Radio Better Offline: Edward Ongweso Jr. & Allison Morrow

Welcome to Radio Better Offline, a tech talk radio show recorded out of iHeartRadio's studio in New York City. Ed Zitron is joined in studio by Allison Morrow of CNN, Ed Ongweso Jr. of the Tech Bubble newsletter to talk about the AI vibe shift, OpenAI’s burn rate, what will finally burst the bubble, and something called “Critterz.” Allison Morrow https://www.cnn.com/profiles/allison-morrow https://bsky.app/profile/amorrow.bsky.social Ed Ongweso Jr. https://thetechbubble.substack.com/ https://bsky.app/profile/edwardongwesojr.com OpenAI Hopes Animated 'Critterz' Will Prove AI Is Ready for the Big Screen - https://www.cnet.com/tech/services-and-software/openai-hopes-animated-critterz-will-prove-ai-is-ready-for-the-big-screen/ The AI vibe shift is upon us - https://www.cnn.com/2025/08/22/business/ai-vibe-shift-nightcap The Silicon Valley Consensus & the "AI Economy" - https://thetechbubble.substack.com/p/the-silicon-valley-consensus-and-614 YOU CAN NOW BUY BETTER OFFLINE MERCH! Go to https://cottonbureau.com/people/better-offline and use code FREE99 for free shipping on orders of $99 or more. BUY A LIMITED EDITION BETTER OFFLINE CHALLENGE COIN! https://cottonbureau.com/p/XSH74N/challenge-coin/better-offline-challenge-coin#/29269226/gold-metal-1.75in --- LINKS: https://www.tinyurl.com/betterofflinelinks Newsletter: https://www.wheresyoured.at/ Reddit: https://www.reddit.com/r/BetterOffline/ Discord: chat.wheresyoured.at https://discord.com/invite/QUUQUP9szv Ed's Socials: https://twitter.com/edzitron https://www.instagram.com/edzitron See omnystudio.com/listener https://omnystudio.com/listener for privacy information.

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

• 0:00Speaker 00

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• 1:14Ed Zitron?

  Hello and welcome to Better Offline. I'm your host, Ed Zitron.

• 1:28Ed Zitron?

  And we are recording here in beautiful New York City and I have a wonderful pair of guests today. I've had, of course, Alison Morrow from CNN Nightcap Newsletter and Edward Onguoso Jr., the hater himself, from the Tech Bubble Newsletter. Thank you so much for joining me today.

• 1:43Speaker 03

  Great to be here as always.

• 1:45Ed Zitron?

  So I think we should start with exactly what we were just talking about. The OpenAI claims that they have worked out what causes hallucinations. Alison, do you want to go over this?

• 1:54Speaker 03

  Uh, I should have read the paper a bit more carefully, but I could, you know, the highlights were getting digested yesterday on X and Blue Sky. And it seems like it's kind of the test-taking problem of when you encourage students when they're taking standardized tests and you don't know the answer, you guess. And that's exactly how these models are trained and they don't, you don't get a point if you say, I don't know. So you come up with something and the models are. Meant to keep guessing until they get something close to right.

• 2:27Ed Zitron?

  Right.

• 2:27Speaker 03

  So that's why you get a lot of nonsense and hallucinations. And OpenAI, at least in their, their reading of it says, oh, this is a simple solution. We'll just encourage the models to understand better when it's like a binary question. And when you can say, I don't know the answer to that. So we'll see.

• 2:46Ed Zitron?

  I, I read the paper, albeit not today, because my brain just immediately read it as marketing copy. Just put that, replaced it with another anime theme song. I, I went through it and I was like, okay, so it's going to encourage them to say, I don't know. This feels like a very flat view of what hallucinations are though, because hallucinations, as people know them, authoritatively stating something that isn't true. But hallucinations in like a coding model are, it will just say, yeah, I did that. When it didn't, this is very common, you go into the cursor and the Claude code forums, you can see this or subreddits at least. And it's not that they say something that's true, they don't know that something's not true. Also, so they might say they don't know and it's just very silly because

• 3:28Ed Zitron?

  they claim that they're going to fix this problem with this solution, but they've done years and hundreds of millions of dollars of reinforcement learning. Do they unreinfor, do they reinforce it more so that, I don't know. I'm fucking tired of these companies, going to be completely honest. I realize this is kind of cliche for the show, but it's the fact that these things get written up as very serious things, that's just saying, you guys still haven't worked this out. It's kind of frustrating to me. And they don't seem to be, the models aren't getting better, diminishing returns and all that, but this is the best they've got.

• 3:59Speaker 04

  I mean, does this kind of thrust feel like, you know, do you guys feel like it's downstream of the attempts? By some of these firms to say, oh, actually, like if we dial back, uh, the sick of fancy. You know, then we'll be able to have a much more engaging consumer product. We'll be able to have it hallucinate less.

• 4:18Ed Zitron?

  Yeah.

• 4:18Speaker 04

  Do psychosis less, you know. But does it, do they feel linked in that way? Does it just feel like a? They, you know, another, maybe another dead end.

• 4:26Ed Zitron?

  I feel like it's just them trying to work shit out and trying to like it. This also feels like a very rudimentary answer that they probably already had. It doesn't. Anytime someone comes up with an idea that I can, that's technical, I'm like, okay, mate, you cannot be cooking with gas. This is, this cannot be that good an idea. And the thing is, the sycophancy problem I don't think is solvable through solving hallucinations. The problem is, it should stop. It needs to just, it should not say, I don't understand. It should say, no, actually, you sound like you think I'm God King. And that you are God King and that as God Kings together, we will destroy the world.

• 4:58Speaker 04

  Yeah, I mean, I mean.

• 4:58Ed Zitron?

  Which in my case is true, but.

• 5:00Speaker 04

  Do you think like the emphasis or the attempt to overcorrect on that is leading them to go down solutions where they think, oh, like if we just dial back this and that, then we'll.

• 5:08Ed Zitron?

  Yes, yes, actually, I, I think that that's right because they have the, I don't know if you saw the attorney general, attorneys general from Delaware and California sent a letter to OpenAI last week saying, hey, look. If you, you need to fix these safety protocols, you need to actually have them because what you have right now doesn't work and we will block your nonprofit. Otherwise, I was really happy to read that right up until the bit they say, we wish you well with your quest for AI dominance. I'm just like, these are the fucking people protecting us from the, they're like, no, it's great. You want to dominate everyone with AI. It's just you drove some people to a murder suicide situation.

• 5:42Speaker 03

  And wasn't that part of the problem with GPT five is they tried to dial back the sycophancy and then it took away the character and like the humanness that people had gotten attached to in GPT four and earlier models. And like, it all seems to come back to OpenAI doesn't realize that what it's selling often is like a companion and a therapist. And it doesn't, it, it reminds me of like Q tips, you're not supposed to put them in your ear, right? But that's all anyone uses Q tips.

• 6:12Ed Zitron?

  I was gonna say, you're not meant to do.

• 6:14Speaker 03

  Of course not, but like, that's the consumer, that's how the consumer has chosen to use this product. And they're saying like, well, we don't condone that. We don't think it's like the best use of our product. And, you know, we know better than the than the consumer, of course.

• 6:29Ed Zitron?

  I had, I think it's one abstraction high, which is I don't think they know what chat GPT is. I don't, I, the AI booster piece came out last week, but it was, I had this whole thing where it was, it's so, they don't describe what chat GPT does. If you go on the website, like, it's like, yeah, analyzes data and it's, it's brainstorming and charts and stuff. The agent does things too. Please buy it. And then you try and like actually look for any use cases and there's nothing. I think that they're just guessing. But my favorite thing I'm seeing, my favorite thing is that now people are like, GPT four O isn't the same. Cause they brought it back and now people are just freaking out. People are like, no, it's not the same. It's different somehow. It's honest, I honestly don't know if it's true. I just think that they've entered gamer mode. This is just what game, this is how gamers react.

• 7:14Ed Zitron?

  It's like the gun isn't the same. It's literally the same code. No, you've changed something. You've changed, I know. And it's what happens when you release an imprecise glazing bot onto the world. It's also really funny how literally any of these companies could have been OpenAI. There doesn't seem to be anything special about this company at all anymore, or ever.

• 7:33Speaker 04

  Well, you know, I, I mean, not everybody can lose as much money as OpenAI, you know, that feels very special. What have the connections to Masayoshi Son, you know?

• 7:43Ed Zitron?

  Oh my God, I haven't heard from Masayoshi Son in a minute. We haven't had an announcement of him claiming.

• 7:47Speaker 04

  Tomorrow or today.

• 7:48Ed Zitron?

  Tomorrow he's gonna be. I like that he bought a, he bought a Foxconn lab, an old Foxconn lab to turn into an AI server, building place in like Ohio, I think it is. It's like, mate, what are you doing, man? Are you okay? Someone needs to check in on Masayoshi. We need to hold space for Masayoshi Son.

• 8:07Speaker 04

  Yeah, bring him on.

• 8:08Ed Zitron?

  I, I have asked him. I have genuinely emailed SoftBank's PR and I've emailed Anthropic's PR for Dario. I haven't heard back from either. I assume there's an email issue because there's no other reason they wouldn't come on this show. It's just it. Now, I what's fun to watch, though, is considering how many times we've had like AI bubble conversations on here. Everyone seems to be kind of waking up to it. It's kind of fun. Must be clear. Everyone here was early on this. Alison, you were actually very early. You've been early on everything.

• 8:38Speaker 03

  Not as early as you, Ed.

• 8:40Ed Zitron?

  No, I give you credit. You're one of like the three people who, when the metaverse was happening, was actually calling it out. So it's good. It's good to see and hear, but also insane that it's still going. That's what I don't like this OpenAI 115 billion spurned within by 2028, I think it is. I don't understand how people keep publishing this and being like, and that will happen.

• 9:01Speaker 03

  I will say to my relief, the metaverse went away quickly because when it first was announced and I wrote a piece just being like, what? What is that? What? And then like everything about it seemed really dumb in every iteration coming after. And so I was like, oh, okay. I wasn't crazy. But with AI, and I know you can relate to this. I feel crazy because the the lack of utility is is still there and like the absurdity of the investment is still there. And it does seem like that. That's why I wrote about the vibe shift. Like it has been like going in Ed Zitron's favor in the last few weeks.

• 9:36Ed Zitron?

  Fucking vindication finally. But it's it's funny as well because even with that, this OpenAI story comes out and people start like, yeah, they're gonna burn 115 billion dollars. People reported about a month ago that they're gonna spend 30 billion dollars a year on Oracle, starting 2028.

• 9:55Ed Zitron?

  How? How? How? I just, that's what I don't understand. How these articles keep coming out. And I understand that reporters have to report the news and things they have discovered. I get it. But can no one just be like, and no one has any idea where this money is coming from? No one. 30 billion dollars a fucking year from Oracle for servers that are yet to be built and all of this, like, don't need to worry about the fact that the servers aren't actually built and the Apple in Texas is not finished and the money doesn't exist and it isn't obvious how Oracle affords it. They will have to take on debt to build this and Crusoe and primary digital infrastructure have already done that. And I mean, other than that, it could happen any day. I just wonder if the media is actually not prepared for this. And I don't mean in a conspiratorial way. I mean, just in a,

• 10:38Ed Zitron?

  is the media actually set up for companies just lying? Or just projecting?

• 10:43Speaker 04

  I mean, I feel like it reminds me of kind of the relationship that maybe our critics or, you know, our coverage might have. The medium where there's not an inherent antagonism or skepticism

• 10:56Ed Zitron?

  Right.

• 10:56Speaker 04

  Of claims that are being offered and an assumption of good faith that continually gets betrayed or, you know, punished, but gets carried on with over and over and over again. I feel like the the AI bubble discussions that we're seeing, part of me also feels like they are going to disappear the second we start to see some of the firms maybe announce some favorable metrics, even though, as we've been talking about for a long time, right? Revenues are not there, profits are not there. Now, the burn is only increasing, right? And there's no way forward in the short term, or, you know, that I can think of where these companies start to actually do the things that they're claiming they're going to be doing with transforming the world.

• 11:38Speaker 04

  But I can see a scenario where, you know, someone has a favorable quarter for adoption, even though, you know, we just, I just saw yesterday Apollo Global Management was talking about how large firms are actually scaling back AI adoption, which already wasn't even providing returns and was hurting productivity in the first place, right?

• 11:56Ed Zitron?

  It's, and it's really weird as well, because there was that MIT study where it's like, they said 95% of generative AI integrations don't have any return on investment. There are some people critiquing that number, but something that comes out of that study that I really like was it was saying that enterprise adoption is high, but the actual transformation is low because this shit doesn't work.

• 12:14Speaker 04

  Yeah.

• 12:15Ed Zitron?

  And it's, it's so strange. And I think that the only reason that things won't immediately unravel with a good quarter is because the media has chosen to follow a direction now. They've, you've got the, when you've got The Atlantic, the goddamn Atlantic, publishing a story saying, yeah, it turns out that AI isn't really doing much, but it's holding up our economy. It's like, holy shit. The Atlantic's willing to admit something that happened, happened? I didn't even know this was in there. I, I thought that they just wrote up whatever was emailed to them by.

• 12:45Speaker 04

  And don't hold your breath, they just published Mike Solana.

• 12:49Ed Zitron?

  Yeah, actually, I retract all my statements. But it's, I think.

• 12:53Speaker 03

  I think with the media, I see it in political reporting, in business reporting, in tech. There is a deference to authority that, that I think American media, but, but all media have an issue with. And I think that sort of speaks to the underlying economics of being in media right now, where there's a general chill, both economically and politically.

• 13:18Speaker 03

  Reporters are worried about their bylines being out there and getting stuff wrong. And I'm not saying that that's an excuse, but I do think that is an institutional mindset that has taken root, especially in the last 10 years. That's just become like really hard to be a journalist and to do it right.

• 13:35Speaker 03

  But you are starting to see that MIT report was so important because it caused people on Wall Street, authority figures, to say, hmm, I don't know about this. And then that got a lot of mainstream financial media to kind of like do that questioning headline about AI that they maybe wouldn't have done six months ago.

• 13:55Ed Zitron?

  I do like that there's a rumor about the next deep seek model doing agents. I, they're not going to, but even just like if that comes out and they even claim they can, I think that might have a market panic just because they'll be like, ah, China.

• 14:07Speaker 04

  I mean, yeah, I mean, that's, that I actually think there's something to that, right? Because, you know, we did agents here, didn't do shit for Salesforce. Really, the market, did the market even really take a hit?

• 14:16Ed Zitron?

  Oh, no.

• 14:17Speaker 04

  Even though that's the central claim.

• 14:18Ed Zitron?

  And a wonderful story from this information. OpenAI in their, in their whole projections through 2029, they've reduced the amount of money they make from agents by $26 billion.

• 14:29Ed Zitron?

  Why? I want, anyway, so, but, but yeah, it's like this deep seek thing could inspire people to get scared horribly because no one actually believes that agents exist. Because they don't.

• 14:40Speaker 04

  Yeah.

• 14:41Ed Zitron?

  But they think they do, but they will, but they won't. It's this, I, I don't think I've ever actually seen anything like this in tech. I'm going to be honest. It's worse than crypto, even worse than just the general generative AI thing is this concept of agents, though. Because I saw some fucking thing about some, one political blog saying that Donald Trump would do some sort of act, he would do the, I forget the exact thing, but it would be an act that would make AI copyright holders just hand shit over to AI due to us needing to beat China. And it mentioned within, like, yeah, the growing agentic capabilities of AI. It's just, what the fuck is that? I've never seen a tech thing in my life that has not existed like this. And people talk about it like it's real.

• 15:20Speaker 04

  And I think also it's interesting to see the more it doesn't manifest, the more some of the recommendations to make them happen just sound more and more like these are also things that might somehow bend the cost curve in our direction. Maybe we should make the internet unusable to anything other than some of these programs, right? And you know, I'm curious which one is going to give out first, like the really savvy ability a lot of these firms have had in spinning, sputtering, or you know, spinning, you know, a crisis that might drain the markets or deter investors into, oh, actually, we just need even more capital, similar to what they did with DeepSeek. The solution

• 16:03Speaker 04

  is even more compute-intensive models. You know, whether they're going to be able to do that faster than people wising up and saying, you know, maybe we shouldn't misallocate trillions of dollars of capital over the next few years towards this.

• 16:15Ed Zitron?

  But this is the thing, though. I don't think there's anything stopping this because the suggested thing was the, okay, so all of these model companies can steal from everyone, which is what happened already, even with this anthropic settlement. It's not, it's great people are getting $3,000. I love that, but...

• 16:31Speaker 04

  It's also what the companies were offering, similar to what your payout would have been if you said yeah, right?

• 16:36Ed Zitron?

  Yeah, I didn't know that.

• 16:38Speaker 04

  I think like some publishers were offering, or you know, trying to ask authors, hey, if we pay you this, would you be, would you allow your book to be trained on? Or would you allow, you know, be put into a dataset? The payment that you're getting from the settlement feels or reminds me of the amount of money that people are being offered in those sorts of deals.

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• 18:05Ed Zitron?

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• 18:50Ed Zitron?

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• 19:11Ed Zitron?

  I think the thing is, okay, they already steal everything. Well, okay, we need to give them as much money as possible. We've already done that. Are we just going to do this forever? Because even if we do this forever, nothing's going to change, even if I'm completely wrong, and OpenAI keeps going another five years. Um, okay, so we're just going to annihilate $115 billion. There is no, there are no more things here. Like, their projections, OpenAI's projections from the information, their chart, I don't even need to show you this because this is just fanfiction at this point. There is, in 2026 starting, there is this growth of this orange thing that is other revenue.

• 19:49Ed Zitron?

  Who knows what it is? I don't know. OpenAI doesn't seem to, and that's really important because they're gonna make what looks like several billion dollars from this next year. What the fuck is go- e- e- every time I look at this company, I feel a little more insane because they've now lowered their expectations of selling their mo- access to their models by five billion dollars over the next few years. What even is OpenAI at this point? Is it just a rap- have they become a rapper company of their own models? They're no better than Cursor. It's just, it's so weird, and I realize I'm kind of going in circles at this point, but it's... I, even the metaverse, even crypto, even crypto functioned. It was bad.

• 20:28Ed Zitron?

  It's still bad. It is bad cloud software, but it still did the thing. AI doesn't even seem to be doing it, and they need more money to prove that it can't do it, and actually, they don't have enough right now, but they're going to need even more. I don't even know how people are still taking this seriously, because on top of that, did you hear about the Microsoft negotiations over the nonprofit?

• 20:50Speaker 04

  I've, I've been hearing reports.

• 20:51Ed Zitron?

  Well, they, they're delaying it to next year.

• 20:54Ed Zitron?

  They have to, they need to convert by the end of the year, otherwise SoftBank comes their round in half, and everyone's just like, "Yeah, it'll be fine, mate. It'll work it out." What the fuck? Have you, have either of you ever, I know, Ed, you covered Uber a lot. I don't even think the economics match with that either.

• 21:08Speaker 04

  No. I mean, you know, it's interesting because I think Uber's strategy, central strategy from the beginning was, you know, we have a few existing playbooks that we need to reference. You know, the Coke deregulation of the taxi industry in the nineties, as well as regula- deregulatory campaigns that they led. Um, you know, in Seattle, and, and historic campaigns in San Francisco. There, there's a lot that we can reference. And if we can figure out a way to bootstrap ourselves onto the model and onto those previous histories of deregulation. While delaying scrutiny long enough for economics to actually, you know, get to a profitable

• 21:53Speaker 04

  place, we'll get there, which is what they did, right? But even then, I mean, I feel like from the beginning, as much as I hated a lot of the coverage of Uber for years, the people who were always correct about it were like the labor reporters who had actually, who, you know, if you spend time talking to the drivers, that will lead you to be a little bit more interested in the, you know, what can justify the suffering behind this. And then you almost always will see that there's no, at that point, there were no way the unit economics worked unless you subsidize everything. I feel like similarly, there's something going on with artificial intelligence firms in the global AI value chain where if you start with a labor analysis and you look at, you know, invisible workers or ghost workers that are integral.

• 22:38Ed Zitron?

  The Kenyan people training the models.

• 22:40Speaker 04

  Yeah, or labeling or, you know, any, any, any labor that's out of sight, out of mind. You know, then the, you know, starting there and going up, it becomes hard to ask, okay, how are we supposed to allocate all this capital towards a model that as is, is right now, is cutting all these corners for cost and is still burning tens and tens and tens of billions of dollars and is asking for trillions of dollars more. But I don't know, I mean, part of my fear is that they are successful in the way that Uber was, where if you get enough buy-in from military industrial comp, well, you know, for, in AI's case, if you get enough buy-in from military industrial complex, if you get enough buy-in from, you know, social programs and interfacing them and helping

• 23:23Speaker 04

  cut, cutting them or redirect traffic through them, if you get enough buy-in from other tech firms, if you get rents from other startups that need to use and get access to your product. And also if you graft yourself onto everybody's daily interactions, daily lives, the way they interface with the internet, can you actually make it work? Which is also another way to say like, what if you just become a massive parasite?

• 23:42Ed Zitron?

  The funny and grim thing is, is AI is a terrible parasite. Mm hmm. It's not good at it. It doesn't like, because Uber's success came from being able to graft itself on through utility. Yeah. And subsidized pricing that meant that everyone used it. And also cabs kind of fucking sucked. Yeah, I mean, yeah, they they sucked. And also transit in most cities sucks. And I mean. And it's only gotten worse. The inherent colonialism of most technology applies, very good from Karen Howe, of course, Empire of AI, Empires of AI, did an episode, great book. But in this one, it's kind of shit colonialism as well, because they don't even, they haven't found a way to actually exploit in a way that's profitable. They haven't found a way to use human beings, because the fundamental thing they want to do, it's kind of like if Uber,

• 24:26Ed Zitron?

  sometimes you got in the car and you got out at the wrong place. And I don't mean in, like, in a different country. Or you you got into the car and it just exploded sometimes. I'm sound like I'm joking, but it really is that bad. And on top of it, it's not replacing labor, and it's also not the kind of tech that can replace labor. So they're, I, it's my grand theory that they're just playing the hits. They're just, they're trying, in the same way that you you just eloquently put, Uber played the hits of here's how we did deregulation, here's how we did growth, and this is how software grew in the past. I think the AI is trying to do the same thing, and it's bad at it. It's like watching a new class of dipshit try and do what the more evil dipshits of the past did and fail.

• 25:06Ed Zitron?

  In fact, what, these lobbying groups lobbying for AI, I hear a lot of people saying, oh, they're lobbying, they're lobbying. It's like, what for? Oh, no, they're gonna build data centers everywhere. They already do. They're gonna steal from it. They already do. They're trying to replace. They're already trying. Everything that they, that they, everyone's scared of, they already can do other than the doing part. They can't do any of that. I sorry, I just, I just remembered as well yesterday, trying to read that, because I went on the chat GPT pro subreddit, because I hate myself. And I was trying to find someone who'd use the agent, and every post was someone saying, anyone ever use the agent? You got any tips? And everyone's just, it doesn't fucking work. It's it's broken. It's. Actually, here's a good question. Hasn't Ed, have you, can you think of a company that's ever released something just completely broken before?

• 25:52Ed Zitron?

  Because the Metaverse kind of worked. It wasn't what they were promising, but it worked. It was a virtual world-ish.

• 25:59Speaker 03

  I mean, the pharmaceutical industry has a nice, long history of putting out quasi-effective drugs that have all kinds of consequences. And I can't remember who skeeted about this a few weeks ago. It was after one of the, you know, it's become such a genre of the journalism right now about AI, about like, this man became delusional and had a psychotic episode because of his ChatGPT relationship. And it was one of those going around and someone skeet it about how if there was, if this was coming from a pharmaceutical company, it would be recalled immediately. There are real regulations in place that could actually claw that back and help save people's lives.

• 26:37Speaker 03

  But there are no regulations around AI. So we get ChatGPT gods and spiritual awakenings and all these psychotic episodes.

• 26:45Ed Zitron?

  I do think that that stuff is going to genuinely be its downfall though, because right now it's burning more money than anyone's ever burned before. And the most common use case people can talk about is, yeah, it drove that guy insane. That guy went crazy. There are children who just horrifying killing themselves because of this thing. That's what it's getting known for. And otherwise, it's like, yeah, your most annoying friend loves this. Because that really, it's the, you love them, but they're like, I learned about all this and ChatGPT is like, you didn't.

• 27:15Speaker 04

  Well, you know, on that part of also, part of my fear I have is, I think similar to how when firms were rolling out facial recognition surveillance and insisting that we need biometric surveillance to help keep cities safe, community safe, products safe.

• 27:36Speaker 04

  One angle that people used to attack it was, well, you know, like the racial bias of these things will allow them to, you know, misidentify black or brown people more often than not. And they might get arrested. They might get targeted by the police in one way or another.

• 27:54Speaker 04

  And that is why we should get rid of the technology versus we should get rid of the technology. And I think like, I'm curious, you know, how it's going to go, the concern about it inducing psychosis or inducing suicides because I could see a scenario easily where they. Patch together something that looks like a fix. And it's not until later, a year, two or three after there's much, after people are much more dependent. Uh, that other harms come to the foreground, whereas we lose something out, I think. Not to say, you know, not to say or marginalize the fact that it has immense social costs or harm here. But it, it does in some ways remind me of the way in which that debate over facial recognition went.

• 28:39Speaker 04

  And then they, you know, they installed, you know, with quotation marks, the racial bias problem. And now people have more or less accepted that facial recognition is okay, actually.

• 28:49Ed Zitron?

  And you're right.

• 28:49Speaker 04

  As long as it's not racist.

• 28:50Ed Zitron?

  And that's the thing, it's people, I didn't say this as a white bloke, but it's like. People really underplay how endemic that racism is within all algorithms, you know, compass, which is like this. Very, very old algorithm for being like, it's basically Minority Report.

• 29:07Speaker 04

  Yeah.

• 29:07Ed Zitron?

  Both in the reference to the thing, and it reports on minorities in that it says, yeah, this. This person will likely offend again, and that should be, and it isn't a unilateral, the judge has to take it. But what a surprise, it's often used to them, black people, to the, the jail systems because. It's heavily biased against them. And yeah, I somewhat fear L L M's doing similar. Uh, they're probably already doing, and I think that every algorithmic system is inherently racist. There's not enough people running them who actually fucking try, it's inherently biased against women. I think there's also, I wish I had this in front of me, but there's also something about how like. More, there are more fans of generative A I who are male than female, and it's just.

• 29:49Speaker 04

  But do you think it's possible that, you know, they'll try to say, oh, we can solve for the psychosis problem? And then that will undermine a large.

• 29:59Ed Zitron?

  The problem is.

• 29:59Speaker 04

  Angle of the criticism.

• 30:01Ed Zitron?

  How do you solve it? Because it is probably a small, it, it is probably a small scale problem. We actually don't know, and it's not that these companies know or will tell us. But nevertheless, each one is so horrifying. It's this is like the story in the Wall Street Journal. Uh, Julie Jargon, another person there who wrote that. Where it was like a murder suicide, an actual son of Sam Altman situation, which is fucking terrifying that this is happening. I don't know if you can completely solve that. Because all it takes is one popping up again for them to go fuck. And it's also not just a chat G P T problem. There's this woman on TikTok who, uh, she has been saying what Claude has been telling her. And it's like, oh, this is giving me psychic visions, I think it is.

• 30:45Ed Zitron?

  It's also an ult, the ultimate grifter tool. It's just, it's, that's why I think it's taken off so much on social media as well. It's a tool that naturally fits into the grifter's toolbox. I think that I actually have similar fears that they will try and find ways to hand wave away from this. If it was the only problem. But they have so many problems. They have so many problems at this point. But I do also think that people need to remember how racism in algorithms is fairly, it's in all of them. I mean, the, you remember Microsoft Connect? Which literally couldn't see black people, which was a joke in the show Better Off Ted. If anyone watched, that's a great show. It's just, it's insane that, I mean, sadly, it's very obvious why this keeps happening.

• 31:28Ed Zitron?

  It's because the people are predominantly white and male and it's just they can't really. And also you can't really fix this stuff without intentionally building the data, which would require them to spend money on something they don't care about.

• 31:38Speaker 03

  And they don't really understand what they're doing when they go in to tweak these models. They don't know how over correcting or under correcting their being. So they kind of have to just try and then put it out in the world and then wait for something bad to happen. It's funny, it's not funny. It's extremely sad in that journal story that you referenced, which I read twice because I was like horrified. And also the reporting was incredible. It was really, and they said it as this appears to be the first instance of a murder resulting from like, we've seen suicides, but like this is a murder suicide. And when OpenAI responded to the question about.

• 32:21Speaker 03

  Did the, did the bot ever respond to this guy who was clearly having a delusional episode? Hey, you need to talk to a real life therapist. You need to go to the hospital. You need to seek help. And I think they declined to comment. It was like a very evasive maneuver, but like ultimately the journal had seen the one time where the bot said, please go to the emergency room was when the guy, the guy who was having paranoid delusions said, I think my mom is trying to poison me. And the bot said, if you think you've been poisoned, you should go to the hospital and get your stomach pumped.

• 32:53Ed Zitron?

  I also, I, I agree they don't know how to tweak these things, but I must be clear. Worked in tech for a long, 16, 17 years now. And that's not even including, including my games journalism work. It is not hard for them to just have a, just a unilateral thing of, oh, you're talking like this, I'm going to stop. I mean, Anthropic just announced that they have a thing that will cut a conversation, which is good. All of them should do this, but it's, they could, if someone, and the whole thing people I've seen where it should be, if you start talking like, I'm going to do this, I am becoming this. It should say, hey, you sound like you're having a paranoid, like I'm worried about you, you should go and speak with it and just stop working with them.

• 33:37Ed Zitron?

  People will say, well, the way they get around that is by telling the chat GPT window, oh yeah, I'm writing a story. I don't know, do we need them to write a story about that? Do we need, what is the answer? And the answer is they don't give a crap, fuck and no one's make. I really, I genuinely think, cause it's really, it's the same thing with like, um, the same thing with social networks as well. It's, you don't ban every slur the moment someone says it, but I don't know, you have a thing that says, hey, someone said a slur, maybe take a quick look at the slur. And you could probably just ban that person because I'm guessing the most uses of the N word on social media are not used as in culturally sensitive ways. They're probably insanely racist. You just, just cut them down.

• 34:20Ed Zitron?

  It's like, well, we can't, you can't, it's an issue of free speech. Fuck you. No, it's not. It's an issue of free speech when a person can't exist online without racism happening to them.

• 34:29Speaker 03

  Right.

• 34:30Ed Zitron?

  And, and these models, they could stop them, but I do think there is a compelling argument of they really don't know what to do, that every time they touch it, something else breaks. It's honestly, it's kind of the most egregious version of the most common software problem, which is coding is really fucking annoying and we don't know how these work also.

• 34:47Speaker 03

  And generative AI is not going to fix your coding problems, no matter how many times you tell us, Sam Altman, that AGI is just going to fix everything for us.

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• 37:21Ed Zitron?

  That's actually been my favorite thing to do right now is go on the r slash cursor, r slash chat GPT pro, r slash Claude AI. And just looking at people complaining and what they're complaining about is, hey, I keep hitting rate limits. Hey, I keep, it keeps breaking things. Hey, it's, you get one guy every so often who says, I, this has changed my life. And then you see the responses being like, yeah, but that fucked up all my stuff really badly. Doesn't really work. And we have an upcoming episode with a cult Voji about this where it's like, the average software engineer is not just writing code anyway. And so you, this is also, I think, this is actually, this is funny. This is a good, this is a good one to laugh about. So their only real growth market right now is writing code. The problem is writing code requires you to use reasoning models.

• 38:06Ed Zitron?

  Reasoning models inherently burn more tokens. And the way they burn tokens is because they're thinking, they don't really think. They look over what a prompt asks for and goes, okay, what would be the steps to solve this? With code that becomes so, so complex. And the more models reason, the more they hallucinate. So the very product that they are building that is going to save them is also the one that is going to burn more compute. And I, this is a rumor I've, I've heard from a source that like, it can take like four to 12 GPUs for one person's particular, particularly rough coding, like a refactoring.

• 38:42Speaker 04

  That's sustainable.

• 38:43Ed Zitron?

  It's insane. And that's, and that's for one of the smaller models as well. That's for like, um, oh, four mini, which is a reasoning model. It's like, what do you think the big ones are like?

• 38:51Speaker 04

  In the information, they talk about OpenAI having a new eighty billion dollars in costs that they expend.

• 39:01Ed Zitron?

  Yes.

• 39:01Speaker 04

  Over the next three, four years.

• 39:04Ed Zitron?

  Yeah, it's like, it's one hundred and fifteen by twenty twenty nine as well.

• 39:07Speaker 04

  Does a good chunk of this come out of, oh, it turns out like computers incredibly expensive and we want to center our business model around it?

• 39:15Ed Zitron?

  I, I think it's that, and I think it's just, they don't know what else to do. It's kind of like we were saying with the Uber model, they're playing the hits, it's like, fuck, what did we do in the past? We spent a lot of money. Shit, what do we buy? GPUs, I guess? What, may, we train more? They're going to spend so much money on training and it's like, to what end? Your last model was a joke.

• 39:38Speaker 04

  This is why it was, it was really interesting to see that op-ed that came from Eric Schmidt and his research assistant.

• 39:43Ed Zitron?

  Oh, yeah.

• 39:43Speaker 04

  Where he was, you know, Eric Schmidt is someone who was an architect of the idea that.

• 39:47Ed Zitron?

  Forensic of Google.

• 39:49Speaker 04

  Forensic of Google, you know, chairman of national security group that was trying to figure out how to merge artificial intelligence into defense contractors and how to create, you know, foreign policy that would allow America to dominate, you know, really to win in arms race, in AI arms race with China. And he comes away saying, the strategy I basically helped craft, which was that we need to prioritize AGI so that we can get, prioritize AGI so that we can get like a permanent lead.

• 40:21Ed Zitron?

  Hmm.

• 40:21Speaker 04

  To deter any potential rivals is, is scaring everyone, you know, and it doesn't work. It's a waste of capital, it's misallocating capital, it's, it's imposing all these harms. And if we look at the, you know, competitor that we're going up against, against China, by abandoning the AGI pursuit, it instead prioritizing ways to figure out how to experiment with it, integrate with it, build up, you know, build up practical use applications. You know, there's a much more general public acceptance of it, willingness to try it out, adopt it, and we're not seeing, because we're not trying to scale out these massive either monopolies or one size fits all models.

• 41:01Speaker 04

  You see wider, you know, adoption and something that looks like it's a more sustainable model. Are we gonna follow it? Probably not. Of course not.

• 41:07Ed Zitron?

  What I love about chasing China as well is China has had stories for like a year where it's like, yeah, we have a bunch of unused GPU compute.

• 41:15Speaker 04

  Yes.

• 41:15Ed Zitron?

  We're massively overbuilt. They, Joseph Tsai, I think it was, the Chinese billionaire said, uh, yeah, it's a bubble. We have a real GPU bubble. And America's just like, we're gonna need to fucking copy it. We need to beat them. We're gonna, we're gonna run our economy into the ground. We're so dumb. We can destroy China.

• 41:31Speaker 04

  It's like we're saying we're gonna copy them. And what is it that we're actually doing? We're prioritizing developing artificial intelligence that has like a question mark consumer use. That's gonna be used in, you know, killing machines and drones, maybe, and for surveillance purposes.

• 41:44Ed Zitron?

  Even generative AI as well.

• 41:45Speaker 04

  Yeah, that's not even generative AI, but that's where the actual excitement for any sort of artificial intelligence future is. And this is, I, you know, the generative AI stuff is talked about as if it is the future, the transformative future of artificial intelligence. In reality, it's just the actual, you know, the actual interest, excitement, capital is gonna, I think, go back to the center of gravity, which is like, how do we just figure out the shiniest, the most fearsome weaponry?

• 42:10Ed Zitron?

  But I think that what's weird about this is I've, I don't think we've had a bubble that spreads so far into consumers' hearts. I'm, I'm not saying it's as bad as the housing bubble, but consumer software, if we go back to the dot com boom, I think it was like forty five percent of Americans had access to the internet. It was relatively small in comparison, though the massive overinvestment in fiber happened. But I don't think people realize what they see to the chat GPT may not exist in a year or two, at least not in the same way. It's gonna be so, you're already seeing week-long wait, uh, rate limits on Anthropic's Claude. Hmm. Like, do people not realize that this could, I guess they don't realize, and I don't, I think that there's going to be a big dunce mask off. There are so many people who have fallen behind this. I mean,

• 42:55Ed Zitron?

  not to bridge too aggressively into this, but there was a story in the Wall Street Journal that I shared with you, of course, about this movie called Critters. It's with a Z or a Z for my Canadian, UK listeners, where OpenAI will be providing the compute and the tech to do a movie called Critters with a budget of less than thirty million dollars, though it's not obvious whether OpenAI and their computer is part of that. But it's the weirdest shit in the world. Alison, you were bringing this up, but like, they're still using a bunch of humans?

• 43:22Speaker 03

  Yeah, so I was reading the same story and I haven't done any, this came out this morning, so I haven't done my own reporting on it, but I will say from the story I read, it seems like they're hiring two different animation studios with artists and writers working on the script. They're hiring human actors to voice the characters and then some mystery X amount of the movie will be put together with AI. And I honestly don't know how different that is from a regular Pixar or DreamWorks animation process, but it seems like there's, when I first saw the teaser image is very cute and I was like, oh god, they're like, this is gonna be some AI propaganda and it's

• 44:03Speaker 03

  gonna be very cute and hard for me to refute. But actually, it's just a human-made movie, it seems, with an extra computer help.

• 44:11Ed Zitron?

  And this picture I'm holding up, of course, we're listening to a podcast, so you can all see this. It's just this generic blue furry creature.

• 44:19Speaker 03

  It looks like an extra from Monsters Inc.

• 44:20Ed Zitron?

  It really does.

• 44:21Speaker 04

  But it's not, due to copyright law.

• 44:23Ed Zitron?

  It's not the same thing, it's different. But what's funny with that as well is, I was mentioning this as a lead-in, it's that $30 million thing, if that doesn't include OpenAI's compute, it probably costs the same as a Pixar movie. Because you're still like, actually, 3D animation is one of the few other GPU use cases. So really, it's just a different thing running.

• 44:45Speaker 04

  It'll be funny also if they save money because they don't do any marketing and they're like, see how cheap it is if you don't advertise a movie at all?

• 44:52Speaker 03

  I think they might be getting around some Hollywood unions by going overseas.

• 44:57Ed Zitron?

  Oh, really? They're going completely overseas too?

• 45:00Speaker 03

  I'd have to check, don't quote me on it, but I think, I know they were using at least one overseas animation studio, so they're probably saving a lot on the animation process by not paying animators, I would guess.

• 45:13Ed Zitron?

  It's so cool. And also, another fact from the story is, we don't know how long the piece will be. And it's if it's like five minutes long, I'm so sorry, come on.

• 45:21Speaker 03

  Feature length.

• 45:22Ed Zitron?

  Feature length.

• 45:23Speaker 04

  They should make it as long as the silent Napoleon film, just.

• 45:26Ed Zitron?

  Which one?

• 45:27Speaker 04

  Six hours.

• 45:27Ed Zitron?

  Oh, six hours, yeah. Actually, love that. They should be forced to. I don't know how they're gonna do a feature long movie because I don't know if you've cursed yourself by looking at the AI generated movies that people try. Every so often, one pops up on Twitter where it's, it'll be, yeah, I made this entire thing in AI. And you look at the front and it's like a different fucking thing each time. That balloon boy one, different sized balloon, different color balloon. You read the stories about the balloon boy one, it's like, yeah, we, they kept putting a face on the balloon. We don't know why. I just, I, and I know I have a good amount of film and TV people who listen who are quite anxious about this. This doesn't scare me because they're very vague about the details. Every other big tech innovation.

• 46:08Ed Zitron?

  I even, other than the metaverse, I guess, they usually like to show you behind the curtain a little bit and like talk up the, it'd be a big splashy. Story and like MIT technology review or something like that, being like all New York Times be like, oh, look at this, look at that. Look at all things and they're like, yeah, we're just using some people somewhere in the, in a place and they will make it. And in the Wall Street Journal story as well, they showed sketches that would then be turned into AI. I just, this feels like a death rattle far more than something terribly scary. And I understand film TV people are likely a bit scared, but it's like they're using out of the country studios. They're, they're very, of course, I just assume they're skipping union stuff because this is all they do. It's like, this is the best they can squeak out years in? Fucking hell.

• 46:51Speaker 03

  Yeah.

• 46:52Ed Zitron?

  Is this, and it's like a boring looking children's thing, I guess, with a name from two thousand and one.

• 46:58Speaker 03

  Oh, it does have the producers or writers who worked on Paddington and Peru.

• 47:03Speaker 04

  That's right.

• 47:03Speaker 03

  Apparently, so.

• 47:04Ed Zitron?

  What, a movie about a criminal? A sequel to a movie about a criminal who unfairly attacked you. No, sorry, I'm not.

• 47:11Speaker 04

  Well, I mean, then this is the question of, you know, wherein the Uber analogy is this, is this, you know, Uber's failed expansions where they tried different models overseas? Or is this Uber returning home where they take the lessons from overseas? Or they use those overseas thing to buy them a bit more time to then subsidize operations?

• 47:32Ed Zitron?

  Here is my comparison. This is the drone deliveries. This is the drone deliveries. It's the Amazon drone deliveries. Great job, Casey and Kevin several years ago talking about the Amazon drone deliveries. Never fucking happened, mate. Uh, it's hilarious as well because it is the same thing. It's like, we cobbled together this. It sucked. It took so much money. It's horribly inefficient. It sucks. We hate it. You hate it. The customers hate it. We hate, we hate doing this, but we did it.

• 47:56Speaker 06

  Mm hmm.

• 47:56Ed Zitron?

  Ta-da. And it's, okay, well, you sure proved that. To your point, Alison, it's like, yeah, we use the power of AI to hire a bunch of people to do all the real work. Cause you can't trust this to work. It does not work.

• 48:09Speaker 03

  When I saw a headline for an AI movie, I was like, it's, it's gonna be awful.

• 48:13Ed Zitron?

  Yeah.

• 48:13Speaker 03

  It's gonna like, writing a movie is hard.

• 48:16Ed Zitron?

  But wait a minute. Also, there's the other thing of, oh my God, how are they gonna lip sync this shit? How do you lip sync this? You can't generate, you can't generate the same frame.

• 48:26Speaker 03

  Hmm.

• 48:26Ed Zitron?

  How are they gonna, are they gonna go in and post edit it with humans, I assume? At this point, how much you actually relying on AI for?

• 48:35Speaker 03

  It's very unclear.

• 48:37Ed Zitron?

  It's just, it, it all feels, it feels like being at a party where everyone's pissed themselves.

• 48:41Speaker 03

  It does feel like some next level, like young propaganda.

• 48:46Ed Zitron?

  Yeah.

• 48:46Speaker 03

  Like if they can get kids to enjoy whatever this monstrous movie is going to be, then maybe there's like a longer term brand play for OpenAI as a warm and cuddly, safe for children.

• 49:00Ed Zitron?

  The thing is, French and Korean companies have already been, already been doing slot based 3D shows. I don't mean the famous one from, I've, uh, K-pop Demon Hunters, which is apparently very good. I've not watched it.

• 49:12Speaker 03

  Haven't seen it yet.

• 49:13Ed Zitron?

  Please don't kill me. I'm not attacking that. I'm talking about, there is a gluttony of like very cheap kids, 3D kids shows, and they've been around for decades. Cause you can do this shit on the cheap now. You've already, another thing where the Uber model made sense as long as you didn't count the cost, which is, yeah, this is a way of getting people around that they become dependent on because it's useful. This is like, we have found an extremely expensive and annoying way to do something that we already have a cheap alternative to do. It's not like there was a cheap, a cheap, reliable cab service that Uber replaced. There was a slow shit cab service that Uber replaced everywhere. And it's like, is it a good company? Uh, is it horrible to workers? Yes. But does it work? Yes. This is, we're gonna automate everything with the power of AI, other than labor.

• 49:58Speaker 03

  Hmm.

• 49:59Ed Zitron?

  Other than stuff.

• 50:01Speaker 03

  That's where the AI story starts to overlap again with crypto, where at least. With Uber, you understand what you're getting as a consumer.

• 50:10Ed Zitron?

  Yeah.

• 50:10Speaker 03

  And then with AI, you're kind of like, I don't really know what this is. I don't know what, what problem it's solving. It's like a solution in search of a problem. And that was crypto's same bag is just like, oh, we, we invented this cool new alternative money system. Why?

• 50:28Ed Zitron?

  The thing is with crypto is they always had a plan, which sucks. I really should have seen it coming. I was not smart enough at the time. It was, they always wanted to just get embedded in the financial system and then just turn the funny money into real money. AI doesn't have that. There is no way to turn this into new, like, you can't just generate new money. That's what crypto did and it fucking sucks. And by the way, the next crypto crash is going to wash out some real, like, it's gonna really fuck people up. I don't think people realize that SPF two, who at this point might just be SPF. Like, if he just gets pardoned and comes back. Honestly, if he comes back and does it again, no one, no one can complain.

• 51:03Speaker 04

  I'm going to law school. I'm gonna go into hyperbolic time chamber. I'm gonna join the fight just so I can, so I can put him in cuffs.

• 51:09Ed Zitron?

  You're going to put Sam Bankman-Fried back in cuffs.

• 51:12Speaker 04

  Yes.

• 51:12Ed Zitron?

  Oh, Sam Altman freed would be good. It's, it's just, I don't see an endpoint for this. I don't see everyone's, even the boosters at this point, they're like, and then it will be powerful. When, how, what are you seeing that even tells you this? I don't even want to fight, just tell me.

• 51:29Speaker 03

  I do think there's so, there's just so much money behind it. And there's so many people who've invested. I was listening to a VC guy get interviewed on the Odd Lots podcast, and I can't remember his name, so I apologize. But he was talking about how all these founders, like all these smaller startups that are getting in on the AI game. All these founders have kind of been raised with this idea of Silicon Valley and what it will bring you. And it's life-changing amounts of wealth. And when you have enough people, and like the VCs are part of that, the, the actual tech startups are part of that. Stanford and like kind of the whole ethos of the of the valley is like, if you just keep going and work hard enough, you can have generational wealth.

• 52:13Speaker 03

  And that is a very powerful force. And I feel like I think we're going to be seeing AI kind of hype last longer than we have in other previous bubbles and tech cycles. In part because the the potential for the wealth is outstanding. And it's like nothing we've ever seen.

• 52:31Ed Zitron?

  But that's the thing. You're completely right. Except AI has one problem, which is all the companies lose a shit ton of money. And no one's selling, no one is buying. There's been like three acquisitions. There's one to AMD, one to Nvidia, one to a public company called Nice, which sold a customer. It was an AI cognitive, I think they were called. It was like an AI customer service thing either. Never really seemed that good anyway, but that whole thing is true. And I think that that's what people are. And I think that the myth of you can just use AI to spin up a startup quickly as well. Has kind of gone into, has kind of fueled that mythos as well. But the problem is, this is so different because the whole point of Silicon Valley, the whole thing where you can just move there and start a startup is because

• 53:12Ed Zitron?

  it didn't cost ruinous amounts of money to start one. You didn't get $3 million from a VC and expect to spend two and a half million of that on compute. You were like, okay, we're gonna, we're gonna have to bootstrap a little bit further. We've just got a little bit of venture capital. We're gonna go this far. This is like every step of the way this cost increases massively. It used to be it was sales and marketing and just people. AI is people plus compute plus marketing plus this plus that. I think, you know, perplexity, the AI search engine spent 164% of their revenue in 2024 just on compute and AWS. Like, it's like, this is not, this whole generational wealth thing.

• 53:54Ed Zitron?

  I I fully agree. It's what they're using to sell it. I just don't think it's gonna work. And it's scary because this could have the wide thing, and I really haven't talked about this enough. The wider problem is as well, is all of these people who went to Silicon Valley, raised all this money, or have pretty much raised to sell companies that will never sell, that they can never take public because they burn too much money. They don't really have great user bases because LLMs don't really have those. And so they're just gonna sit there and then you've got a bunch of VC money tied up in that that will never exit and a bunch of limited partner money that will never exit. I think that there is an entirely separate bubble building. That when that burst is going to, the depression within Silicon Valley is going to be insane. It's already pretty gnarly.

• 54:37Ed Zitron?

  But I think it's like thirty three percent of venture capital when it's AI last year. It's like. Eventually, people are gonna realize there's no exit for anyone. And I I don't know what that does. I mean, I don't. It will piss off limited partners. It will, the money that comes to VCs is just not gonna be there.

• 54:53Speaker 04

  Well, so then that's the, that's the question, right? Because venture capital encourages on one level overvaluing because you need to figure out a way to make more money than what you put in on the exit within acquisition or some merger.

• 55:08Ed Zitron?

  Yeah.

• 55:09Speaker 04

  But on another level, you're also working within a network trying to enrich yourself and your friends. Or trying to build the infrastructure for future startups, portfolio options that you and your friends make to come in and make money.

• 55:24Ed Zitron?

  Yes, building a platform that other people can invest in bits of.

• 55:27Speaker 04

  And so, you know, on one level, I really, I really do, I agree that there's not really much of an exit ramp if there's actually no revenue and no profits. But then also, I would, I'd be curious, like, do you think they're gonna try to ram these things through similar to like what we saw with Corey Weave, right? Where, you know, like you, you talked, I think extensively about. Ways in which the financials there do not actually make sense if you're interested in a company that actually has the capital to do what it's going to say it's going to do, which is provide GPU compute to everybody. And even though it has such a central role in this ecosystem, it can't make profits that are, you know, that justify the capital that it's getting.

• 56:07Speaker 04

  It has odious and burdensome debt that should be a massive red flag and it might be, you know, round tripping, right?

• 56:14Ed Zitron?

  Yeah.

• 56:14Speaker 04

  But this is supposed to be like the darling of the sector and it and it got pushed through, part of me feels like because of.

• 56:21Ed Zitron?

  I mean, Nvidia and Magnetop and Magnetop Capital, of course, famous for the CDOs.

• 56:29Speaker 04

  Yeah.

• 56:29Ed Zitron?

  Right. They're back. But with Core Wave, they pushed it through onto the markets, but that doesn't mean it can't die.

• 56:36Speaker 04

  Right. Well, so that's the thing. Do you think that it's possible that they'd be successful in pushing it onto markets, but it dies? Because I do.

• 56:42Ed Zitron?

  Yes.

• 56:42Speaker 04

  I feel like there will definitely be a lot of investment in Cinderation, but I also do think we're going to have bags dumped on everybody.

• 56:48Ed Zitron?

  I think you could do it with something like Core Wave and Lambda, which is another situation where Nvidia is the customer invested and also sells them the GPUs, which they then use as collateral to buy more GPUs using debt, which is so good. You'll notice that there are no software companies going public. There's no software AI companies going public. Everyone thinks that OpenAI goes public here and, oh, they'll go, the market's going to, if they can even convert, the market's going to eat them for dinner. Oh yeah, we're going to burn bazillions of dollars forever. No, they, the markets didn't like Core Wave either. Core Wave wouldn't have gone public had Nvidia not put more money in. Lambda is probably going to be exactly the same if they even make it. You won't see software companies because that's the other thing.

• 57:32Ed Zitron?

  Core Wave had, albeit bunches of debt, assets. They have data centers kind of through Core Scientific. God, I hate these fucking companies. But they don't, they have things that they can point to and relationships. Even OpenAI, that's the thing with them. They don't, they barely have assets. Oracle is building their data center in Abilene with Crusoe. They don't own any of the GPU. They have a few GPUs, I think, for research, I've heard, but Microsoft owns most of their infrastructure. They don't own their R and D. Well, they do, but Microsoft also has access to that. They're intellectual property, same deal. So it's like, what actual value does an AI startup have? And people always say, oh, they're getting the data. They get the data so that the data will tell them. It's like,

• 58:14Ed Zitron?

  what? It's all these horrible stories about like, oh, Doge has got an LLM they're doing this with. What's the endpoint? It's scary. Don't get me wrong, but and then what? And there never is one. And I, I hope someone, I hope an AI software company goes public. I want to see this so bad. I want to see you have any, if you give me the OpenAI books, the Anthropic books, you become the official homie of Better Offline. I'll mention you on every episode. Get me, get me these books. But, because I think all of them are going to be like a dog's dinner. There's, I've actually looked at the markets and Uber, Uber, by comparison, they did burn a shit ton of money. It's like 25 billion between 2019 and 2022. A lot of that was on sales and R and D. It's pretty much Groupon. I think also their R and D with autonomous cars, but separate problem. But it's like, there

• 58:59Ed Zitron?

  wasn't a, I can't find an example of someone that just annihilated fuel, unless it's like planes. And I think we've established the use case for planes by now. Clear.

• 59:12Speaker 03

  Sold.

• 59:13Ed Zitron?

  It's, it's just, it's all very frustrating. But you know what? I think I'm going to call it there. I think we've had a good conversation. Alison, where can people find you?

• 59:20Speaker 03

  You can find me on Blue Sky at Amaro or on CNN.com slash Nightcap.

• 59:27Ed Zitron?

  Ed?

• 59:28Speaker 04

  You can find me on Twitter at Big Black Jacobin. You can find me on Blue Sky on Edward Anguissa Jr. And on Substack at the Tech Bubble.

• 59:38Ed Zitron?

  And you can find me, of course, at Google.com. Just type in Prabha Gargavan. You'll find me. I pop right up. That's all me. Thank you so much for listening, everyone. This, my episodes are coming out in a weird order because I'm recording this knowing there's a three part of this week, but this will come out with a monologue of some sort. Thank you so much for listening, everyone. Of course, Bahid, thank you for producing here out in New York City. And yeah, thanks, everyone.

• 1:00:07Ed Zitron?

  Thank you for listening to Better Offline. The editor and composer of the Better Offline theme song is Matt Osowski. You can check out more of his music and audio projects at mattosowski.com. M A T T O S O W S K I dot com. You can email me at [email protected] or visit betteroffline.com to find more podcast links and of course my newsletter. I also really recommend you go to chat dot where's your ed dot app to visit the Discord and go to r slash better offline to check out our Reddit. Thank you so much for listening.

• 1:00:39Speaker 07

  Better Offline is a production of Cool Zone Media. For more from Cool Zone Media, visit our website, coolzonemedia.com, or check us out on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts.

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• 1:02:13Speaker 09

  Oh my gosh, you can't be serious. You think making the pick is the hard part? No, it's not. The pick takes like three seconds. You know what's hard? The sweat. The time between locking in and cashing out. Yeah, you have a take, but in the end, it's not about the winners or losers. This is about us, man. Whether we're brave enough to sit through it. Don't fight the sweat. Live in it. Because you are an underdog. Underdog. Unleash your dog. Terms may apply.

• 1:02:43Speaker 08

  This is an iHeart Podcast. Guaranteed human.