Google Layoffs, Netflix Shakeup, and Davos Recap

Ranjan Roy of Margins is back for our weekly discussion of the week's tech news. We cover: 1) Google Layoffs 2) Netflix's prospects and leadership change 3) Davos pros and cons 4) Media layoffs 5) Robinhood's new financial publication. For weekly updates on the show, sign up for the pod newsletter on LinkedIn: https://www.linkedin.com/newsletters/6901970121829801984/ Learn more about your ad choices. Visit megaphone.fm/adchoices

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

• 0:00Alex Kantrowitz?

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• 0:45Alex Kantrowitz?

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• 1:20Alex Kantrowitz?

  Welcome to Big Technology Podcast Friday Edition. I am Alex Cantrell, live here, as always, on Friday with Ron John Roy. For our weekly news show, we stream on LinkedIn, we stream on YouTube. If you're on YouTube and this is working, that's cool. But I know we're live on LinkedIn, and we bring this to the podcast feed every single Friday. So we can talk about the news. It's going to be a supplement to the weekly Wednesday flagship show. And we're stoked you're here, Ron John. I'm stoked that you're here.

• 1:52Speaker 01

  I did not know the big technology theme could go on that long, but I liked where it's going.

• 1:59Alex Kantrowitz?

  Look, as I've said it a couple of times when we've done these live shows,

• 2:04Alex Kantrowitz?

  it's definitely going to take a few tries for me to figure out how to do both the recording on Riverside for the podcast and streaming, and we'll also take questions. And that's a situation where you just end up getting a very, very long intro as I'm checking all the settings. But hey, look, that's what music's for. And now the game really gets going.

• 2:27Alex Kantrowitz?

  So our discussion today is titled, I hope it's titled on LinkedIn, but it should be titled, Google layoffs, Netflix and Davos. And we're going to talk all, we're going to talk about all those big stories. Let's start with the big news of the week, Google layoffs. What did you make of the fact that the company is cutting 6% of its workforce down 12,000 people? It's, it's just one of a number of layoffs. We've talked about Amazon, Microsoft, Meta, Apple hasn't done anything yet. But when you think about where Google's headed, does this tell you anything other than the fact that the company just needed to increase margins?

• 3:06Speaker 01

  I think from the Google layoffs have a number of really interesting layers to it. I think the 12K layoffs they just announced is likely much more just in line with Meta laying off 11,000 people, Microsoft 10,000, just trying to cut costs, trying to, and we can definitely get into reverse their extrapolations from their growth during COVID. But I think we had touched on this last week. What are the new threats to Google search? Are there from G chat GPT? There was a piece in the New York Times about Sergey and Larry might be back after all this time, just flying around on private islands and going to Burning

• 3:48Speaker 01

  Man. So, so I think Google is definitely at a very interesting place right now relative to where they've been over the last decade.

• 3:57Alex Kantrowitz?

  Right. And Larry and Sergey are back. Like that is a thing that's happening now. They're in the offices, working with them. The thing that I find interesting about Google, so of course their profits were down 27% in the last quarter. Their margin shrink from 32, what are the margin shrink from? I just had it written down. Their operating margin was 32% and shrink to 25% in the third quarter. So they had to do that. And I think in some ways that's completely different than or dissociated from the fact that they're now getting challenged from Microsoft with this chat GPT thing. In fact, they do have the technology that's better. And it's to me a question of will, of whether they will decide Release this in some way. The New York Times story that broke today said that they have about

• 4:41Alex Kantrowitz?

  twenty different applications that they want to use this type of technology to release. And the question is, you know, what were they waiting for? Obviously, there were some safety concerns, but the fact that OpenAI is doing this right now does make them look a little silly. And that will be the challenge, I think, for Google is can you used to be the safest place in technology, right? People would say that you'd go to Google and retire. No employees ever really felt threatened there. And can you now really shift the culture to a point where you feel like a more existential threat? You have to be willing to take more risks. And you have to keep people motivated, knowing that you're no longer as safe as you used to be. So I wonder if you think that's a net good or a net negative.

• 5:23Speaker 01

  I think, okay, so, so for at margins, I write with John Deruk. And he wrote a piece this morning, sent out around GPT and its threat to Google. And he touched on, to me, what's one of the most important parts of this entire story? Monopoly. And I think I think this is a huge net good. And I think Google has not evolved search, has been building all this technology internally and has not released it because of being protected, because when you have a bill, a business that prints money in a monopoly over search, you don't need to actually release this type of technology. So only because

• 6:04Speaker 01

  OpenAI actually released ChatGPT and scared them and showed the world that this type of technology is possible to use in this way. And we all started talking about the risks to Google search. Are they under a code red? Otherwise, we would have, I mean, this technology, as far as we know, could have just sat in a back room like, I think, was it Kodak that was famous for you know, creating amazing innovation and or Xerox? And then it just, you know, lived in a laboratory. So I think this is a hugely positive thing for just technology overall, for competition, that the only reason Google is rushing and scrambling to answer this is because

• 6:44Speaker 01

  it's out there and because someone is doing it and they see a threat, which they haven't forever.

• 6:50Alex Kantrowitz?

  Right. And with the layoffs, do you think that that impacts their ability at all to run after this?

• 6:56Speaker 01

  No, no, no, I

• 6:57Alex Kantrowitz?

  I don't think so either.

• 6:58Speaker 01

  I think the layoffs are 100% around focus. And I think, I mean, again, at any of these large companies, That have been doing everything in the world over the last decade that are now, you know, every movie you watch, winning Oscars, Monday, Thursday Night Football, I'm picking on Amazon here, but Google is also doing any number of different initiatives. I think it's time to focus. If they have the technology, if they're a artificial intelligence models, they invented the transformer. If they're for real, it's time to actually put that into action.

• 7:35Alex Kantrowitz?

  Yeah, well, I think without a doubt that is gonna come into action. Now, the secondary question that we ask here is, how did this company let this happen? Roy Bahat was on a few weeks ago talking about how companies really didn't mind about overhiring during the COVID times because even if they overextended tremendously, they could just do a layoff like they're doing now, cut 10,000 people, get costs back online and have taken their best shot at the market, whereas they would risk losing the market. And I also wrote about this after the conversation in Big Technology. That being said, do you think that that's actually what happened?

• 8:11Speaker 01

  Oh, completely. Actually, in your piece, I think it was Roy's quote, "It was one of the tragedies of companies is that a risk that may make sense for the company to take may be catastrophic for employees." And that's what happened. They had to take these risks. If your competitors are, if everyone is growing at astronomical rates, 10, 20%, even for a trillion dollar business, and your competitors are investing in every new field and doubling down on all their infrastructure, for you to not pursue that, the investors would have been furious. So I do think everyone is to blame. Clearly,

• 8:51Speaker 01

  like, the idea that a Sundar might have said in 2020 fall, "You know what? We're growing, but I'm gonna be prudent about it." Obviously, in hindsight, that would look good, but, I mean, this is the investment community's pressure on the companies, the companies themselves and their own hubris, every employee taking a job at one of the companies to get, you know, work for the most comfortable lucrative trillion dollar big tech giants in the world. I think there's no simple blame that it was just a mistake on the part of a few people.

• 9:26Alex Kantrowitz?

  Right. And one of the companies also going through some change this week is Netflix. Actually, before we get to Netflix, I just want to throw this out there. I'm kind of curious what you think. I think Google is actually, you know, obviously in a vulnerable spot, but I think that that threat from Chat GPT is real, but probably a little overblown. And it's in this position where it's really been hit hard because of an advertising pullback. And that's probably going to be the first thing that comes back when the economy rebounds. So I kind of think Google is a prime candidate for a rebound and is not, and has dire straits, as some might say.

• 9:58Speaker 01

  I vehemently disagree.

• 10:00Alex Kantrowitz?

  Yeah, why?

• 10:03Speaker 01

  So in the piece this morning from John, he went into recipes. And I'm sure many of our listeners, I cook a good amount, have Googled recipes and are used to that ridiculous format where someone basically gives their entire life history and runs a thousand ads. So to get to the recipe.

• 10:24Alex Kantrowitz?

  The most annoying thing on the internet.

• 10:26Speaker 01

  And that distortion, that is completely driven by economic distortions where Google benefits financially, the publisher who does that will benefit financially. And the only person hurt is the user, but because Google has a monopoly, the user just gets screwed and has to cycle through someone's life story to get to just, you know, some ingredients and a couple of steps. I think that's where Chat GPT shows just how big of a risk because Google's entire business model has been built around these kind of distorted economic incentives. And the internet grew around that, around these distorted incentives, and we get these ridiculous recipe websites.

• 11:08Speaker 01

  And I think that's gone. That's forever going to change, especially you take something like a recipe. The most simple, structured, potentially unchanging piece of information that is a simple answer to a simple question.

• 11:22Speaker 01

  You know, that's the kind of stuff that is, search is going to change. And I think Google, unless they, they're gonna have to rethink their entire business to answer that threat.

• 11:31Alex Kantrowitz?

  Okay, I've already started going to ChatGPT for some of these things. Even asking, like throwing in a bunch of different stances and say, now spit out what this person is politically. It's been interesting. Okay, I, I will recalibrate what I said. Maybe ChatGPT is that threat, but it will take a long time to get there. So I think short term, it's probably gonna look really good for Google. Long term is where the threat is. Let's see how they respond. All right, now let's talk about Netflix. Netflix to me is like one of the most interesting companies going. It crushed its expectation to add survivors, subscribers. Adding, that's what happens on Fridays, adding 7.5 million thereabouts.

• 12:11Alex Kantrowitz?

  They were expected to add four, so almost double expectations in the fourth quarter of 2022, which they just reported on earnings. Now, as that happens, Reed Hastings, their co-CEO, is gonna step down. Ted Sarandos is gonna remain co-CEO. They're elevating Greg Peters, who was their chief operating officer, to co-CEO. And Reed is gonna now go to the executive chairman role. It seems like a complete mess. They've contracted subscribers last year. What, what is happening with Netflix? I mean, how do you read this?

• 12:45Speaker 01

  I, okay, so I will forever give Netflix credit and Reed Hastings credit after, do you remember Quickster?

• 12:55Alex Kantrowitz?

  Yes.

• 12:55Speaker 01

  All right, and not Quibi, we talked about that last week, Quickster, 2011. Uh, I, I still think this is one of the most brilliant, like, I'm gonna say courageous CEO moves where Netflix, he reckoned, Hastings recognized the future is streaming, but we have this very profitable lucrative, but slowly declining DVD business. So I'm going to take an ill-fated, not fully thought out, uh, move to split our businesses. And the DVD business would then be called Quickster, and then Netflix would remain the name of the streaming business. It, it was not well executed.

• 13:35Speaker 01

  But to me, the fact that they they they said, we're betting the entire company. I'm going to stake my reputation. They re negged on it and then slowly phased out the DVD business, but or actually, maybe it still exists. I'm not sure. But I I think like they recognize and all these questions around transformation. What is Google going to do if you see your search business is threatened? But it's still highly profitable and lucrative. How do you make a courageous move to actually build for the future? And I think Netflix is clearly right now. Streaming is in a very interesting place right now, where a few years ago, you know, barely any competitors for them. They owned it. Now everyone has been losing billions of dollars, Paramount, HBO.

• 14:16Speaker 01

  You know, it's just been the the the move has been try to lose and bleed money to just build out content and build subscriber bases. So I think this is going to be streaming is the the most interesting place in business right now. And I think Netflix, I wouldn't count them out, given what they've done in the past. They're able to make these kind of moves and when needed.

• 14:39Alex Kantrowitz?

  Why do you think streaming is the most interesting place in business?

• 14:42Speaker 01

  Oh, I mean.

• 14:42Alex Kantrowitz?

  Because the competition?

• 14:44Speaker 01

  Yeah, yeah, because again, competition is makes things interesting. Look at Google and Chat GPT. So uh, so so so you have, you know, you have the OG Netflix, who also, you know, was just printing money through debt and, you know, like whatever, you know, anyone could get a show on there or an entire series renewed for multiple seasons. Then HBO Max comes in under with the deep pockets of Discovery Paramount Plus is coming in. Peacock is coming in Hulu. I I I I think Disney is now trying to buy out the remainder of Hulu because it was originally a joint venture. Everyone is involved investing. And as a consumer, I mean, I'm sure you might feel it too.

• 15:28Speaker 01

  Even just trying to keep track of every streaming service or know where I can find a specific show or what I want to do.

• 15:34Alex Kantrowitz?

  Even which ones I'm paying for is tough.

• 15:36Speaker 01

  Exactly.

• 15:37Alex Kantrowitz?

  So this would point to the idea that Netflix is screwed because it was valued and it built based on this idea that it would have a monopoly. Not only a monopoly on viewers, but a monopoly potentially on content. Because if you were going to try to sell to a streaming service, it was the one buyer. No longer the case.

• 15:54Speaker 01

  Yeah, but Netflix has been playing this game longer than everyone else and has been gone through multiple cycles of this, whereas, and this is Netflix's business. When Disney Plus, if it starts, continues to bleed money, at a certain point, Bob Iverker might say, well, you know, our theme parts are profitable, is this really driving more tickets over there? Or, you know, how do we factor this in with our ownership of ABC or ESPN? Like, there's a million other, Discovery is a behemoth right now. So every other company has any number of revenue sources that are competing with its streaming services, or at least being held against it, versus Netflix, this is your

• 16:39Speaker 01

  business. So I think I still, you know, who comes out of this, you know, just massacre over the last few years? I think, I still think they could be okay.

• 16:50Alex Kantrowitz?

  Right. And one interesting thing is Netflix has shown it can be profitable here, or the others haven't.

• 16:55Speaker 01

  Yeah, exactly. This is their business. They, you know, they, they have been bleeding money in order to compete. So who will be the last one standing? I mean, I would still give them more of a chance than the others.

• 17:10Alex Kantrowitz?

  By the way, we have a nice number of live viewers here. So thanks to everyone who's tuned in. If you have questions, you can just drop them in the stream and Ranjan and I will get to them as we go. Also, if you're listening and you want to take part, we're gonna, we're gonna do this every Friday. As long as you guys keep listening, we'll keep doing this every Friday at 11 a.m. Pacific time and 2 p.m. Eastern time. So feel free to come and tune in. On LinkedIn, we'll have events, it'll be streamed on my page. And we'd love to have you there. We'd love to have your questions. If you're listening, not only can you expect this on the feed, but you can expect it live during the day. And if you want to stop by, catch a bit of it, catch it all, we're happy to have you. We'd love to have you. So. One more question about Netflix. I just think that the competition, though, is the

• 17:55Alex Kantrowitz?

  real issue. Yes, this is their business, but it's almost unfair because Amazon can lose money on Prime Video and still be happy with the results because of the spillover to retail. Disney can lose money on Disney Plus, but still be happy with the results because of what it will see in the box office potentially, but also what it will see in the theme parks. I just think that it's gonna, it's, there's a reason why Netflix has gone through this tough time. Now it's trying to basically run it's run the company with three people. It's gonna be hard to pull off.

• 18:27Speaker 01

  I will say, the weirdest part of this to me was, they had co-CEOs, and then Reed went up to executive chairman, and then they replaced him with another, the other, I think, I was mistaken.

• 18:40Alex Kantrowitz?

  How do they make decisions?

• 18:40Speaker 01

  Well, that's what co-CEOs usually, I kind of assume is a temporary thing, not when one person leaves, you actually then replace them with another co-CEO. But, again, in terms of the competition, I think this is, this is a competitive market. That's what makes it exciting. That's what we're so not used to seeing, this level of cutthroat competition at this scale, because, over the past decade, in most markets that have been concentrated, that have been monopolistic, that I think that's what makes it exciting. And remember, on one hand, having a cash cow in another part of the business, theme parks for Disney, Amazon Web Services, and funneling that money over to Prime, by the same token,

• 19:25Speaker 01

  the moment one of those businesses exogenously has an issue, that can also stream over to the, their streaming services, feed over to their streaming services. So, so I think it, there's good and bad, but it does not stand alone mean that you have a huge advantage. And I think, again, Netflix, this is their business. This is what they have done for longer than anybody. I think they, I still, I'm, I'm pro Netflix here.

• 19:53Alex Kantrowitz?

  I'm gonna throw one more dart, because there is a view out there that this is a mirage. And that's coming from folks who've said that Netflix work with service providers like Verizon to give away Netflix for a year or something like that. And that helped inflate their subscriber statistics, which is responsible for their stock.

• 20:13Alex Kantrowitz?

  Rocketing up this week. And the thing that is the real interesting part is that they met their revenue expectation, but their subscriber, their subscriber number almost doubled what they were expecting. How do you meet your revenue expectation? But the subscriber number goes up. It does seem like there's some tricks there, doesn't there?

• 20:32Speaker 01

  I saw that too. I think they were, yeah, they met their exact revenue target and then doubled subscriber numbers. So the giving away one year free as a Verizon customer, I agree, there can definitely be some pretty aggressive promotional behavior to juice those subscriber numbers. But is that really different than Apple trying to just inject me with Apple Music every time I open up any device, even though I'm a loyal Spotify customer? Is that different than Disney, you know, like you subscribe to one thing and suddenly I'm getting marketing for Hulu or ESPN plus? I think it's a platform play. It's there. When you don't

• 21:15Speaker 01

  own the entire ecosystem, you have to be creative about your partnerships. I think overall, to me, meeting the revenue target and also for context, this was a messy quarter because they said going forward, they're not going to break out subscriber numbers because the advertising based business. And again, for clarification, Netflix now has an ad supported free tier, or is it cheaper? Or is it free?

• 21:41Alex Kantrowitz?

  It's cheaper.

• 21:41Speaker 01

  It's cheaper.

• 21:42Alex Kantrowitz?

  It's still pretty expensive.

• 21:43Speaker 01

  It's still pretty, yeah, like Hulu, yeah. And so because there's all these different, now there'll be an entire advertising revenue stream, it over complicates how subscriber, what subscribers mean to the company. So they're not going to break it out. So I think maybe this was a last quarter of kind of a messy subscriber number, and that's okay. We'll just look at the revenue.

• 22:06Alex Kantrowitz?

  Yeah. And I thought, I thought the fact that they would stop breaking out subscriber number was another bad sign. Clearly, I'm the devil here and you're the angel of the Netflix story. But yeah, the reason why I thought it was an issue is because you're, you're, you only don't tell people what the numbers are if you don't expect them to be good. That's just sort of my philosophy on this. Your ad supported tier ostensibly will help juice those numbers because you'll churn less. Well, you're not really in the, Netflix had to return money to advertisers last quarter, according to some reports. So you shouldn't be focusing on the subscriber numbers unless you're really concerned.

• 22:40Speaker 01

  Yeah, it's always tough. As a universal rule, hiding numbers either means it's something very good or it's very bad. Again, remember, AWS, we never saw forever. And that's because it was so lucrative and basically funding a money losing e-commerce operation, they didn't want everyone to know that. So yeah, maybe that is a stretch to say there's a corollary to Netflix right now in subscriber numbers. But again, I think revenue is all that's going to matter. And we're going to see. I think to move, to fundamentally transform your business from pure subscription to working in advertising, it's not going to be as, you

• 23:23Speaker 01

  know, a straight line and smooth sailing. Every media company, even you as a publisher, everyone thinks about that. It's not, it's not a simple equation and easy to do. So, so I think it's not going to be easy. But if I'm betting, I'm still thinking Netflix is going strong in a few years.

• 23:42Alex Kantrowitz?

  Ron John Roy is here with us. This is our traditional Friday episode where we talk about the news. This week's episode, tech layoffs, tech shakeups, and Davos. So we've done tech layoffs, we've done tech shakeups. Why don't we do Davos on the other side of this break? This episode is brought to you by App Point. Everyone's racing to roll out AI right now. Co-pilots, chatbots, agents doing real work. But here's the part nobody loves talking about. All that AI runs on your data. And most teams have no single way to see it, secure it, and prove it's under control. That's exactly what App Point does. For 25 years, they've been the trusted layer beneath the world's most demanding data, now extended

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• 24:57Alex Kantrowitz?

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• 25:42Alex Kantrowitz?

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• 25:57Alex Kantrowitz?

  And we're back here on Big Technology Podcast with Ranjan Roy from Margins. We're streaming live on LinkedIn. It's great to see so many people have joined this, joined the stream. Again, if you have questions, feel free to drop them. We'll take them at the end. And now we get into the Davos. So first of all, we have a lot. I feel like there's a remarkable obsession with Davos, and I think it's interesting that all of the global elites gather in this one place. And you can kind of run into them in the promenade. I went last year. I wasn't part of the actual confab, but I was doing some live podcasts off to the side. And I thought it was pretty interesting.

• 26:36Speaker 01

  And as someone who's never been to Davos, tell me, what does that mean, promenade, confab? Can you explain that a bit? Because I just picture people in big winter coats who are important and powerful.

• 26:50Alex Kantrowitz?

  So that's basically what it is. So I'm going to try to pull up the access levels here because I think it's kind of hilarious to describe what actually happens in Davos. But basically, inside Davos, it's called, everyone calls it Davos, but it's really a gathering of the World Economic Forum, which started off as a European business group and then started to move more and more towards social causes. And so that's why you end up having world leaders together with business leaders, and it's a very unique event. Now, not everybody is allowed into the actual conference arena and you need to be accredited for it. And Ben Smith has done a great job in this Semaphore newsletter. By the way, Ben is going to come on the show in a couple of weeks. I'm pretty stoked for that. So just

• 27:34Alex Kantrowitz?

  something for folks to pay attention to. Maybe if you're not a subscriber, then subscribe. We're going to get that up kind of soon. But he's had a great series of dispatches from Davos. And, and so here's the, the access levels. So he takes a picture of the sign, no access for red badges, red stripe badges, yellow stripe badges, affiliate badges, affiliate sessions, support staff badges, and hotel badges. And here's what he writes. There are about a dozen, I think this is Ben writing it, but it's from his newsletter. It's either him or his staff. There are about, there are about a dozen types of badges this year. They include a couple of all access categories, white for participants and blue for forum staff. There's also a Byzantine hierarchy that ranges from orange journalists who can,

• 28:19Alex Kantrowitz?

  who can access the Congress Center, but not attend sessions, to red drivers, to purple for medical and technical staff, orange purple for production staff, brown for AIDS, to white badges, green for other members of the entourage, light blue for forum contractors, and orange hotel badges that just let you into certain hotels. So it's a very hierarchical, structured system where you are able to participate in these meetings with the business leaders and, and the, and the world leaders. And the reason why it's interesting, I mean, of course, there's so much controversy around it that this is like, kind of, it's viewed by the right wing and left wing as like, there's this cabal that meets the plan. And

• 29:01Alex Kantrowitz?

  there's this saying that's been talked about attributed to Klaus Schwab, that you will own nothing and be happy. And basically, people view it as this gathering to ensure that the power structure remains in place. In fact, there's another, there's this great quote from Peter Goodman that I dropped in, in our document here, where he talks, that talks about, he says, more than anything, Davos is a prophylactic against change, an elaborate reinforcement of the status quo, served up as the pursuit of human progress. And Jill Abramson, the former editor of the New York Times, she says, it was and is a corrupt circle jerk. So that's sort of like the perspective.

• 29:39Speaker 01

  Davos is a, Davos is a progress condom, is what we're, we're learning today. Well, first of all, hearing those access levels, I think, like, triggered me more than reading Sam Bankman-Fried's Substack.

• 29:54Alex Kantrowitz?

  There's a reason people hate this thing.

• 29:56Speaker 01

  Yeah, yeah, I, well, to me, starting our conversation today with the tech layoffs, and then trying to connect that, because this whole idea of, you know, like, around the layoff side of things, and look at the technology industry by itself, you know, leadership CEOs soon are Mark Zuckerberg, over extrapolating and being overly aggressive, and now the everyday worker is paying the price for that, and that, that, that distance between the two, and then now that Davos actually has that, you know, ingrained into the actual structure to keep people separated, to keep the highest elite and the CEOs, or,

• 30:38Speaker 01

  you know, like, and it's actually so rules-based and codified, I think, it affirms the idea of prophylactic against change, I think, that should be the new branding.

• 30:51Alex Kantrowitz?

  Right, and there's this, there's all this talk about doing good for the world. So here's another thing that happened that everyone, they always talk about the climate crisis, right, they're talking this year about the polycrisis, and they all fly in on private jets, so this is from, I think Greenpeace wrote this, that talked about how, let me just pull it up quickly, because I feel like it's important to read.

• 31:14Alex Kantrowitz?

  Let's see, last, last year's World Economic Forum, that there was, and this was a muted one because of, of COVID, there was 1,040 private jet flights arrived and departed out of airports, serving Davos, and many of them were short haul flights, and they attribute at least 50% to this meeting, so the folks that are going in and talk about saving the planet are taking actions that are not good for the planet. Full disclosure, I took the train in from Zurich after taking a, a mass flight.

• 31:49Speaker 01

  You have done your part.

• 31:50Alex Kantrowitz?

  Yeah, we also missed our stop, I missed my stop, this is kind of a funny story, I missed my stop, and ended up 40 minutes, the next stop was 40 minutes down the line, so we had like an hour and a half, or two hours, to spend with these two psychedelic entrepreneurs.

• 32:06Speaker 01

  Oh, alright, alright.

• 32:08Alex Kantrowitz?

  Psychedelic house.

• 32:09Speaker 01

  Wait, there was a psychedelic house at Davos?

• 32:12Alex Kantrowitz?

  There was, so, so this is the second part of it, there's this promenade. And the promenade is effectively the street that's next to the place. If you can't get in there, you can hang out on the promenade. And it's nice because it's a small town, so you can actually end up seeing people walking back and forth. And bump into them and say hi, maybe ask them questions, ask them to do business with you. I walked into Paul Ryan one night after some event. And I was just like, usually I'd want to talk to you, but I'm just going to go back to my hotel. Like this has been, it was late night, had a couple of drinks. I was like, all right, this is not a good time to start a discussion here.

• 32:46Speaker 01

  Talk to Paul Ryan.

• 32:47Alex Kantrowitz?

  And yeah, and so that's, that's what, what the promenade is. And it's, it's, it's an interesting thing, but yeah, there's definitely like, you talk about, talk about like the values that they put out there and, and like the actual world we live in, and there's a real disconnect.

• 33:02Speaker 01

  I, well, I do think, but I think it's important right now because I think it really does represent all these hugely critical issues. Again, uh, you know, CEO verse like a, uh, capital versus labor, management versus workers, obviously is becoming, has been a topic over the past number of years and has only been, uh, growing in importance. Environment or greenwashing around ESG and environmental credibility, obviously is one of, one of the other biggest topics in the world. And, and each one of these things, and, and that's why I think to me, the really interesting part is

• 33:41Speaker 01

  no actual words or content or ideas that have come out of Davos, at least for, I'm not even sure is the conference over? Is it still going? It is done yet. I, I don't know what happened. Nothing. I think I saw, wait, did Larry Summers talk about inflation, Fed's got to stay, maybe like the.

• 34:01Alex Kantrowitz?

  You do know about one big issue though, which is globalization.

• 34:05Speaker 01

  Oh yeah. I did see, this is the kind of stuff I love. Uh, actually, so, so there was like a piece on their blog around globalization, global and localization. And now using technologies like digital twins and autonomous robots, you can both be local and still run your supply chains globally. I mean, they got to workshop those a little bit better, I feel.

• 34:27Alex Kantrowitz?

  Right. And also like, what's the point of being local? It's that you spark the local economy, that you have jobs. And that the fact that they're pitching autonomous robots as part of this globalization thing. Just seems so ridiculous.

• 34:40Speaker 01

  Yeah, but, but, but I can, I can feel like, cause I was reading something in a piece, it was like around how it's changed and how now it's like questioning its entire purpose after the globalization is falling. And it was talking about how in 2013, the theme was resilient dynamism. And it was about trying to bring resilience and dynamism back after the financial crisis in the world had stabilized. And then now you have, and I love that word, poly crisis, just cause it's the most, it says everything and nothing at the same time. And I feel, uh, I think as someone who has been in content for a long time or thinks about the words they use or has tried to come up with catchy taglines like this.

• 35:25Speaker 01

  I feel so much of this ends up being just around trying to come up with the next big catchphrase and, and it's just not landing anymore.

• 35:33Alex Kantrowitz?

  Exactly. And I mean, there is, it has effectively become, we talk about all these issues that we talk about. It has become this thing that people hold up and say, all right, we don't trust the elite. And these are some of the reasons. I think their communication is definitely part of it. Their actions are definitely part of it. And let's see, we covered, so we covered globalization, which I'm glad we did, poly crisis. They also talked about this idea of re-globalization, which I think is interesting. I think it's a real thing that's happening where you're going to have come, the globalization. It's so interesting because re-globalization actually means de-globalization. It basically means countries align and, and, and coming into trade agreements, aligning and coming into trade agreements with other countries that reflect their values.

• 36:18Alex Kantrowitz?

  So for instance, moving from China to India, when it comes to supply chain, moving away from Russia to Ukraine. So it's a reshuffling of globalization, not the, the move towards localism, but the move towards partnering with countries. But it's actually really, when you think about it, just this split.

• 36:35Speaker 01

  Yeah. And that, that's actually, that is Davos, that is like the perfect embodiment of what I perceive to be Davos. In that it's actually de-globalization, but somehow putting a positive spin on it and calling it re-globalization. And it's just a realignment. Actually, my favorite word for that, which I kind of, I kind of. I'm not totally against is friend shoring because you've had near shoring, offshoring. Near shoring is bringing things back onto your own domestic economy. Offshoring, we all know. Friend shoring is the US moving or Apple moving from China to India, things like that. So I can kind of work with friend shoring, I think.

• 37:18Alex Kantrowitz?

  Friend shoring, I'll take friend shoring.

• 37:19Speaker 01

  I'll take friend shoring.

• 37:21Alex Kantrowitz?

  Which actually means de-globalization.

• 37:22Speaker 01

  Yeah.

• 37:24Alex Kantrowitz?

  Anyway, I'm glad to have missed Davos this year, although I had a good time last year. I'm glad to have seen it, even though I didn't actually make my way into the Stripe badge type of place. It was, it was fun to be there. It was a great place to do interviews with, with people who I might not normally get on the podcast. Nick like came on at the, at Davos, so. From that standpoint, it's pretty cool as a journalist, but the, there's, I think, real reason to be skeptical of the organization and the, and the, the stuff that they spout out.

• 37:56Speaker 01

  I'll admit, I wouldn't not go.

• 37:59Alex Kantrowitz?

  Right. It's good to see.

• 38:00Speaker 01

  It's still something, but uh, yeah, it's definitely, I remember like 10, 12 years ago, I was working in finance and emerging markets and like, I mean, the, the dream would have been being invited to Davos and speaking at Davos. And that, that I feel is, is long gone.

• 38:18Alex Kantrowitz?

  Yeah, I was going to say after this podcast, I don't know if they're going to have.

• 38:21Speaker 01

  Well, yeah.

• 38:22Alex Kantrowitz?

  Us on stage next year talking about the return of.

• 38:25Speaker 01

  Globalization.

• 38:26Alex Kantrowitz?

  Globalization, but who knows?

• 38:29Speaker 01

  Who knows?

• 38:29Alex Kantrowitz?

  Never know. Got to bring all, all stakeholders in as they might say. So let's, let's end talking about media, very busy week for the media. Let's go, let's go first to the layoffs at Vox and, and now Vice is going to be selling. I'll just say this, as someone who runs a ad, ad-supported publishing business.

• 38:52Alex Kantrowitz?

  I think that this is all residual from the second half of 2022. I'm saying this because it was extremely difficult to sell ads in the second half of 2022. In fact, there was a moment where I said, look, if this was a scaled business and it wasn't just me and some people that I work with, but not full-time employees, I'd be looking to lay off. I'd be looking to cut costs because the revenue just wasn't coming in and advertising had dried up. And I wondered how long it was going to keep going like this. Because if it did, it might be a real trouble for the business. Now, advertising luckily has come back, I think, in a big way in the beginning of this year. And I'm kind of optimistic about the rest of the year, given the way the first quarter has gone for big technology.

• 39:35Alex Kantrowitz?

  So I'm kind of curious what you think here about about these layoffs and what the media industry might be in store for. Now that, you know, it's not just Vox, of course, like that's what happened today. And for for those following at home, they're laying off like something like 7% of the company. But this has been something that's going on across many different publications. Vox, BuzzFeed, of course, is always included in that conversation. Washington Post is having a situation where it might do layoffs. I'm curious what your read is on on this and whether it's going to be a blip for media or this is a sign of even worse things to come.

• 40:11Speaker 01

  I would say, because the names you're, you know, listing out Vice, Vox, BuzzFeed, all the darlings of the mid 2010s, startup media, raising hundreds of millions of dollars, getting valued into the billions, just kind of like eye-popping numbers. I think that world is so long gone that I don't think any of those companies will ever come into what they were supposed to be and still are unfortunately operating at a scale that they, like you said, if you're a scaled business, Q4 last year, even into Q1 this year. You were never supposed to be that big potentially.

• 40:53Speaker 01

  But on the other hand, you know, the Semaphore we brought up, I think there's pretty interesting up and coming media startups that-

• 41:00Alex Kantrowitz?

  But Semaphore, good, good point. They said this week they had raised $25 million and 10 of it came from-

• 41:07Speaker 01

  I know, so they might have to change, alter their cost structures a bit. Hopefully they were a bit prudent going into this. But, but I do, I, I think, I, right now, publishing, advertising is going to not rebound completely the way it was, especially digital advertising, you know, at late 2020, 2021. The same problem that everyone is facing in anything digital, that was started our conversation around tech layoffs. But I think publishing, rethinking the model of what advertising is and how they approach it, a lot of people are getting a lot more creative. And I do think, I think the ones who figure it out, whether it's whatever combination

• 41:51Speaker 01

  of subscription, affiliate fees and commerce revenue, display advertising, even though that feels like it's long gone. I think there, there are people who will figure it out. And let's not remember, forget, you know, Facebook and Apple tracking and what hurt cookie-based advertising. Publishers have an advantage here that the advertising they run is contextual by definition. Your publication has a brand and the ads that the, like you, your pitched advertisers is this isn't some, you know, like purely data-driven cookie-based thing that could be cut off by Apple tomorrow that was what Facebook and Meta depend on. You have a different model.

• 42:36Speaker 01

  So I think people are going to figure it out. But the, the ones, again, you think about organizationally, a Vice or a Vox, that kind of, that stuff's tough. If you're on top of the world and to- Be brought down to kind of reassert yourself. That's, you know, that's like a Harvard Business Review transformation story versus just figuring out a business model.

• 42:57Alex Kantrowitz?

  Most definitely. Maybe instead of journalists, they'll just all employ ChatGPT. I know that CNET was working to have ChatGPT or some other AI write its stories. And this week it ended up having to post a long correction and because there were some serious inaccuracies. So obviously the AI hallucinated itself into the story. And by the way, that's a good moment to plug. On Wednesday, Jan LaKoon is coming on the show. We are going to talk about generative AI. He is a professor at NYU and also the chief scientist at Facebook, a chief AI scientist at Facebook. So we talk a lot about AI hallucinating in particular because Facebook had a program, Galactica, that hallucinated its way out of

• 43:38Alex Kantrowitz?

  existence. But I'm curious what you think about the fact that, that is this a good news for journalists? That CNET tried to have AI write some of the stories and it ended up just being such a disaster. It had to apologize and probably lost some credibility in the process.

• 43:52Speaker 01

  The AI went to the psychedelic house at Davos, apparently.

• 43:55Alex Kantrowitz?

  That's clearly what happened.

• 43:58Speaker 01

  I, uh.

• 44:00Alex Kantrowitz?

  That's got to be the episode title, by the way.

• 44:03Speaker 01

  I, so, so CNET, what they did to me is like the exact nightmare scenario around generative AI and publishing. And, and we started this conversation talking about Google's business model being under threat. And this is exactly a, you know, an example of that where CNET, what, one of the things they were doing is essentially rewriting articles or taking like the top section of an article and rewriting it because the benefit you get as a publisher is you republish, it's technically original content. And from an SEO perspective, it gets juiced up and is considered new content. So they're taking recycling content. For SEO value using ChatGPT, that sucks. That's like the worst

• 44:48Alex Kantrowitz?

  Right.

• 44:48Speaker 01

  user experience. It's not, it's not good for anyone except for them at that moment, but not even their long-term brands, not for the people working there. So, so I do think this is, people need to watch what they're doing and realize it's probably happening more and more in different places. And this stuff, this stuff is getting more urgent. I think it's already, it's happening. It's happening.

• 45:12Alex Kantrowitz?

  Yeah. The one thing I'll say is I'm glad that it turned out so poorly for CNET because it's, otherwise it would have maybe encouraged others to start using AI to write these stories. And it's much better, in my opinion, to have real humans doing it.

• 45:25Speaker 01

  Yeah, but, but.

• 45:26Alex Kantrowitz?

  For the sake of all of us.

• 45:28Speaker 01

  I, I, from the story that came out, I believe it was employees who had leaked this. It wasn't like users were reporting that, you know, this stuff doesn't make sense. This is useless. This is bad content. Cause think about as the average user.

• 45:44Alex Kantrowitz?

  Right.

• 45:44Speaker 01

  This happens. You just go to the next page or you don't even process it. You come across so much bad content.

• 45:49Alex Kantrowitz?

  And the publication that broke them, that that's been all over the news, this publication called Futurism, they made a great point, which is that Google hasn't penalized CNET for doing this. And that is going to be a boon for SEO farmers all over the place, looking for a signal of the way, you know, that they're using AI-generated content to populate pages is gonna, is gonna turn out. So.

• 46:13Speaker 01

  Yeah.

• 46:13Alex Kantrowitz?

  I think it's pretty interesting.

• 46:14Speaker 01

  And that comes back to what is the threat to Google? It's the supply side. It's the idea that the amount of content that's going to, bad content that's going to explode is going to existentially threaten these entire search model that they've built, the business side and the algorithmic side of ranking. So I think this is why I'm. Bullish Netflix, bearish Google, if we're wrapping up the earlier parts of the conversation.

• 46:43Alex Kantrowitz?

  Right. All right, folks, if you have questions, this is our, our real last opportunity to ask them. So drop them in to the chat if you have them. Let's just talk about bad content to end, which is the fact that Robinhood is going to start a new news subsidiary and ostensibly cover financial news. It's being run by Josh Topolsky, who stood up the, I think he was one of the

• 47:07Speaker 01

  The Verge founders.

• 47:08Alex Kantrowitz?

  Verge co-founders. And he's worked at Bloomberg as the head of digital. And now he's going to go run a blog for, well, new subsidiary, excuse me, for, for Robinhood. And what makes it amazing is during the whole GameStop rebellion, he tweeted, literally, Robinhood app just told the world that you can play until someone bigger than you doesn't like the game anymore. Brand suicide. And now he's there working for it, for their content arm. So are, speaking of bullish or bearish, are you bullish or bearish of Robinhood's new content play?

• 47:41Speaker 01

  I am eternally bearish on anything Robinhood, but it's tough because I'm the first person to say, and I, you know, a typical Robinhood user, why not, if they're already going to the app, why not provide them with valuable content to make them stay? It's such a clean thing for a business and it makes so much sense and especially around financial news. It's, it's, it's theoretically perfect. It's a management consultant could come up with that deck and it would sound so good. However, Robinhood's entire problem to date has been everything around the app was designed to make you trade more because that

• 48:22Speaker 01

  is how they make more money. And, you know, the leaderboards, the UX, the, and there's been plenty of backlash around this. So the idea that there's going to be a highly, you know, independent journalistic integrity-driven financial news site.

• 48:41Speaker 01

  I don't think makes a ton of sense, but to their credit, Robinhood, they actually bought Market Snacks. It was a newsletter that was up and coming a few years ago. So they'd made a plane media before. And now the Market Slacks newsletter, it is funny because I think they said there's tens of millions of readers. But everyone who had a Robinhood account was by default

• 49:02Alex Kantrowitz?

  Right.

• 49:02Speaker 01

  opted into Market Snacks, or now it's called Robinhood Snacks. So obviously that's a nice way to.

• 49:07Alex Kantrowitz?

  And the podcast is popular too.

• 49:09Speaker 01

  Yeah, yeah. And again, like you can make pretty good content, but the content will always be heavily by definition have to be buy stocks, buy options, buy everything, because that's the way we, our business is actually going to make money. Is that you're actively trading and feeling good about the market, especially for retail traders. So, so I think that adds such a weird element of conflict to the entire idea of it that, I mean, how it grows and who's reading it? And what they're doing with that information? I mean, I'm curious to see. Again, Josh Topolsky at Bloomberg did some really interesting things. The Verge obviously is still around as one of the, you know, best tech publications. So, so it could be interesting.

• 49:53Alex Kantrowitz?

  Right. We do get some questions. Do you have a couple of minutes to stick around or you got a?

• 49:57Speaker 01

  Yeah, yeah. Questions from LinkedIn on a Friday. That's.

• 50:00Alex Kantrowitz?

  Great. We'll take them. Thanks, everyone who's dropped them in. So first of all, it's kind of a comment from Grant Walker, but let's take it. He says generative AI copywriting is great for ideation and frameworking, but needs a human touch. At this point, at least gaming, the system will pretty much always catch up with you. I totally agree with that. I think that once you, if you rely entirely on these chatbots, you're going to just get really subpar writing. And I know like the person that plagiarized me using AI did a terrible job on their story. And I've actually been like, I don't really know what, how to lead this story off. Let me ask ChatGPT. And, and I mean, haven't been impressed at all about the quality of writing and decided

• 50:41Alex Kantrowitz?

  that humans still have a pretty big advantage over these things as far as like content creation goes.

• 50:47Speaker 01

  Unfortunately though, Grant, try to search for any recipe on the internet and the internet still remains full of subpar content that still, it has its place in the, in the entire ecosystem.

• 51:01Alex Kantrowitz?

  We have another great question from Laura Vestal, who asks regarding the threats to Google, what is your take on the threat to search from social platforms like TikTok? I think this is gonna be the last question we take, but it's a really good one because it it shows that Google is kind of under threat in two ways. One is these people asking questions or doing traditional search queries inside TikTok. And then the chat GPT issue as well. Now, the more we talk about it, the more I'm like, Google has some significant long-term threats.

• 51:32Speaker 01

  Yeah, and actually, that's a really good point because we didn't even bring that up, that TikTok on the actual kind of like content and culture search, Amazon's ad business has been exploding. So like e-commerce and product search, you know, there are a number of other places where people start their search on the internet. And I do think it is, it's a testament to Google search has gotten worse and worse and worse. There's a time I honestly, for most, like anything shopping related, anything trying to get qualitative information, I add Reddit to the end of my Google search because the goal is actually to end up on Reddit and find some thread that's going to give me the right information I want.

• 52:15Alex Kantrowitz?

  Yeah.

• 52:15Speaker 01

  So I'm still, it's starting on Google, but little by little, all of these things, you know, they're getting hit from every side. I think Larry and Sergey, they're back. Hopefully they can

• 52:26Alex Kantrowitz?

  Back in town.

• 52:27Speaker 01

  Figure something out.

• 52:28Alex Kantrowitz?

  Let's end on this, more vulnerable big tech company, Meta or Google?

• 52:34Speaker 01

  Oh, that's a good one. I think if Mark Zuckerberg just tones down the word metaverse, if it just one hint of saying, you know what, maybe we'll maybe

• 52:49Alex Kantrowitz?

  Speaking of the quickster thing, if he changes it back to Facebook and cuts investment down by one billion a year, the stock is through the roof.

• 52:57Speaker 01

  I'm buying everyone. And the thing is their advertising business, and we talked about this last week, it's, you know, at least anecdotally recovering, we'll see in the earnings report, but if all he has to just do is take that one step and say, you know what? I like VR. It was cool, but this is not, we're not going to all be sitting in meetings with helmets on and everyone will be happy. But until then, I still think Meta, given the amount of spending on the, the, what is even the metaverse reality division, I think still is a bit more vulnerable than Google, which is, has a monopoly that's a bit under threat, but Larry and Sergey are back.

• 53:39Alex Kantrowitz?

  So.

• 53:41Alex Kantrowitz?

  Well, Rajan, thank you so much for joining. It's always a pleasure speaking with you. I feel like I always learn a ton and it's fun to go back and forth and the listeners will hold us accountable here. Who's right about Google, who's right about Netflix, who's right about ChatGPT. It'll be fun to keep talking about this week after week.

• 54:01Speaker 01

  Send us your questions on LinkedIn.

• 54:03Alex Kantrowitz?

  Yeah, really stoked that we got some great questions this week.

• 54:06Speaker 01

  I love, if anyone's watching, send us a question next time.

• 54:09Alex Kantrowitz?

  Thank you. So again, we'll do these every Friday, 11 a.m. Pacific, 2 p.m. Eastern, 8 p.m. Central European time, as long as I'm here. So anyway, it's been a pleasure. Thanks for listening. We'll be back on Wednesday with a new episode with Jan LaKoon. Until then, take care and have, have a good weekend. All right. We'll see you next time on Big Technology Podcast.

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