you want to increase your total wafer sooner rather than later. That's how you get your yield back up. And so like, and so that was one reason where you do sort of the logic, the hard part, in the complicated part where it's different. Where you would do that first and they do the other layers on top. The problem is that as these chips get smaller and smaller and need more and more power, electricity, like you start having like, you're losing electrons and you're having RF interference.

• 18:24Ben Thompson?

  And like all these sorts of issues of electricity being, especially going through this communications layer. So the solution from like a physics perspective is to separate the communications and the power. And this is what is called backside power. You put power on one side of the logic, then you have the logic, then communications on the other side, and they're totally separated. This makes it easier to design the chip because you don't have, you have to worry about trying to fit all this stuff in a small space. It reduces interference issues. There's lots of benefits to doing it, but the cost is yield. And it's, it's because you're, so Intel's solution is the most technologically forward solution, which is they're laying down the power, then they're putting on the logic, then they're putting on the communications,

• 19:08Ben Thompson?

  and it's all a fully sort of integrated chip. The risk is if you screw up the logic layer, you're throwing away a lot more work. So it's going to be, it's going to be worse for yield, it's going to be more expensive overall. What TSMC is doing is they're doing logic and communications. And then for N2, which Apple is using, they're putting the power on top like it used to be. And for A16, which Nvidia is going to use, they're making a separate chip with power and bonding it to the bottom. And so it's literally making two chips for one.

• 19:45Ben Thompson?

  That approach is inelegant, it's kind of clunky, it's more expensive than either, than the other approaches, because you're making two distinct chips. But if you step back and you zoom out. The end result is that Apple, who's baking chips for a phone where the total power is gated, you don't want to go above like seven or eight watts. Because like you're running on battery.

• 20:13Andrew Sharp?

  Right, you don't want to drain the battery.

• 20:15Ben Thompson?

  Thing device, right. From their perspective, they get no benefit from backside power. Because they're not amping up the power enough to encounter all the issues that backside power is meant to address. So they don't need backside power. And so they don't want to pay the yield penalty or the extra chip penalty of getting it. So just from a apples to apples basis, TSMC's approach is better for Apple than Intel's approach. Okay, then you so but what about the sort of Nvidia's of the world? Well, they're selling chips for $30,000 or $60,000 or whatever the price might be. So if TSMC jacks up the price is in because not happy about it, but they have plenty of margin to pay for it. And so TSMC chose a clunkier, but ultimately more flexible approach to N2.

• 21:00Ben Thompson?

  Where Nvidia chips, they're pulling like seven, 800 watts per chip, like just massive amounts of power. They really have a power issue and they want efficiency, but that efficiency is gated by cooling. And given you're gated by space in a data center and your total electricity generation. It's really interesting because they both both Apple and Nvidia care about efficiency, but in totally different ways. And so TSMC is delivering two totally different approaches using the same logic layer for for N2. That serves both.

• 21:29Andrew Sharp?

  Right.

• 21:29Ben Thompson?

  Intel's stuck in the middle. They and it's a bit of a tragedy because Intel remains and always has been more technologically interesting and creative than TSMC. And this is a great solution. Intel's 18A and 14A, they're all backside power. It's a completely new way of building chips. It's very technologically innovative. It's classic Intel. The problem is it's not meeting anyone's needs. It doesn't meet Apple's needs. It theoretically meets Nvidia's needs, but this is the problem of not being in the market and not having proven themselves to date.

• 22:05Andrew Sharp?

  Well, that's what I'm saying. It's like there's no proven track record here. There's also. Now with these comments from Liputan, like it's not clear how committed Intel actually is to staying in this world. And then you layer on the lack of customer service jobs and the lack of track record where they are working with companies and moving with urgency to meet their needs. Meet anyone other than Intel's needs. And it's like, not surprising in the slightest that there aren't people beating down the doors to work with Intel. And so that then creates a situation where the leading edge manufacturing in the U.S. Looks like it's now a two-player game with Samsung and TSMC. Would that be a reasonable assessment going forward?

• 22:50Ben Thompson?

  Well, so the Samsung angle is pretty interesting. I haven't covered them enough. They really ran into some problems first with EUV and then with Gate all around. So, so part of the 3 nanometer transition for all these companies is a new kind of transistor. That that becomes even more 3D than, than, than like FinFET was previously. And that's, it's always like, these transitions are always super difficult and hard. It's usually at these transitions that companies sort of fall off because it just, they can't, they can't do it. The money's too great. Someone else sort of does it and goes forward. And so Samsung was making Tesla's chips before on 7 nanometer. And then they really fell apart on 3 nanometer. They just couldn't get it working.

• 23:34Ben Thompson?

  So Tesla goes with TSMC for the AI 5 chip. The news here is the AI 6 chip, which will be on 2 nanometer, is coming back to Samsung. They're like the first best customer for this new Texas fab that was delayed and now is clearly going to be built. And it seems like, I think they're sort of the dark horse that came in and they're going to be the second supplier. Like you, you just sort of zoom out. Number one, Samsung has some of the concerns about Intel, particularly around IP theft and things along those lines. It's part of why Apple left them. You know, Qualcomm's expressed concerns about this.

• 24:11Ben Thompson?

  They actually separated out their silicon division from the rest of the company because of there was real questions in customers about them, particularly about a decade ago.

• 24:20Andrew Sharp?

  Yeah.

• 24:20Ben Thompson?

  Yeah, you know, but Intel has all the same concerns, sort of to be clear. This has always been one of TSMC's trump cards, which is we're never going to compete with you. We're never going to sell a product.

• 24:28Andrew Sharp?

  We're not making phones.

• 24:29Ben Thompson?

  All we're going to do is fab.

• 24:30Andrew Sharp?

  Yeah.

• 24:30Ben Thompson?

  That's right. Or no, we're not, we're not designing your own chips. We're only making the chips. You're doing, you're doing the design. So that's always been a bit of a concern. But you also had, you know, they have, and they're also a memory maker. And part of that is, I think there's always a cultural challenge for memory makers, as I mentioned before, making logic. Cause it's, it's sort of a different skill set. Then again, memory also throws off a ton of cash in the boom cycles, which can help sort of fund these transitions. Memory is also very lithography intensive, you know, which is, you know, again, Samsung's EV struggles set them back in memory also. But it also means they did get over the hump and now they sort of figured it out, uh, when it comes to logic. And now they have a core customer who's making a lot of chips.

• 25:13Ben Thompson?

  And you think about Intel needs a core customer who's left.

• 25:18Andrew Sharp?

  Right.

• 25:18Ben Thompson?

  Apple and AMD are not going anywhere. They're locked in with TSMC. Apple, because they're like, they help fund TSMC, they're locked in on the leading edge. AMD, because TSMC really sort of saved their bacon. They're really loyal to them. They're not going to go anywhere else, uh, you know, even though they're, they're a node behind. Um, I just think that that's a very tight relationship that I think is not going to change. Nvidia has always been willing to dual source. But Nvidia hates Intel, like with a passion, like, like, and this is just long rooted 20, 30 years. If there's any company in the valley that never, ever wants to get in bed with Intel. Nvidia is arguably top of the list. They believe Intel tried to kill them. Well, they believe it's true again and again, like through both shady and legitimate and illegitimate reasons.

• 26:03Andrew Sharp?

  Okay.

• 26:03Ben Thompson?

  It's just purely, this is just a historical thing. It's hard to see Nvidia ever going with Intel.

• 26:08Andrew Sharp?

  But they would want a second source, right?

• 26:10Ben Thompson?

  They do want, they do want a second source.

• 26:12Andrew Sharp?

  That's leveraged with TSMC. Yeah.

• 26:15Ben Thompson?

  Right, well, but if they want a second source, Samsung, they've done, they've gone with Samsung previously. I think they'd be willing to do it again. And so then there's Qualcomm. Qualcomm's a little iffy to go with Samsung because they compete in modems, but. Then again, like Qualcomm has kicked the tires the most with Intel. And they said, no, like, like you're just like, they don't, they don't trust Intel can, can meet their needs. So Qualcomm is probably the biggest wild card out there as a potential Sam or Intel partner. You know, I still think the sort of like, uh, I think Doug Laufman put this out and I sort of co-signed Broadcom acquiring Intel. And even though they probably don't want the manufacturing part, but Broadcom has a lot of volume. Broadcom did, Broadcom tried to acquire Qualcomm. That was, that was blocked.

• 27:01Ben Thompson?

  But there, there's, there, there's somewhere, somewhere in there is maybe a path forward. But if Samsung becomes a viable second source, is there room for three? I think is a very fair question to ask.

• 27:14Andrew Sharp?

  Are there enough customers for three at that point?

• 27:17Ben Thompson?

  And Samsung does have, they have done the customer service thing. Like, like again, I went back to that Fidel interview. They worked hand in hand with Apple before sort of things, you know, fell, fell out because of the product. Yeah, product arguments. But if Samsung's going to be a viable alternative, it just makes, I think, the outlook for Intel even more dire outside of just straight up government intervention and like pseudo nationalism.

• 27:45Andrew Sharp?

  Well, I mean, that was going to be my final question here because it occurs to me that I think maybe three years ago, we were recording in the wake of the passage of the CHIPS Act and we hadn't gone live yet with the Sharp Tech Podcast, but we were recording one of the early episodes that we put in the bank that we'd launched with. And we were talking through the CHIPS Act and we were talking through Intel as a national champion. And every Intel conversation we've had since, I've been looking at our national champion here and being like, God, it's not looking great for the prospects at Intel and there are like layers and layers of problems there. And so as an American.

• 28:25Ben Thompson?

  There's layers and layers of problems. It's like the layers and layers of a chip. And the problem is the base layer of Intel is like their culture. That's rotten. Does the waiver just have to be thrown out?

• 28:37Andrew Sharp?

  That's the thing. And so as an American, looking ahead at the future of the US semi-supply chain, like, should I feel good about where things stand right now? Because TSMC is fabbing in the US and Samsung looks like there's some promising progress on that front as well. And so if Intel is dying on the vine and we're giving up on the dreams of a national champion emerging here in the next five to 10 years, is that okay?

• 29:08Ben Thompson?

  Um, I think things are better than they were. Uh, I am somewhat encouraged. I think that I was a little skeptical of the TSMC Arizona promises. And maybe I was right to start. I don't know. It's hard to say. Where they're at now, I think is pretty promising. Just in general of Arizona being, and this really speaks to in some respects. I think Arizona is a validation of some of the stuff we talked about with trade and things on those lines, where just getting a foundation, an anchor, starts to pay off over time. There's an aspect from TSMC, maybe the first fab was just to mollify Trump. And you know, this started under Trump, sort of like, you know, seven, eight years ago.

• 29:53Andrew Sharp?

  Trip one, yeah.

• 29:53Ben Thompson?

  And yeah, we're going to make stuff in the US. I'm like, wow, they're just, all this is going to be totally dependent on Taiwan. They're just, it's going to be a few generations behind, blah, blah, blah, blah, blah.

• 30:02Andrew Sharp?

  Even Morris Chang was giving interviews being like, we make less money in the US.

• 30:07Ben Thompson?

  Yeah, he's like, we're doing it because we're being forced to, yeah.

• 30:10Andrew Sharp?

  Right.

• 30:10Ben Thompson?

  But you know what? Once you've put in the effort and like well chronicled challenges and difficulties in getting this fab built to the US.

• 30:18Andrew Sharp?

  Oh yeah, all kinds of cultural challenges with TSMC for sure.

• 30:21Ben Thompson?

  Well, yeah, but in cost challenges and just there's so much to get it started. But once it's there, how do you maximize all the time and effort that you put in? Make more. You build more. Produce. It's like, no, it's the exact same as a fab, right? Yeah. Once you've built the fab, you need to maximize the number of chips that is being sold by that fab. So you get a return on your investment. And in this case, whatever the motivation and whatever the intention of that original fab in Arizona has seven to eight years later resulted in an extremely aggressive, large scale. They're talking about, I think it was 30 to 40% of their advanced chips are going to be made in the US in a number of years. That's a large number.

• 31:04Ben Thompson?

  That's much larger than I think was thought about at the beginning. Mm hmm. It's going to have its own R and D center so to like, so it can be somewhat self sufficient if Taiwan gets taken off the map. And it, it just, you know, they refer to it as a giga fab. What is a giga fab? A giga fab, a new term that's entering the lexicon, but I think is actually really, really interesting. So the way TSMC used to function like 10, 15 years ago, they would build a fab once and then just run that fab forever. That's how they made their money because they were way behind Intel. So they, they couldn't charge a premium for their chips, but they would depreciate that fab over five years or 10 years or whatever it is. They'd use that fab for 30 years. And so it's just generating like free cash over time because you've already paid for the equipment

• 31:48Ben Thompson?

  once and you're just, you know, selling, even if the chips cost a dollar each, it's a dollar of basically pure profit. So you're just, you know, you're making money again and again for ages. They faced a real challenge when they became the leaders. I critique them heavily for N3 and I don't know. I think it's why their former chairman of the board and former CEO lost his job. I, from what I've heard, he didn't necessarily leave, especially the, the chairman of the board post willingly. They underpriced N3. They were the leaders in the market and they priced it too low, given their sort of dominant position. And the reason is they had to have a cultural mind shift from we're going to. Make money over 30 years to we need to make money immediately because this stuff's so expensive and also we have pricing power.

• 32:32Ben Thompson?

  And the other reason is like from basically underneath like 28 nanometers, there was the shift to FinFET, which is around 17 or 18 nanometers. And then seven, five to seven nanometers was shift to EUV. The cost became so large that for a lot of applications, it didn't make sense to go lower than 28 nanometers. It's like this is a perfectly functional chip. We don't have any power constraints, any performance constraints. This is going in a refrigerator. Like it's totally fine, right? Like we don't need to. And so the problem is they have these massively expensive fabs that the apples of the world would come in and use. And then when they had the new massive fab, Apple and AMD, everyone moves forward and suddenly wait, who's going to use this fab? Right. Right? So they have this sort of like gap in the middle between like the trailing edge and

• 33:17Ben Thompson?

  the leading edge. And so they've had to rejigger their, their business model to make much more money upfront, but also rejigger their fab model into this giga fab idea, which is our, our three, five and seven nanometer fabs is actually all together and we are designing them to be repurposed. So we can start with seven and we only need to change out some equipment and it can do five. Then we only need to change out some equipment, it can do three. And building in this flexibility from the beginning, knowing that we're not going to have as much backfill as we're used to, what we need to do is reuse our equipment to the greatest extent possible on the leading edge. The thing about this is that was the Intel model, right?

• 33:59Ben Thompson?

  TSMC is becoming Intel and they're becoming Intel much faster than Intel was able to become TSMC. That, that's, that's really at a fundamental level, what has sort of happened over the last five to 10 years. If you were to sum it up, man, that's a good line. I'm going to have to write this article for sure now. There you go. And so I thought it was meaningful in that context that they're now referring to Arizona as a giga fab. Yeah. A giga fab is not one fab. It's a bunch of fabs that are, that are worked together, that is a flexible sort of organism that is meant to be continually be on the leading edge. This is not a, we're going to throw some sort of Satellite out there that's copying one of our fabs from before is just gonna sit there and run like they have a fab in Washington. They tried the US thing like in 1999 or something.

• 34:42Andrew Sharp?

  Is it Oregon or Washington? Yeah.

• 34:44Ben Thompson?

  Yeah, somewhere out there. Yeah. Same equip like that is not like that's just stuck there frozen in time, right? It operates but because they've spent money on the equipment, but it's still 1999 technology, right? And that's not going to be the case in Arizona. So, so, so number one, as far as the US position is, TSMC's presence in the US is substantially different, more meaningful, more sustainable, more independent of Taiwan than it was previously. And they're in kudos to the US for making that happen. So that's, that's number one.

• 35:20Andrew Sharp?

  Yeah.

• 35:20Ben Thompson?

  Number two, Samsung, like this whole, this whole fab is in Austin. Now Samsung is still, I think, similar. Their core functions are in South Korea. Their R and D is there. There are fabs that sort of pioneer all this stuff is in South Korea. I think it behooves the US to now push Samsung to make similar investments around this Texas fab that TSMC has done in Arizona. But the likelihood that that happens, given this Tesla deal is much higher because these investments have their own gravity. Well, they have their own gravity. You've, if you're gonna spend all this money to build a leading edge 2 nanometer fab in Texas,

• 36:04Ben Thompson?

  it just starts to make more sense to keep building around that to sort of like make it sort of a center. And so that, that's, that would be a big focus for me. If I were in the, in the shortage chip stuff is continuing to push TSMC to be more and more independent in Arizona, which sounds like has happened.

• 36:21Andrew Sharp?

  Yeah.

• 36:22Ben Thompson?

  And do it, getting Samsung to do the same. And, you know, that's, and Intel like, I mean, it's.

• 36:34Ben Thompson?

  It's a bummer, but it's always sort of, it's always been a fight against gravity to a certain extent. And I think that culture is hard to overcome. And just the biggest, you know, I, I do, I was just so struck by Elon Musk saying, I'm gonna walk the line of the Samsung fab.

• 36:48Andrew Sharp?

  Yeah.

• 36:49Ben Thompson?

  It's like, on one hand, okay, Elon.

• 36:52Andrew Sharp?

  What are you gonna do?

• 36:56Ben Thompson?

  Number two, it's like, well, everyone's like, okay, Elon, you're a rocket expert now, like 15 years ago, and now look.

• 37:01Andrew Sharp?

  Yeah.

• 37:02Ben Thompson?

  So, so, hey, maybe he's gonna actually have some input. You, you sort of think about it, like, what if we put Elon Musk in charge of Intel? That, like, that actually might solve the problem.

• 37:11Andrew Sharp?

  Figure some things out, right?

• 37:12Ben Thompson?

  Yeah, I think that would, that would, that would cut through some rent.

• 37:15Andrew Sharp?

  Cook an omelet eventually.

• 37:16Ben Thompson?

  It's, it's exactly what Intel needs. Like, there's, there's no country in the world that could probably benefit more from Elon Musk being in charge of them than Intel. Just going in and just like break, Intel needs to be broken. They need to be broken and reconstituted.

• 37:29Andrew Sharp?

  Well, I mean, the reason I highlight TSMC and Intel, or I mean, TSMC and Samsung is because I came away from your coverage earlier in the week feeling optimistic about the future for leading edge manufacturing in the US. Despite all of the dysfunction sort of compounding at Intel and them potentially getting out of the leading edge manufacturing game, like, given that story, um, the future actually looks fairly bright for the US, generally speaking.

• 38:00Ben Thompson?

  I mean, yeah, I mean, does it matter that, that, that it's not a quote unquote US company? In the modern stock market, does it, does it really make a difference?

• 38:07Andrew Sharp?

  Doesn't matter to me.

• 38:08Ben Thompson?

  I think it, yeah, I mean, it's really interesting because I think there, there's lots of industries where actually, this is a very pertinent question, like shipbuilding, right? Big push for US to make ships. Guess what the US cannot do is make ships. Guess who can make ships? The Koreans and the Japanese.

• 38:24Andrew Sharp?

  Yeah.

• 38:24Ben Thompson?

  Yep, and, and, and like, there's a, should our shipbuilding endeavor, which seems very reasonable,

• 38:31Ben Thompson?

  Should that manifest as American companies have to make ships in America? Or is should it be some sort of partnership with Japan, with South Korea? Of course, we should make some in America because of the risk of war in Asia. But we should be leaning on these companies and their expertise and their capabilities to a much greater extent. This is like the Nippon Steel thing.

• 38:51Andrew Sharp?

  I was just gonna bring that up. Yeah, it was so infuriating to hear people pushing back against that deal. It's like if Nippon wants to do it, then let's.

• 39:00Ben Thompson?

  If they want to invest money in America to upgrade steel mills, like, why are we saying no? Right? It's like this, you know, and at some point, are we going to trust the Japanese or are we not? Right? Like, and I think the similar thing is sort of with South Koreans and like, but you could push back on that. Look at a map, South Korea, not ideal location. We fought China over South Korea in the past. Like, it's something that has actually happened. So like, but, but at the end of the day, like, what is this gonna be a pursuit of the perfect? And sort of abandoning the good along the way?

• 39:35Andrew Sharp?

  And how long would it take for Intel's manufacturing to get to perfect is its own question in the midst of this?

• 39:41Ben Thompson?

  Well, then also there's, you know, Intel, by the way, not exactly scared of outsourcing. They're the ones that started it, right? They, they went to Hong Kong and Viruchal Semiconductor in the 1960s. They were the first ones to do it. All in all, I think you're right to feel encouraged. I think the TSMC situation, and again, I think this is a real credit, going back to the first Trump administration of, of really pushing, putting pressure on this specific point. And this has been a bipartisan effort. Uh, and I think we're in a much better spot than we were, even if Intel is arguably in a, in a worse spot.

• 40:15Andrew Sharp?

  Yes. Um, okay. Well, shifting gears here, I look forward to your Intel article next week, although that's not a promise.

• 40:23Ben Thompson?

  I never promise articles.

• 40:24Andrew Sharp?

  Who can say?

• 40:25Ben Thompson?

  No, it was like, I, I think I kind of wrote everything I wanted to write, but it wasn't like packaged. Um, I don't know. We'll see.

• 40:31Andrew Sharp?

  Yes. Uh, well, time will tell. For now, last week we recorded before you'd had a chance to parse Google's earnings. You wrote about them for Thursday and then Bob C. sent the following question. He writes, "Your update on Google's earnings has me thinking. Are any of the big tech incumbents going to lose in an AI world? I am now long on everyone." What do you think, Ben?

• 40:58Ben Thompson?

  Well, one of my, I think, better articles, by better, I both mean it was both prescient and also everyone hated it at the time, and I think I've turned out to be right. Okay. Uh, was the end of the beginning, which I wrote in, I think, January 2020. Mm hmm. And I analogized tech to the car industry, where the car industry started out with a gazillion car companies between the 1890s and 1910s, like, there's hundreds of car companies that were started. And then it rapidly sort of congealed into four or five, and then over time down to three, such that Tesla was the first new car company in like 60 years. I was gonna say, like 80 years, yeah. Yeah, and actually, there was, there was one that started in the 40s, 50s, that got absorbed right away. So realistically, it's really the first new car company in like 100 years. Mm hmm.

• 41:42Ben Thompson?

  And people wonder why does Elon Musk get a lot of credit from people? Like, that sort of says it right there, right? Oh, seemingly sort of impossible, impossible task. And what happened was, you had this explosion in innovation and new industry, then it just sort of settled into economies of scale and production, and all the innovation happened on top of that. Now, obviously, there was, you know, foreign, uh, you know, the Japanese and the Europeans and all those sorts of things. It's not just a US sort of story, but the overall take is that people might be biased by the fact that they were around for tech's early years, where you had a gazillion new companies. Anything was possible for everybody. Competing for these spaces and XYZ, and actually, it might be settling down into

• 42:23Ben Thompson?

  a very rational structure of the big tech companies. And each of them sort of does their thing. And there's some competition, like in the cloud layer, for example, but by and large, each dominates their space. And every time someone tries to challenge them, they just get overwhelmed with scale and distribution. Like, that's just sort of, sort of what happens. And, and, and I noted this, this was combined with the sort of end state of computing, which is a phone in your hand and cloud computing on the other side, and you have continuous computing everywhere you go. And yes, we'll have devices beyond the phone, but it's really hard to beat the phone for it's sort of like being the sweet spot for everything you want. Portability, battery life, connectivity, the screen big enough to do stuff, also convenient your pockets. And then cloud computing, you get access to computing everywhere. It's continuous, like.

• 43:08Ben Thompson?

  Thanks to five, you know, 5G in the air, 5G, 5G, 5G and, and, and the internet and sort of whatever it might be. And given that, it makes sense that this is the point where things are set.

• 43:17Andrew Sharp?

  Mm hmm.

• 43:18Ben Thompson?

  Doesn't mean innovation's over. It means all innovation going forward is going to happen on top of this foundation. And I think Bob's question here is, Ben, were you totally right in January 2020? And I think Bob looks like I might have been like, they're like, like, you know, Google AI comes along. Now, Google was the one that was always sort of the most interesting and not because they couldn't technologically do it. Everyone knew they were ahead, right? OpenAI famously was started because everyone's like, oh, Google's gonna run away with this. It was the business model question. Can they actually? What happens when the 10 blue links question goes away? And the whole thing about Google and this update, that's still a question. Like, it's still there.

• 43:59Ben Thompson?

  But the, the thing about the cloud and GCP and the reason why I've always been very bullish on GCP. I'm one of the world's biggest Thomas Kurian fans. Like, I think what he's done with that organization in general is very impressive.

• 44:11Andrew Sharp?

  Thomas Kurian is running GCP for anybody who's not familiar.

• 44:13Ben Thompson?

  That's right. And he's a former Oracle executive where they hired him. It was like, why are they bringing an Oracle guy into Google? The hell's that gonna work? Turns out that's exactly what Google needed. They needed like some Oracle discipline in, in to actually like be a reliable organization.

• 44:27Andrew Sharp?

  Let's get Elon into Google, you know, mix it up.

• 44:30Ben Thompson?

  No, no, that's the wrong mix. You know, we need, no, we need Elon to go in and break things. Google's like so Lucy Goosey and flexible. They don't need someone to break things. They need someone to, to stiffen them up. They need the exact opposite. That's right. So, so Thomas Kurian gets GCP into a functional enterprise organization just in time for AI to show up. And it was so perfect because all these investments that Google makes, like, I think we mentioned on a podcast previously, people's like, well, you know, Google's responded to OpenAI. The point was they needed an OpenAI to respond. They didn't have it in them to build an AI product. They invented the transformer, didn't build crap with it in the real world

• 45:12Ben Thompson?

  until OpenAI forced them to. That is a picture perfect example of why an incumbent holds back innovation for business model purposes, even, even if it's sort of subconsciously.

• 45:22Andrew Sharp?

  Right.

• 45:22Ben Thompson?

  But GCP. GCP takes advantage of all of Google's strengths. It takes advantage of the technology. It takes advantage of their, they, they have the best cloud. They have all their own networking. This goes back to like the dark fiber days of, of, of the, of the dot com era where Google bought up all this dark fiber. And so they still have advantages that are reaped from that. They have everything that's great. And also with GCP, other people are building the product. So Google's product sclerosis and inability to sort of like build, build anything effectively doesn't matter because other people are doing for it. And that's why I've been posting this graph or this chart of, of GCP revenues and margins and growth rates. Earnings after earnings after earnings, because this is the key.

• 46:06Ben Thompson?

  It, it, it's, it fits in perfectly with Google. It's kind of a business they can get for free as long as they can execute. And as long as their AI offerings are compelling enough for third parties to actually switch to them. And all evidence is that that is happening. GCP is crushing it. Their margins are going up, their shares are going up, everything's going up. And now I don't know if this is why Google has a new CFO. All I can say is ever since they got a new CFO, it is pedal to the metal. And the pedal to the metal is, is capex investment that is going explicitly for GCP. So who are the GCP customers? Just for example.

• 46:44Ben Thompson?

  I mean, enterprises all over the world, like everyone, so everyone, it could be like, well, they brag about a lot of AI companies are on GCP. OpenAI now on GCP apparently with some, with some workloads. But say you're just like your bank of, I don't know if Bank of America is worth that, but say like Bank of America, they need cloud computing, right? So all these companies, first, the first wave was on AWS, particularly a lot of startups. Yep. A lot of companies went to Azure with Microsoft. But then there's a lot of companies that either they're going to the cloud now, and so they go to GCP. Or they might be on other clouds, but Google's AI offerings are so compelling and it's so much cheaper. Like the AI stuff on Google's cloud is much cheaper than it is everywhere else, in part because Google's implicit infrastructure advantages.

• 47:29Ben Thompson?

  And so they're like, actually, we will keep Azure, but we'll also go to GCP. But the great thing from a GCP perspective is once you have some workloads, they have gravity. They'll start pulling more workloads in. And the the bull case for GCP was always that Google's AI offerings would be differentiated. And that would be the the the anchor to start pulling another business. And it looks like that's happening. And the and the beautiful thing for Google is this is completely independent of the search questions. The search questions are still out there. But the GCB was always compatible with the search model. The question was if they could execute on that. It appears that they are and they're investing for it. And and they weren't invest. That's the crazy thing.

• 48:11Ben Thompson?

  They did $55 billion in CapEx in 2024. It was clearly not enough.

• 48:16Andrew Sharp?

  Yeah.

• 48:16Ben Thompson?

  And and now they're they they went up to 75, which blew everyone's mind. I came out in January, like even though I've been the Google skeptic in January is like every no. Investors are totally missing the point here. This is amazing. You should want them investing more. Wrote the same thing last week. They went from 75 to 85. If GCP is such an opportunity that if they don't have sufficient supply, that meant they screwed up previously. And again, they do have a new CFO. I don't know if that's why. All I know is that they definitely invested too little. Now they have a new CFO. They're being super aggressive and they and they absolutely should be.

• 48:51Andrew Sharp?

  Yeah, well, I mean, and zooming out as far as big tech generally, we go back to your article, the end of the beginning. I don't think we were working together at that point. In fact, I know I was a lawyer at that point, but we were friends. And I thought that was a really poignant article at the like in what was it 2021?

• 49:09Ben Thompson?

  No, 2020, January 2020, right before as as COVID was just.

• 49:13Andrew Sharp?

  Oh, COVID. Before the entire world changed. Well, and the framework makes sense and the analogy to the auto industry makes a lot of sense. And you look at some of these companies now, they have so many built in advantages and various forms of lock in. It's easy to see how AI will be more sustaining than disruptive. Google has always been the kind of unique case within that conversation, only because. Google is so dominant, like they have the entire market share of the greatest business in the history of businesses. And so if the volume of traditional searches drops 20%

• 49:57Andrew Sharp?

  or Google's market share of searches drops 20%, Google is still ridiculously profitable in that context, but less dominant than they've been for the past 20 years. So who's going to lose in an AI world? Losing may be relative, particularly if the cloud business emerges and becomes dominant in its own right over the next however many years. It sounds like it's dominant now.

• 50:19Ben Thompson?

  Well, it's interesting because the cloud business is a much lower margin business. And so there is a risk, like Google is committing to lowering its overall margin profile. If GCP is massively successful, that means Google has worse margins as a company.

• 50:33Andrew Sharp?

  Exactly.

• 50:33Ben Thompson?

  And that's always, and that's always a challenge for companies to sort of accept and deal with. And kudos to Google for leaning into it. They are investing heavily to get worse margins, which is exactly what they need to be doing. The other companies, yeah, that's why you go back to A and the big five. Like I'm like, Google definitely disrupt some questions. Everyone else looking pretty great and, and distribution and all that sort of things matters. And I think the real question, if it's true that AI is sustaining and not disruptive, is should we be a little more worried slash skeptical about XAI, OpenAI and Anthropic? Like, if they're in a fight with incumbents who are funding their efforts with profits

• 51:18Ben Thompson?

  and you're funding them with VC money and debt and whatever else you need your hands on.

• 51:23Andrew Sharp?

  Every single year.

• 51:25Ben Thompson?

  Yeah, that's a tough fight to be in. It really is, right?

• 51:28Andrew Sharp?

  Yeah, I mean, it depends on the chart that you look at, but with OpenAI, it has market share. It has mind share. It's growing every single month. Like it's, the rate has been unbelievable in terms of the accelerating growth. But then you look at the projected losses, it's like. Relative to the way tech worked 20 years ago or 25 years ago, you're supposed to lose less money as you take over the world than people are using your product constantly. But I don't know.

• 51:58Ben Thompson?

  Their unit costs are probably still, I'm almost sure are still positive. Like people, people's subscription for chat GPT, like if they stopped all their R and D investment and whatnot, they'd be fine. But, but does that count if you can't stop?

• 52:10Andrew Sharp?

  Right.

• 52:10Ben Thompson?

  Because you will fall behind. And this is why the Mark Zuckerberg's war for talent is really debilitating because it, even if OpenAI keeps people, their costs are just rising through the stratosphere. It's like, like, so Mark Zuckerberg wins either way. Either he gets the talent or he really hurts OpenAI's profit margins.

• 52:36Andrew Sharp?

  Yeah.

• 52:36Ben Thompson?

  And, and like, you know, OpenAI and Meta, that's the fight. It's OpenAI versus Meta for consumer mind share. So, so there's a very real factor here where, where Meta is, it's a no holds barred assault on OpenAI. And this talent war is like a boxer doing body blows. You don't see it. It doesn't look as good on TV. But you're just sapping the energy and, and sort of the vitality of your opponent by doing that.

• 53:05Andrew Sharp?

  And harder with each passing round, each hundred million dollar deal that comes raining down from the sky, from the super intelligence team. Well, so I will say.

• 53:15Ben Thompson?

  And Mark, Mark Zuckerberg is paying for that with free cash flow.

• 53:19Andrew Sharp?

  Yeah.

• 53:19Ben Thompson?

  He doesn't have to go to a SoftBank and get money.

• 53:23Andrew Sharp?

  Absolutely.

• 53:24Ben Thompson?

  It's, he decided to pay them more.

• 53:26Andrew Sharp?

  Totally. I mean, it's again, built in advantages. You have a money printing machine. If you're Google with a search business, you're not underwater as you invest in the cloud business. You also have YouTube, which is just this empire sitting right there. Somehow never comes up in the Google conversations, but it's like just as dominant as any entertainment platform in the world.

• 53:47Ben Thompson?

  A mistake I've made for years. Uh, yeah, no, they're just taking over TV. Like that's, that's where the under, like, this is the real Netflix threat. The Netflix threat was not other streaming services. I think we were all over that, like they're gonna be fine.

• 54:01Andrew Sharp?

  HBO trying to become Netflix before Netflix becomes HBO. Yeah.

• 54:06Ben Thompson?

  YouTube just devouring everything with a fundamentally advantageous cost structure because they get their content for free.

• 54:12Andrew Sharp?

  So could I just say alongside this conversation, what I enjoy about the landscape for the next five to 10 years is that there's still a decent amount of unknown baked into all of this. And you could go company by company and the individual bull case is more compelling than the bear case for each of the big tech companies, whether it's Microsoft, whether it's Google, whether it's Meta. But if I were to step back and ask myself, are we going to get 10 years down the line and still be talking about the same five companies as the most powerful consumer tech companies in the world? That seems like a bad bet, despite everything we just said about Google, despite everything we're saying about Meta.

• 54:55Andrew Sharp?

  Like Meta has not had a hit product in a really long time. I mean, they bought Instagram and are monetizing that. They're great at monetizing, but in terms of like a new thing that people care about, it's been a while. And so the jury is still out until in terms of whether they can make AI work. Apple legitimately lost right now and like liquid glass. I heard you and Gruber talking about liquid glass. It sounds like the stupidest thing in tech history. Like, I don't understand what they're trying to make happen there. And so like, I'm closer than ever. If OpenAI released some hardware in two or three years and it was really cool, like I'm open to trying it at this point.

• 55:39Andrew Sharp?

  And whether Microsoft, like, how does ChatGPT change workflows?

• 55:44Ben Thompson?

  So interesting. This is why OpenAI is like one of the most interesting companies. Like they're basically taking on everyone.

• 55:49Andrew Sharp?

  Exactly.

• 55:50Ben Thompson?

  Right? Like if they're trying to walk like the narrowest path.

• 55:53Andrew Sharp?

  The threat is OpenAI. It's wild.

• 55:55Ben Thompson?

  Well, you can make the case that OpenAI should never have hired Johnny Ive. They should have really buddied up with Apple and like cemented that relationship. And they didn't. And this is like classic Altman. He wants it all. He's going for it all. And it's, and so, yeah, it's super compelling.

• 56:11Andrew Sharp?

  Trying to be Google and Apple at once.

• 56:12Ben Thompson?

  It is funny though, there is a bit where I mean, just tying into Sir Teckery, like what we talked about in 10 years. I mean, there, there was a point, you know, in the mid 2010s where I'm one person. I can only be stretched so thin. People are like, why don't you cover X? Why don't you cover Y? I'm like, because the answer to doing that is having multiple authors. Yeah, that's right. Well, it's not even that. It's like. I want to write authoritatively about what I write about and I could like lampoon as an expert on company XYZ, but I'm kind of making it up as I go along and that ultimately is not good for you and it's not good for me. And so I'm like, just sort of like, look, stratechery is really about the big tech companies that that ultimately, and I will talk about other companies to the extent they intersect with that. And occasionally

• 56:55Ben Thompson?

  I'll dive into other companies as sort of a sign or as I think I have a really interesting angle. And it was interesting because that was just sort of a functional decision that I had to make at some point in stratechery's evolution, but it also ended up being, I think, like a strategically very good one. Like, like the end of the beginning is good for stratechery. Like that, that's like the, I'm going to be car and driver in like 1930 or whatever it might be, right? It's, it's, uh, it's so, it, it's funny that it just sort of has that, that impact. It's something that I have to think about. And it is like, am I talking my book by saying it's the end of the beginning? It's only the big tech companies, which happen to be the companies that I cover specifically.

• 57:31Andrew Sharp?

  Right.

• 57:31Ben Thompson?

  But, um, but no, maybe, maybe, maybe it ended up working out.

• 57:35Andrew Sharp?

  Yeah. Well, and also I would say it, it really was fortuitous timing because AI arrived and everybody immediately treated it as this disruptive threat to several of the companies that we're talking about here. And the reality is there are so many advantages and so many different ways for these companies to integrate AI into how they make money that there is.

• 57:57Ben Thompson?

  The search, the search question's still out there, by the way. Again, that's what, like that, I don't think that's been resolved. I think Google's responded as well as they can. The way they're aggressively, like I said, the, the, all the product shops that still exist in the company appear to exist in search. Uh, and, and there, I think they're responding as well as they can. And again, the GCP thing is great, but that was never in conflict with search. It's still an open question if it's going to have an impact.

• 58:21Andrew Sharp?

  Well, I mean, that's what I mean. It's fun that there's still a little bit of unknown here and all of these companies can feel confident, but the earth could shift underneath them over the next couple of years and spice things up a little bit. And as far as Google's concerned and Google search, my wife was complaining about her sister last night. We were sitting together and her sister. Was texting her all these different questions and she was like, why is she asking me these questions? She can just go to chat GPT, get answers from chat GPT. So, and I think that's how a lot of people are, are living at this point. I'm not that unfriendly to various people who reach out with questions, but I don't think that bodes well for Google.

• 59:06Andrew Sharp?

  Obviously try to protect like 98% market share of that sort of use case. So I guess we'll continue to check in, but a good note from Bob, because it does dovetail with a lot of the conclusions that you've drawn on Strategery over the last year or two here as people try to size up.

• 59:23Ben Thompson?

  Did you remember and were you ever a user of, of LMGTFY?

• 59:29Andrew Sharp?

  Yes, but I always thought it was dickish when people would hit me.

• 59:33Ben Thompson?

  I did too. I never used it. I think there is like a let me Google that for you website or something. And you can send someone a link and then it like replays you typing the question in Google. Where is the new let me chat GPT that for you?

• 59:46Andrew Sharp?

  And I, I hit you with questions like several times per week that I could ask of chat GPT. But I don't because I want to talk to my friend Ben, you know? And so communion is all part of the human experience. We don't need to all just.

• 1:00:04Ben Thompson?

  Man, you just bought yourself like a hundred new queries with that one.

• 1:00:07Andrew Sharp?

  That's right.

• 1:00:11Andrew Sharp?

  Keeping it moving and keeping it LLM themed here. Daniel says, Grok has been discussed by you both as being a potential big winner in the AI space. Presumably.

• 1:00:21Ben Thompson?

  Just a second, just a second. When?

• 1:00:24Andrew Sharp?

  I don't know. I was, that was good. The first thing I was going to say to Daniel is I don't recall ever talking about Grok as a potential big winner in the AI space. They've been a peculiar entrant in the AI space for the last year and a half or so. But do you want me to read the rest of his question or do you want to just?

• 1:00:44Ben Thompson?

  No, because the whole question is predicated on what our angle is like, like the, I think it, you know, the theory of the case is at the end of the day, some of the LMs are pretty annoying in what they will or will not answer. Is there actually a space like, and it's not just like what they won't answer. It's like the coying nature of them. It's right. Like I'm very good at dismissing that and ignoring that. But if you do actually go back and like read the text, it's like. Stop, stop brown nosing.

• 1:01:11Andrew Sharp?

  This is, this is really annoying.

• 1:01:14Ben Thompson?

  Right. And so is there room for quote unquote, it's, is it so much truth telling as it is just like saying it like it is, or whatever it might be. I think in theory, there, there's something for that. In reality, ChatGPT has won the consumer space. It's hard to see anything sort of getting in the way there. To the extent I've talked about Grok and XAI, it is that they're super useful for everyone else as a stalking horse. Like if you, if I, if it doesn't work out with you, I'll just go with XAI, right? If you're like a cursor and Anthropic wants to, you know, it is a problem, like, well, we can just plug in XAI. Like, it's great to have more players. The problem is being sort of like the designated second bride,

• 1:01:59Ben Thompson?

  or whatever it is, usually isn't a very good business model.

• 1:02:03Andrew Sharp?

  The bridesmaid, I think is what we're looking for there.

• 1:02:06Ben Thompson?

  Bridesmaid, thank you. Second bride, whatever. Uh, you know, so is XAI, is it actually going to pay off with Elon's own companies? Maybe that might actually be the better way to think about it.

• 1:02:16Andrew Sharp?

  Yeah.

• 1:02:16Ben Thompson?

  But, um, but yeah, this is, I mean, the whole question, uh, do better, Daniel.

• 1:02:21Andrew Sharp?

  So, hold on, hold on, hold on, hold on. In Daniel's defense, this came up on a dithering episode last week, and it wasn't you. I think you were quoting someone else in a group chat. You were recapping group chat back and forth stuff. Um, great midsummer content. Love it.

• 1:02:38Ben Thompson?

  Oh yeah, that's what it was with the, the three dragons and Grok being silly.

• 1:02:42Andrew Sharp?

  And being a potential winner in entertainment. And I, look, the reason I raise that is because I do think that's a really good question, two and a half years into this new era. Like, who are the entertainment winners actually going to be? I don't know whether Grok is nonsensical enough to fill that role. But I do think it actually, it reminds me of the Nat Friedman discussion, maybe a year into the AI era, where it's like, where are all the products and where are the people who are going to capitalize on these new capabilities? I don't know that there's been a good entertainment solution that's working on the strength of L L Ms at this point, but maybe I'm missing it.

• 1:03:22Ben Thompson?

  The whole like, sort of like anime girl talking to you, it just, everyone gets upset about it. And then you remember that some of the most valuable companies are like stupid toys that everyone dismisses because like, it turns out, most people just want to be entertained. They don't actually want to get stuff done, right? Like, and to the extent they want to get stuff done, it's so they can get back to their entertainment more quickly. And so, and so, yeah, that was, that was the angle. But the, um, yes.

• 1:03:49Andrew Sharp?

  And like, would Grok be the company that does that? I don't know, but like, what am I doing on my iPhone all day?

• 1:03:55Ben Thompson?

  Right.

• 1:03:56Andrew Sharp?

  Mostly screwing around in group chats and reading Twitter. It's not me being productive all day, to be honest with you. And granted, I'm talking to my boss here on this podcast, but it's like an 80 20 situation in terms of iPhone usage, 80 being entertainment. So who is gonna serve that 80% market? I, maybe it's gonna be Chat G P T and Chat G P T is just gonna win everything at the end of the day.

• 1:04:20Ben Thompson?

  Yeah, well, maybe, or maybe it's gonna be Meta. You know, maybe, yeah, this was, yeah, maybe Grok just by not caring.

• 1:04:30Andrew Sharp?

  Just being stupid and spewing out nonsense and occasionally like pretty dark nationalism. I don't know. But in any event, good question. Well, I'm complicated question from Daniel there, but we appreciate all the people who write into us. To keep it moving, this is not an email, but it piqued my interest last week. This is Matt Levine at Bloomberg. He's riffing on Sam Altman's discussion of Chat G P T agent. He could be describing any number of product launches in AI. And he writes, I have described Altman's marketing approach as business negging. If you say, quote, "Our product is good and will make the world a lot..."

• 1:05:11Andrew Sharp?

  Better. That is sort of ho hum. Everyone says that. So your audience will discount it. But if you say, our product will probably make the world a lot better, but could destroy humanity. Tee hee, aren't I a little rascal? That's exciting. People are drawn to danger. And if you go around warning people that your product might destroy humanity, then that strongly suggests you think it's powerful. Similarly, when you launch a product whose pitch is, this product could do your whole job for you. Boring. Everyone says that about everything. But if you launch a product whose pitch is, this product could do your whole job for you, but there's like a 10% chance it will email porn to your boss.

• 1:05:55Andrew Sharp?

  More people will be excited to use it. The do everything for you and maybe ruin your life AI assistant is just obviously more psychologically appealing than an omni competent AI assistant that definitely won't ruin your life. Aren't you a little curious? And Ben, I just wanted to read that into the record because this is the psychology that he's describing there does ring true and it will stick with me as I digest future product launches in AI. Does it spark any thoughts on your end?

• 1:06:28Ben Thompson?

  I mean, I think just in general, all the AI rhetoric, like I've always been pretty critical of the whole, like it's going to destroy the world sort of thing. Like I still think Washington DC is really screwed up in their evaluation and understanding of AI and chips and Nvidia and China and all these sorts of angle. In part because you had folks like Anthropic going there and convincing everyone this is like this doomsday device that is a one time chance to control the world, which I think was wrong and false. And is actually causing us considerable problems and an ongoing sort of issue that is just out of touch with reality.

• 1:07:02Andrew Sharp?

  It still drives the, yeah, it drives the conversation to these bizarre places, like with the H20 being lifted.

• 1:07:10Ben Thompson?

  The Biden administration just destroying. US industry as far as like, like a lot, a lot of the chip stuff sort of goes and destroying the Nvidia moat because they were like, they were convinced this was a one-time opportunity.

• 1:07:25Andrew Sharp?

  Right. Well, and there's this notion that there's going to be one super weapon that nobody else is going to be able to replicate. And if we don't ban everything, then we could be losing everything in that scenario and seeding the future to X, Y, and Z. And it's just not really.

• 1:07:42Ben Thompson?

  It's not seeding the future. It's not like we're going to magically control the whole world forever.

• 1:07:46Andrew Sharp?

  Yeah.

• 1:07:47Ben Thompson?

  Like, I mean.

• 1:07:49Andrew Sharp?

  And it's not been borne out over the last like three years of AI progress and development at various places. And so it all just strikes me as kind of crazy, but you're right. It has absolutely taken hold and informed how a lot of people think about these issues.

• 1:08:03Ben Thompson?

  This is a very frustrating mode of argument, which is the base case for AIs in where I've generally been is it, you know, it's probably the impact over a smaller number of years is going to be smaller than impact for a larger number of years will be large. Like technology sort of as a whole, and it is going to have be hugely impactful. It in massively improving productivity, it's going to like eliminate a bunch of jobs. It's going to have all these sorts of effects, but in a way that we've seen technology play out before. Like people who are like, I'm not saving any more money because the world's going to end in two years. It's like, do you have any concept of how technology actually

• 1:08:43Ben Thompson?

  disseminates over time? And again, but the problem is the people hearing this who, who believe that they're like, yeah, but it's different this time.

• 1:08:53Andrew Sharp?

  Mm hmm.

• 1:08:54Ben Thompson?

  And the problem is that they were saying it's different this time in 2020 and 2021. At what point do we get it aside? Actually know it's playing out like we thought. We're going to get to 2035 or 2037, then they say, look, the world's totally different. Told you. I'm like, no, I also thought the world would be different in 2025, 30, 2037. I just think it's going to be this really steady change that we're going to acclimate ourselves to in a surprising way, just like we, we had this discussion on the podcast a while ago. The world's drastically different in so many ways and we barely notice. That's sort of what happens.

• 1:09:25Andrew Sharp?

  Yeah.

• 1:09:25Ben Thompson?

  And again, this isn't to dismiss what happens. It's just to say the method in which it happens and the way in which we experience it is different than popular conception. But, but people come out with these scarce scenarios and it's like. Shouldn't we just in case, it's like the whole COVID thing. It's like people came up with these spectacular means of transmission and harms that what if it's the case and then they convinced everyone to protect against this worst case scenario? That was basically a function of imagination. And no one's doing an actual expected value calculation, which is like, what's the,

• 1:10:09Ben Thompson?

  it's not just the potential harm of an outcome, but what's the chance that harm is actually correct and real? If it's a 0.1% chance, that harm has to be multiplied by 0.1%. And now these people say, look, if the world's ending, then that's more than one. They have to think through like, oh wait, what capabilities do I actually have to stop this? Right? Like, like, is it actually even solvable or tolerable? Or do you have to just sort of accept the fact it might happen? And manage all the other potential outcomes along the way? And what, what, what I feel has happened with AI, particularly in Washington DC, is very much similar to what happened with COVID. It's people with the largest imaginations got the most influence and control.

• 1:10:54Ben Thompson?

  And no one was actually considering what's the best policy for the most likely outcome.

• 1:10:59Andrew Sharp?

  Yeah, I mean, I, I can't argue with you. It does remind me that the AI executive order under the Biden administration was drafted after Joe Biden watched Mission Impossible Dead Reckoning. Camp David, as far as imagination is concerned, wonderful stuff, a note that will delight me to no end until the end of time. So thank you to the Biden administration who put that out favorably to show that Biden was taking the issue seriously. And as far as the rhetoric from Sam Altman, it just cracks me up because it seems like every time there's a new model.

• 1:11:35Ben Thompson?

  Altman's bad and Anthropic's worse. It's like, it's like.

• 1:11:38Andrew Sharp?

  Well, it's always like, there's a tweet that precedes the new model by a week or two where Altman's like, I don't know if we should even release this. We're really worried, but here goes.

• 1:11:51Andrew Sharp?

  It is very effective marketing, though, you know, it piques my interest. I can't wait to see ChatGPT 5. Let's check it out.

• 1:11:57Ben Thompson?

  And it's really annoying because all these people who are doomers, it's like you're to disprove them. You're disproving a negative.

• 1:12:03Andrew Sharp?

  Yeah.

• 1:12:04Ben Thompson?

  Right? Like, like, could we get some metrics about what the actual?

• 1:12:08Andrew Sharp?

  A date where we could all measure if the world hasn't ended.

• 1:12:12Ben Thompson?

  It was 2025, I think. Now it's 2027. Everything 2027, what's it? It seems auspicious. That's like the date everyone's putting on for China and Taiwan, too.

• 1:12:19Andrew Sharp?

  Ah, yeah. Well, I think that's the cheat day.

• 1:12:21Ben Thompson?

  A real big opportunity for the nothing happens crowd to make some, make some anti 2027 bets.

• 1:12:27Andrew Sharp?

  Oh, boy. Well, I'm going to enjoy the rest of my summer and we'll cross the 2027 bridge when we get there. For now, we'll keep it moving with Joe T, who says, it's surprising to me that Apple isn't taking any heat for the T app. The ethos for their App Store monopoly power is partially based on promises of protections and app standards. SaaS apps use a, use a SOC 2, SOC 2 or SOC 2?

• 1:12:53Ben Thompson?

  SOC 2.

• 1:12:54Andrew Sharp?

  SOC 2, SOC 2 it. SaaS apps use SOC 2 and more to standardize trust. Apple should implement something similar in the era of professional looking vibe code slop. What do you think, Ben and Andrew? So for context, for anybody who is enjoying his or her summer is blissfully unaware of what the T app is. It was an app that allowed women to upload a selfie and sign up and share their experiences with men they've dated, men to stay away from, et cetera. The whole affair looked pretty dystopian. I didn't investigate any further than seeing some tweets.

• 1:13:35Andrew Sharp?

  But then in the past week, there were reports that the company inadvertently exposed the names and selfies and identity documents and locations of thousands of women. And then on Tuesday, there was a second report that the app's direct messages had also been compromised. So it's turned into quite a mess. Do you think Apple has a role, a responsibility to police something like this?

• 1:14:00Andrew Sharp?

  How does it happen?

• 1:14:01Ben Thompson?

  What, to police apps that are predicated on randomly slandering other people who can't defend themselves?

• 1:14:06Andrew Sharp?

  Well, I will say there was a similar website that emerged when I was in college that was quickly banned like 15 years ago. I didn't know we were doing this again 15 years later.

• 1:14:18Ben Thompson?

  It's like you could choose any angle you want on this and it's incredibly dystopian and like fairly horrible. And again, I'm not defending bad actors to be clear, but it's like the entire premise of this is not great.

• 1:14:33Andrew Sharp?

  Really, really crappy and depressing. No question about it.

• 1:14:37Ben Thompson?

  So, so yeah, I mean, so it should, you know, I think the reality is, is I'm not going to get all worked up like Joe is because I never believed Apple's BS about the App Store in this regard anyway. I've been calling it out for years and years. So I'm not going to like, I'm already on my high horse. I don't have a higher horse to get on.

• 1:14:55Andrew Sharp?

  Well, I don't know if that's true. I don't know. Every time we talk about the App Store, you say, well, they are very secure. That part is true. They do work hard to ensure the security of your devices. I, and I-

• 1:15:08Ben Thompson?

  No, no, no. What I say is the, the, the fundamental architecture of iOS is secure. In that apps are in their own sandbox. They can't interfere with other apps, which makes it fundamentally different than a Mac or than a PC. Or the way computers used to be architected. My point is that the security comes from the architecture, not from the App Store. I'm disputing Apple's characterization of the App Store. Yeah. I think it's, I think it's all BS.

• 1:15:36Andrew Sharp?

  So is it something that we should worry about though, as AI lowers the barrier to entry for app development and we get-

• 1:15:44Ben Thompson?

  We should have been worried about Apple's BS around the App Store for years. That's been my position since as long as I've been publishing online. So I see this is just-

• 1:15:52Andrew Sharp?

  Do we multiply those worries? Now I sound like a doomer here because it's suddenly going to be really easy to make a professional looking app that is completely unsecure.

• 1:16:02Ben Thompson?

  Right. But the insecurity here is on the cloud side. It's not, it's not the- And so like, do you want Apple going in and verifying someone's cloud implementation? Like, we could. We could go that direction. But that is what Joe's referring to. And to be fair, that's what Apple seems to suggest with what their claims about the App Store. I'm just saying, I've called those claims BS all along. The, the security comes from the way that it's architected on the system layer.

• 1:16:32Andrew Sharp?

  Yeah.

• 1:16:32Ben Thompson?

  And that this is like, in this case, no one's hacking into someone's app on an iPhone and getting this information. They got a publicly available URL to an S3 bucket, uh, in the cloud.

• 1:16:43Andrew Sharp?

  Well, fair enough. Um, you talked about zero trust security in the past. I have zero trust in any security, anything I'm putting into my phone, putting into an app is something that I'm comfortable with people hacking because at this point I just don't really feel that secure in any of it. Um, so similar to you, nothing is going to change for me in the future.

• 1:17:06Ben Thompson?

  Well, it also speaks to like, well, the other thing is you can critique is the whole, uh, know your customer set of laws and regulations generally that condition people to continually uploading their identity and verifying themselves and all these sorts of things. You know, nominally to stop smugglers or counterfeiters or people, you know, or money launderers, whatever it might be. And the reality is, like so many things, what you're actually doing is, is compromising the security of everyone else who are law-abiding citizens that are forced to compromise just to live their life on a day-to-day basis.

• 1:17:37Andrew Sharp?

  Yeah.

• 1:17:37Ben Thompson?

  Like KYC is in many respects, again, I'm not, there's of course legitimate reasons to know your customers. But it's like any trade-off, by focusing on one thing, you're trading off a bunch of other things along the way.

• 1:17:51Andrew Sharp?

  Yep. Um, well, we will see. Good luck to the good folks behind the T app. I'm sure it's been a very stressful week for the last couple of days here.

• 1:18:02Ben Thompson?

  I mean, this whole thing feels like

• 1:18:03Andrew Sharp?

  Nothing but the worst of luck.

• 1:18:07Andrew Sharp?

  James says, Ben and Andrew, you all have had several thoughtful conversations about digital media recently. And that leads to a question. How has The Ringer lasted twice as long as the greatest sports website of all time? Its predecessor, Grantland. Great question from James. I worked at Grantland, so near and dear to my heart. Did not work at The Ringer. Still have a bunch of friends over there. Do you have any thoughts, Ben? Any guesses for James?

• 1:18:34Ben Thompson?

  Yeah, Grantland, ESPN decided to stop funding Grantland and then Spotify keeps funding The Ringer.

• 1:18:39Andrew Sharp?

  It's, I mean, like it's the, yeah, I mean, well, the Ringer, much more than Grantland,

• 1:18:44Ben Thompson?

  is very explicitly a podcast-first organization. The website supports, I think the website is probably there because Bill wants it to be there and Bill still has enough pull at Spotify to make it happen. Spotify is there for the podcasts, which are successful. And this was, I think, a shift Bill made after Grantland, where Grantland really was a website first and foremost, and one of the greatest websites of all time.

• 1:19:07Andrew Sharp?

  Yeah.

• 1:19:07Ben Thompson?

  Despite the fact you were there, you overcame that sort of challenge.

• 1:19:10Andrew Sharp?

  Crippling handicap. Well, it's funny. So, the end of Grantland, I was not all that familiar with your work at that point, but you were writing about Grantland's business and Bill's podcasting. And the end of Grantland was very frustrating because I was on the inside as things were beginning to fall apart and people were speculating about how much money it was losing, this, that, and the other thing. And it was the first time that the media was writing about something I knew a lot about and watching people just repeatedly get the story wrong, like Deadspin, a habitual offender in that regard.

• 1:19:51Andrew Sharp?

  But you noted that Bill should be monetizing the podcasts first and foremost then. And that's what ESPN just did not do very well during the Grantland era. And I think the economics have become a lot more favorable at The Ringer, where like five or six podcasts can pay for a lot of ambitious work elsewhere because they're actually doing a good job monetizing in that space, which monetizes much better than digital media, digital print media in the modern era. So I think that's part of the answer in terms of The Ringer's longevity versus Grantland's kind of cursed fate at ESPN.

• 1:20:33Ben Thompson?

  Yeah. I mean, there is a bit, like, Grantland is like the Kurt Cobain of websites, where it will always be thought of as great and can never be diminished by virtue of sort of going out early. It never had the chance to sort of fade, as it were. It's a shining light forever and ever.

• 1:20:48Andrew Sharp?

  It also existed.

• 1:20:49Ben Thompson?

  But it was really awesome for those over there.

• 1:20:52Andrew Sharp?

  It existed at a time when everybody online was in a much better mood than they have been over the last 10 years. So that helps its legacy as well.

• 1:21:01Ben Thompson?

  Absolutely. So it was, it was, yeah, but it's one of my favorite articles I wrote. And it goes into some of my thinking around Stratechery and Stratechery Plus. This idea that text is, you need to think about a media company in a multimodal sort of way. And what is text good for? Text is good for customer acquisition because it's easy to share, easy to spread. It's really bad for monetization. Podcasts are good for monetization. You have a captured listener, really hard to grow and spread. So you need to think about them together. You, so you, you have people that get popular through text and you then they could be on podcasts. You need people that can fit that mold and can do that. And I wrote that about, about how ESPN was not thinking about Grantline the right way. How you had to have this multimodal approach.

• 1:21:42Ben Thompson?

  And that's actually, that's how I met Bill. And for sure, this was a core piece. I think it's fair to say this thinking went into the wringer and like how the wringer is going to be formed. And much more of a very explicit link between website and podcast and how they sort of work together. Ultimately, probably doesn't really matter to Spotify that much. I think the wringer, the website is more a function of like, Bill wants it to exist, so it still exists. But I think overall, it, the fact it lasts longer

• 1:22:15Ben Thompson?

  is because business models matter even more than product sometimes, or, or having a sort of a model that works is important to longevity, not just having a great product. Grantline was an incredible product that cost, that lost a lot of money.

• 1:22:28Andrew Sharp?

  Yeah. Well, and I would also say that Bill cares about the written word and cares about preserving the website. And he has a tremendous amount of leverage because Spotify has figured out how to make money on his tremendously profitable podcast and suite of podcasts at The Ringer. And so he's allowed to sort of swing that weight around and keep writing alive for a couple more years here. Who knows whether anybody's going to be reading, writing in 2035, but I've enjoyed The Ringer and I'm glad it still exists. Not quite on the level of Grantland, to be honest.

• 1:23:02Ben Thompson?

  No, it's not even close to Grantland. I'm glad it exists. It's not close to Grantland.

• 1:23:05Andrew Sharp?

  Yeah. All right. Closing out here, Andrew says, I know Ben is reluctant to go all in on the endorsement game. But given how consistently helpful his recommendations have been, I'd love to see some sort of middle ground. The Above and Beyond Group Therapy Playlist has carried me through many late nights building presentations. The Kizzix, big win with my father-in-law.

• 1:23:28Ben Thompson?

  That's me father-in-law recommendations. That's really, that's really my angle.

• 1:23:32Andrew Sharp?

  I've worked in tech, so I'm not a total normie, but I still find myself asking the same questions I imagine many listeners do. Should I get the M4 MacBook Air now or wait for the M5? What's the best desktop setup? Travel setup? And yes, some of us are very much interested in watch talk, even if it is dangerous territory for host and listener alike. You've built trust by being rigorous and practical, but I think everyone would learn, would love to learn more about your product recommendations, your heuristics for buying, what's worth future-proofing on a regular basis, as well as having a place

• 1:24:10Andrew Sharp?

  to find those recommendations. Thank you for the note, Andrew. As Ben's friend and co-host, I don't know what the next 20 years of your career look like. I don't know what the next 10, 15, who knows? You could do any number of things. I do hope that your final job in life is life coaching and product recommendations, because I think that's what you're most passionate about in this world. So I don't know if you have any response to Andrew, but I feel like you've been training for this for quite some time.

• 1:24:45Ben Thompson?

  I mean, there was, there was something I was talking to someone about. Oh yeah, it was keychains.

• 1:24:52Andrew Sharp?

  Oh God. So of course you've got keychain takes.

• 1:24:57Ben Thompson?

  I do. So my keychain is, you want a car, a carbinder, carbinder? What is it like? The clip you use for like rock climbing? There are keychain carbinder clips. Those suck. Don't use those. You want a real one that's actually strong. Carabiner, is that what it is?

• 1:25:12Andrew Sharp?

  Yeah.

• 1:25:12Ben Thompson?

  And then every individual key gives its own keychain that goes in the carabiner. So you can not only carry them all together, hook it on your belt. I'm a big key on belt guy. Really great, real father-in-law territory.

• 1:25:24Andrew Sharp?

  I was gonna say, a real dad move there.

• 1:25:27Ben Thompson?

  You could take one key off super easily for something else. You need to give it to someone to use XYZ and it goes back on. So I, so I, of course, you know, was in the US, I needed a new, so I got a new carabiner, an extra one. So I was giving someone my other one, saying, oh, this is how I do my keys. And they come back, they're like, This is such a better key system.

• 1:25:44Andrew Sharp?

  What a hack.

• 1:25:45Ben Thompson?

  Like, I can't believe in her thoughts before. And I'm like, look, there's literally every single aspect of my life, I've probably thought too much about and have my own system. So all that is to say, yes, I think your recommendation is correct. I'm happy to write your keychain article at some point. But I'll have to stick with the, the big tech companies for now.

• 1:26:05Andrew Sharp?

  Right.

• 1:26:06Ben Thompson?

  If you want to drop the occasional question, look, there's my key recommendation, how to carry your keys.

• 1:26:12Andrew Sharp?

  That's what the podcast is for. There will be room on Sharp Tech for Ben life coaching for years to come. I assure you, Andrew and anybody else who's interested. I'm interested depending on the day.

• 1:26:27Ben Thompson?

  We got into. You're a big problem with this thing. So the issue is like you're, you're, what makes you a good podcast host?

• 1:26:35Andrew Sharp?

  Hmm.

• 1:26:36Ben Thompson?

  Is sometimes even you might agree or be inclined to agree, but you'll push back.

• 1:26:44Andrew Sharp?

  Tease out the devil's advocate perspective for sure.

• 1:26:47Ben Thompson?

  Because it makes for good podcasting, but because you're instinctually inclined to disagree. You, you are a contrarian, like speaking of like Silicon Valley cliches. You are the biggest contrarian I know. And that can serve you well. It's good for podcasting.

• 1:27:01Andrew Sharp?

  It has.

• 1:27:02Ben Thompson?

  It leads to some horrific life choices, particularly the longer you know me. Cause you're like, I can't listen to Ben for everything. So I have to disagree in particular areas to like maintain my sense of self and independence. And I just like, it's like, do I need to like, watch the movie inception and like, just like trick you? Like, do I have to start saying stuff I don't believe? So you start doing the right thing.

• 1:27:24Andrew Sharp?

  You know what? I actually do that.

• 1:27:26Ben Thompson?

  Friction in our relationship.

• 1:27:27Andrew Sharp?

  I do that to my two and a half year old son sometimes. When I want him to do something, I'll tell him to do the opposite of that thing. And then he'll naturally gravitate to doing what I actually want him to do. So I'm glad to know that I'm the two and a half year old son in this analogy. Context for this conversation is that, um, Signal, I at Signal on Twitter said, every millennial is.

• 1:27:52Andrew Sharp?

  Now paying Apple nine ninety nine per month for two terabytes of data just to not delete their life. And I responded to this midday Friday in a group chat and said, I actually got so upset when Apple tried to charge me nine ninety nine that I went out and bought a external hard drive and moved all my stuff onto an external hard drive just because I'm not going to pay Apple ten dollars a month for the rest of my waking life. I draw the line at a ten dollar tax for living and taking photos. Then like six hours later, you log on.

• 1:28:33Ben Thompson?

  So it was on the delay. Yes.

• 1:28:35Andrew Sharp?

  So it's Friday night. I'm sitting with my wife and I've got Ben waking up in Taipei, just coming off the top rope about how stupid this decision is, how you could lose the external hard drive any day.

• 1:28:52Ben Thompson?

  An external hard drive is not a backup. All you're doing is transferring your data into a less safe device. It's still only exists in one place and now that one place can be

• 1:29:05Andrew Sharp?

  It can be lost. It can be stolen. Anything is possible.

• 1:29:10Ben Thompson?

  Not a tax. It is a service. You are, you are, it is insurance. Like there's nothing in your life that is more irreplaceable than like photos of your kids. And you can by definition, never take them again. And for the low price of nine ninety nine, you can have that taken care of immediately and backed up. It's worth it. It's a, it's a great, it's not a tax. It is a service. And yes, I've never woken up so quickly because I was so filled with disgust and rage first at you for doing this. And number two, at myself by knowing that by coming from the top rope at you, I was just solidifying your obstinance and making it more likely you are not going to do it. So I was just filled with self-loathing all at the same time.

• 1:29:55Andrew Sharp?

  Here's the thing. I may be contrarian. I am open to changing my mind. On Greatest of All Talk, I'm known as the greased pig because as the facts change, I'm willing to change my mind. This one, however, you were so annoying on Friday night.

• 1:30:14Andrew Sharp?

  Sitting there, I will never be paying 999 a month for the two terabytes.

• 1:30:19Ben Thompson?

  All you're hurting is yourself.

• 1:30:21Andrew Sharp?

  No, I'm not. No, I'm not. So this is the thing. As a millennial, there are so many freaking photos of my kids. We print photos of my kids every like three or four months. I'm not, I, one thing I can promise you is that 20 years from now, no matter what happens to my photos, the, the external hard drive, whatever. I shouldn't have even bought the external hard drive. I'm not going to be suffering from any lack of photos of the early years of my children.

• 1:30:50Ben Thompson?

  The problem is fine. You, you make that choice for yourself. At least let your wife have the back, have the backup plan.

• 1:30:55Andrew Sharp?

  Well, she does.

• 1:30:56Ben Thompson?

  Deal with her despondency when stuff gets lost.

• 1:31:00Andrew Sharp?

  Yeah, look, my wife is nothing if not.

• 1:31:04Ben Thompson?

  Family plan is very reasonable.

• 1:31:05Andrew Sharp?

  A big tech adherent.

• 1:31:07Ben Thompson?

  Yeah, I'm.

• 1:31:08Andrew Sharp?

  Paying the 999 a month.

• 1:31:09Ben Thompson?

  I'm texting her right over this call.

• 1:31:10Andrew Sharp?

  I know. I checked with her. Don't worry. She's got the extra two terabytes. So.

• 1:31:15Ben Thompson?

  Get a family plan.

• 1:31:16Andrew Sharp?

  I know. Maybe I, maybe I owe it to her to get a family plan, except you were so annoying. Over the weekend, I can't possibly cross that bridge.

• 1:31:26Ben Thompson?

  Like I said, like I said, what made me most upset was knowing how annoying I was and how this was going to be counterproductive, but I couldn't contain myself.

• 1:31:32Andrew Sharp?

  I'm dug in now. Sorry, signal. I'm one millennial who does not pay 999 a month. But Ben, great to see you as always, and we are coming back next week. People can continue emailing email at sharp tech.fm. Again, we're going to be in the heat of August, so hit us with anything you've got because God only knows how slow it's going to get over the next several weeks. But we'll be having fun on the podcast regardless. For now, go enjoy.

• 1:32:02Ben Thompson?

  One rec, I'll give one recommendation, a podcast. You have to come, come up with.

• 1:32:06Andrew Sharp?

  That's right. Product recs, life coaching.

• 1:32:09Ben Thompson?

  It's a little risky because who knows what we're going to get, but I, but it, that's why the key thing was so funny because I'm like, yeah, actually I do. I have a take on, on literally everything.

• 1:32:19Andrew Sharp?

  Of course you do. It's unbelievable. And there's nothing, it honestly is really charming. You enjoy helping other people improve their lives and optimize various aspects of their lives. It's like, what gives you the most charge of anything at this point in your life?

• 1:32:36Ben Thompson?

  It's so true. It's really rough because you resent it.

• 1:32:38Andrew Sharp?

  That's right.

• 1:32:39Ben Thompson?

  It's like a very dysfunctional relationship. You know what, though? Dysfunctional relationships make for a good podcast.

• 1:32:43Andrew Sharp?

  Good podcast, great content. It's all about content at the end of the day.

• 1:32:47Ben Thompson?

  I mean, this was why I wanted to hire you in the first place. You and Ben, very dysfunctional relationship. Great, great podcasting. I love it.

• 1:32:55Andrew Sharp?

  That's right. Absolutely. Well, more great content next week. Until then, have a good couple of days and I will talk to you soon.

• 1:33:02Ben Thompson?

  Talk to you later.