Anthropic’s Mythos is Back, OpenAI Releases GPT 5.6, Apple’s Price Increases

Ranjan Roy from Margins is back for our weekly discussion of the latest tech news. We cover: 1) Mythos is back 2) OpenAI releases GPT-5.6 to a small group 3) Should the government pick winners? 4) Is this a blessing to open source AI? 5) Is the gating of frontier models bad for these companies businesses? 6) Frontier lab customers are finding cheaper ways to do business 7) There's a bunch of overbilling happening in opaque AI systems 8) Is SpaceX's valuation frothy? 9) Apple's price raises: Greed or not? 10) Apple's impact on the memory space 11) Rest in peace, Om Malik --- Enjoying Big Technology Podcast? Please rate us five stars ⭐⭐⭐⭐⭐ in your podcast app of choice. Want a discount for Big Technology on Substack + Discord? Here’s 25% off for the first year: https://www.bigtechnology.com/subscribe?coupon=0843016b Learn more about your ad choices. Visit megaphone.fm/adchoices

• 0:00Speaker 00

  Mythos is back and OpenAI's most powerful model, GPT-5.6, is out too. But will the public ever get to see either of them? And Apple hikes prices massively to keep pace with memory prices. Is it greed? That's coming up on a Big Technology Podcast Friday Edition, right after this. This episode is brought to you by Genesis. What does it actually take to put a Gentic AI to work across an entire enterprise? I recently spoke with Genesis Chairman and CEO Tony Bates about why orchestration is emerging as a competitive advantage in customer experience and what companies need to get right in the AI era. Then I sat down with Adam Mitchell, Head of Enterprise Business Solutions at Voya Financial,

• 0:41Speaker 00

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

• 1:20Speaker 00

  Welcome to Big Technology Podcast Friday Edition, where we break down the news in our traditional, cool-headed, and nuanced format. We have a great show for you today, coming a bit later than usual, but we are here on the feed. We're going to talk about the return of Anthropic's Mythos, the debut of OpenAI's GPT-5.6. OpenAI, by the way, may be delaying its IPO to 2027, or maybe it won't. We'll discuss that. And Apple hikes the prices up on MacBooks and other devices by anywhere between the teens and 30%. So we'll talk about what's behind that, the memory crunch that's underlying a lot of the price increases you might see in consumer electronics, and whether it is unavoidable or, as some might say, greed.

• 2:04Speaker 00

  Joining us as always to do it is Ranjan Roy of margins. Ranjan, great to see you.

• 2:08Speaker 01

  Great to see you, Alex. Is, uh, are you on the Mythos list out of the 100 US institutions, major companies and government agencies that now have access to Mythos?

• 2:19Speaker 00

  I am not. If the government is picking winners and losers, then I am without a doubt a loser. So let's go through the headline here. It's something that we have breaking as we speak. "The US Releases Powerful Anthropic Model Mythos to Some US Companies From Semaphore." The US government Friday lifted its block on Anthropic's powerful Claude Mythos 5 AI model, allowing the company to release it to more than 100 US institutions, including major companies and government agencies. The decision in a Friday letter sent to Anthropic is a major de-escalation in the confrontation between the Trump administration and one of the world's most valuable private company. The letter is silent on Fable 5, a weaker version of Mythos

• 3:01Speaker 00

  that was briefly the most powerful AI model available to consumers. People close to the talks said they are moving toward releasing Fable as well, though the timeline is unclear. Howard Lutnick, the Commerce Secretary, has given his stamp of approval. Well, Ranjan, it looks like this, uh, long outage of Fable is about to end and, uh, so ends the saga. I don't know if we have any details about whether there've been actual structural fixes or whether the guardrails or the anti-jailbreaking, uh, guardrails that the US government has asked for are there. Uh, what do you make of the news?

• 3:40Speaker 01

  It's, for me, the most difficult part of trying to process all this is, I mean, more on the overall regulatory landscape of who has control of what and when. I think, uh, I mean, we've talked about is Mythos more marketing and fear mongering, or is it a true danger to kind of the global structural order? And I don't know, it's like, do you feel that the government is actually, has any real plan around how they're approaching, dealing with Anthropic now? Like, it looks like, this just feels like an extension of what originally Project Glasswing was, whatever that was, 20 to 30 companies now we're at 100.

• 4:22Speaker 01

  But I don't really understand where this is going or what's fundamentally changed.

• 4:30Speaker 00

  Right, well, it does seem basically, you know, when you take it in combination with this week's OpenAI news, that the government has installed itself as the approval of frontier models. And I think we should talk about the implications there. Let's get into the OpenAI news, because I feel like it really couples together with the Anthropic news. So this is from a blog post from OpenAI previewing GPT 5.6 Sol, a next generation model. Today, we are beginning a limited preview of the GPT 5.6 series Sol, our flagship model, Terra, a balanced model for efficient, high-volume work, and Luna, a fast, affordable model for everyday work. I'm just gonna pause here for a moment. They're calling their two or their three models Terra and Luna? Isn't that the like, the worst branding mistake ever made?

• 5:15Speaker 01

  Thank you. That was the first thing that just jumped out dramatically to me. For listeners who don't remember, those were the names of cryptocurrencies that crashed dramatically, one by 99.999%, the other by Terra by 98%, and Terra was a stable coin as well. These were kind of the poster children for the crypto fallout from a couple of years ago. So like, why, I mean, I'll take that over Spud, I guess, their code name, but how do you think they came up with those names? All of them, actually?

• 5:53Speaker 00

  I think they were trying to find some version of like, the Anthropic Sol, or like, a version of a story, like a sonnet and an opus and a fable. So they were trying to make their own with these Earth and Space Celestial nicknames like Terra, Luna, and Sol. They're obviously like, they have, are wide open to the fact that Anthropic has beat them on branding. But I would just say, for goodness sakes, don't use Terra and Luna.

• 6:21Speaker 01

  Read the room, guys.

• 6:23Speaker 00

  Read the room, my god.

• 6:24Speaker 01

  Please.

• 6:25Speaker 00

  And it's not only that they crashed, it's that, and correct me if I'm wrong here, it was a scam, right? It was a scam that basically got everybody to invest in these two, thinking that they were stable and people lost their shirts. That's why I would stay away from that naming.

• 6:40Speaker 01

  Yeah, don't actually now that you did explain it to me, it didn't jump out at me. The whole kind of like earth, wind, fire, space type stuff. Maybe I am feeling it a little bit separating out the cryptocurrency association of actual full scale fraudulent scams that had a lot of people lose a lot of money. Maybe I am liking it a little. I don't know, maybe I'm liking a little bit. Maybe we're trying to appeal to a non cryptocurrency crowd and really try to get to something a little bit more memorable. I don't know, I've just gone too undecided from net negative on these names.

• 7:23Speaker 00

  Well, I'm still against, but I suppose it's better than harness. Okay, so let's talk about, let's get back to our main story here, which is that here's what OpenAI says in its blog post that the, the release of this model is going to be restricted at first. We believe in broad access, but we are starting with a limited preview for a small group of trusted partners whose participation has been shared with the government before releasing more broadly during this preview, we will continue testing and coordinating closely with the partners as we work toward broader availability. We don't believe this kind of government access process should become the long term default. So obviously they saw what happened with Mythos and Fable. They don't want a repeat of that. So they're kind of letting the government handpick the customers that they're able to work with and those they can't.

• 8:10Speaker 00

  We're going to get into the model's capabilities because it does seem pretty impressive, but I think the release, the way that it's being released is even is more important at the moment.

• 8:20Speaker 00

  Obviously there are implications here, right? If, if companies or countries cannot rely on their, their ability to access frontier AI from US foundational model companies, they will rush toward open source. They will rush towards other solutions. They, they may, you know, not, they may be slower to go to these more expensive frontier models, which means the ROI and the incentives to build them will be less. And therefore we're now at a point where. I won't say the entire business model is in question, but given the stakes and given the money that's being raised, maybe it is.

• 9:00Speaker 01

  Well, hold on, let's take, let's separate out. I think there's like a few different parts of that statement. The first part is, I guess, like on the, or actually on the business model question, let's remember that it was Anthropic that raised the flag and the concerns around this and basically invited the US government to bring this up. Now it feels like this is becoming the default American rollout, like regulatory model for any kind of frontier model, but it was the lab itself that pushed the narrative. OpenAI

• 9:38Speaker 01

  obviously appears that it's following it, but do you think not releasing a frontier model to like a full-scale audience is necessarily a bad thing? Do you think like the most qualified, responsible people and companies should be the ones that start testing it and pushing its limits first?

• 10:01Speaker 00

  Yeah, well, we've gone back and forth in this. I mean, I have in the past said, okay, maybe this is the right strategy to if you think that this thing can be this powerful, then maybe you should be careful with your release. So I understand I've said that here. But the other side of it is that like you, you know, you could end up in a situation where the government and the companies really pick the winners and losers in this space. And from a business standpoint, maybe they're able to charge a lot more, right? So the initial preview of Mythos was quite expensive. And actually, the preview of GPT-5.6 is about half the cost of the, of Fable. So that's interesting. But yeah, I think

• 10:43Speaker 00

  that like from a business standpoint, there are second order effects here. And I think more broadly, there's concern.

• 10:52Speaker 00

  To me, that if we're going to go into this moment where there is this, you know, government picking winners and losers situation that you could end up, yeah, you could, you could end up with a more controlled economy, right? Like, there have been people on Twitter talking about how like, the US is much more top-down on AI than even China is today. Here's another tweet that I thought was interesting. Someone wrote, "I'm afraid we've entered a dark era in AI model development and access." And somebody else quote tweeted them and wrote, "Breaking: Member of the permanent underclass left shocked after finding out the permanent upper class is invite-only." So I imagine that this moment is going to pass, but certainly there's like some worrying precedence here if it continues.

• 11:38Speaker 00

  Your thoughts?

• 11:38Speaker 01

  Well, I, I guess I've found it a bit, the whole phrase winners and losers and the government picking them, because that is how the administration has essentially worked for the last, I mean, for especially in this second term. And it's, it's just coming down on, I think, a faction that has kind of like, screamed for libertarianism for a long time. But even though like when, you know, when it's who gets to buy TikTok? Or what, any other decision? Or how does Stargate roll out? Or, you know, like all of these things, the government and the administration have been pushing. So it's just kind of taking the same approach to frontier labs in my mind.

• 12:20Speaker 01

  And I don't know, I guess I have not been surprised at how things have been playing out at all. I don't think it's a good thing. I, I, I do agree that overall, like, especially like vis a vis China and how things are playing out overall across the entire global AI landscape. I think it's a very bad thing, but I guess I'm not as surprised as a lot of VC Twitter seems to be.

• 12:46Speaker 00

  Yeah, I wouldn't say surprised is the reaction I'm having, but you know, it's important. I think it's important to talk about the problems that could lead down the line, both in terms of like, all right, if this is the new process, then certainly you're at a much greater disadvantage if you aren't able to use these models and your competitors are, right? So who gets to decide that, right? I don't think that's, you know, the free market that the US needs. Then the other side of it is, do you end up playing into the hands of your competitors? This is an interesting thought from Aaron Levy, and we've kind of touched on this, but it's worth talking about. If the US remains at the frontier at all times and has heavy regulation on the release of intelligence, then we end up with an economic and geopolitical edge

• 13:29Speaker 00

  because we can control who has access to frontier intelligence. However, if we delay model releases and another player, specifically China, doesn't slow down and has equally strong models, not now, but soon, then our delays end up advantaging their models and eventually their tech stack. And we've definitely seen conversations recently about how, you know, we're moving from people using a frontier model to using model routing, using more open source models. And I think this kind of goes to your point, right? Like, if you think the harness is the big competitive advantage now, and not the underlying model, then you could end up with this type of policy sort of icing out

• 14:12Speaker 00

  the frontier labs and having a lot of the benefits of this AI moment go to open source in China, which who knows? I mean, if there's a robust open source AI availability, then that could be really good in a lot of ways. But you also then sort of lose your ability to control on the safety side of things. And that's why you have people talking this week about banning open source models, which I don't think would be good either.

• 14:38Speaker 01

  Well, I think let's dig into that a little bit. Like, to me, they are two separate issues because especially a lot of the stories you're hearing about or work that's being done, or even what I've been seeing kind of like with customers on the front lines around exploring open source models. A lot of that is more around cost and like what models are actually suited to what tasks versus the idea that anyone is going to use Mythos or Fable for a lot of the work that's being routed now towards open source. So I think like, The cost driver, which we'll talk more about, is more of a factor rather than the regulatory

• 15:20Speaker 01

  side. But I do think like, because we have to remember, like, the most state of the art, cutting edge, frontier model, that's really about whether it's, you know, finding tons of security loopholes, or like pushing the boundaries of science, scientific innovation, like, I don't know, like, that, that, that kind of work is still, to me, very different than what we're hearing about on the open source side.

• 15:51Speaker 00

  Right. But, I mean, that's because the open source models have trailed in capabilities. But it could end up, I mean, this might have happened, whether we see the regulation or not, right, that the open source models will not only be cheaper, but they can start to rival.

• 16:07Speaker 01

  It's happening.

• 16:07Speaker 00

  They can start to rival in capabilities. And, and that, that really, I mean, especially now, as these companies head towards IPO, it really makes you wonder, and I did try to speak with Brockman about this a little bit, when he was at the AI summit, but like, makes you wonder, like, if you have a model that's closed, and is the equivalent of like 15 PhDs, and has good EQ, and can do stuff, get stuff done for you, then you have an open source model, right, let's say, a couple of years down the line, that's like the equivalent of 12 PhDs, and has decent EQ, and will still get things done from you, then like, what is the competitive advantage for the frontier models versus, versus, you know, the open source if they all get that smart?

• 16:50Speaker 01

  Well, okay, so, on the business model and IPO question, and we're gonna talk more about OpenAI's, the reporting and on their potential IPO, but I think it's a massive deal. I think it's like a absolutely ridiculously massive deal, the fact that it completely destroys the entire story. The story has been, like, expensive frontier models, all the ARR growth that was shown to the world from, call it, September-ish, October-ish, to February, March, was people just cranking on whatever the latest, most expensive frontier model was.

• 17:31Speaker 01

  The moment, and again, we can Jevons paradox it all day long, and I do firmly believe overall utilization of models in agentic AI is going to be just, you know, like exponential. But the core IPO story, I think, takes a huge hit from this. So I think like the the advantage of having something far superior for a short amount of time starts to go away anyways, the moment people start realizing they don't need the Ferrari. The Honda Accord is is great.

• 18:10Speaker 00

  Right. And, you know, up until this point, it was like a nobody gets fired for buying IBM situation where like you wouldn't look elsewhere because you didn't need to, right? Because it was just kind of easier to plug and play the found these frontier models in the from the closed companies. But what I'm saying is because the frontier is now being restricted, it adds an incentive to look elsewhere. And when it adds that incentive to look elsewhere, you might see a slowing. Now, you know, the the foundational model companies would argue that their models are still better, which they are, that they have more compute, which they do. But, you know, ultimately, the expectations have been built up so high and the money is so, you know, significant in that they they basically need

• 18:52Speaker 00

  to shoot a hole in one here for everything to work, or maybe a hole in two. I don't know. They have to basically be near flawless in their execution. And the pressure is is now on. And that's why I think you saw opening on taking the risky stance of saying we're going to play with the the way the government wants us to play right now. But we would really prefer not.

• 19:12Speaker 01

  And you're right, like, they have executed dearly flawlessly. I mean, it feels like for the last six to 12 months. And that's why the expectations have been built so massively. But, yeah, I don't know. Overall, I think this is a big issue. I guess one thing I've been wondering, though, is right now, you keep hearing and reading about as these frontier models actually, you know, like have widespread adoption, that's where the distilling starts to take place. That's where. Competitors can start to, I mean, like, you know, I've heard about these like distillation swarms where they're literally like asking, you know, like sending

• 19:55Speaker 01

  millions of prompts to try to like, start understanding all of the model behavior and starting to work to actually recreate it from a open source standpoint. Is there some world where the regulation is good to kind of protect the frontier model and you only give it to your hundred most profitable, large enterprise and government customers that pay you the most money and also minimize risk of distillation as well? Could that, could they be almost a little happy that that's the case?

• 20:29Speaker 00

  My hot take is that one of the things that we saw from Anthropic with all these safeguards that it put on Fable was not as much that they were worried that Fable would be misused, although I'm sure there was some worry there. It was more that like, we know our competitors are going to try to distill this model and we're just not going to let them do it in places that provide the most value. And in fact, I think Anthropic was, you know, effectively coming out and saying that if we think that you're using our technology to build a competing model, we're going to block your access to do that. And they kind of backed off that a little bit because people were like, Anthropic doing any, you know, preventing any AI research with its models is anti-competitive and bad. But yeah, I think

• 21:12Speaker 00

  that's a, that was a real worry. And, and this limited release strategy could prevent distillation to a degree, although, you know, the models, it's, it seems like it's kind of hard to keep the models under wraps, don't you think?

• 21:26Speaker 01

  I don't know. My favorite, Bill Gurley this week had tweeted, "If you're on the verge of AGI or ASI, why isn't your model smart enough to recognize espionage distillation in real time? You say you can cure cancer in a few years. Isn't sniffing illicit distillation quite a bit easier than curing cancer?" And I, I kind of loved it because it's like, Why do you need, why, it is surprising to me that that is still such a threat when it is existential to their business? That they haven't kind of invested or figured out a way to protect against this, short of not giving as many people access.

• 22:06Speaker 00

  Yeah, no, it's a great point. I mean, I think that's what they were trying to do with these proactive safeguards, but obviously it's still a problem. They just accused Alibaba, Anthropic just accused Alibaba of distilling their models recently. Okay, one thing on GPT 5.6. Then we'll move on to the OpenAI IPO stories.

• 22:24Speaker 00

  So they ran GPT 5.6 through a test called Exploit Bench. And the capabilities were basically on par with Mythos. And this is obviously a cybersecurity test. But Mythos is much less token efficient. So Mythos used something like 300,000 tokens for the, for the test. And GPT 5.6 used around 100,000. So I would say it's at least, you know, half, uh, uh, two times more efficient than Mythos preview. Which is, which is interesting and it's priced more cheaply than it, about half price.

• 23:01Speaker 01

  Yeah, I mean, you see price constantly being now a highlight rather than kind of some afterthought. I don't think most people could have, you know, like reasonably known what their input and output token costs were in the past. And now everyone is looking, I mean, is looking at it. I've, uh, wait, hold on, it's not publicly available in any capacity now, right?

• 23:27Speaker 00

  5.6?

• 23:28Speaker 01

  Yeah.

• 23:29Speaker 00

  It, it's not publicly available. It is the same thing. There's a limited number of companies that, that.

• 23:34Speaker 01

  But even for all three of them?

• 23:37Speaker 00

  All three like?

• 23:38Speaker 01

  And Terra?

• 23:39Speaker 00

  All three.

• 23:39Speaker 01

  Okay, so they're not doing like, uh, Luna, everybody gets a little bit of access too, but, uh. Soul, you gotta wait.

• 23:46Speaker 00

  Yeah, I mean, I think the hope is that it comes out fairly soon. That's just the way that they're talking, but we'll see.

• 23:52Speaker 01

  Well, I guess why I'm asking that is in my mind, and maybe it's wrong. I still kind of associate the more expensive and heavy the model is, the more dangerous it is. And that's why when Luna is fast and affordable for everyday work, and that's kind of the positioning. You would think like that should be easy and you just give it to everybody versus soul is the flagship model. And that's the big dangerous one that can get us all into trouble. But maybe that's the wrong assumption, but.

• 24:24Speaker 00

  Yeah, you gotta be careful of those nimble fighters, right? You think they're just lightweight and chill. And next thing you know, they cut you.

• 24:30Speaker 01

  They're they're they're exploiting software left and right, bringing down global financial infrastructure.

• 24:37Speaker 00

  Exactly. Okay. So speaking of global financial infrastructure, we do have IPOs on the way. This is from the but but the question is when this is from the New York Times. OpenAI leans toward waiting until next year for its IPO. OpenAI is leading towards holding off its initial public offering until next year. A turnabout that punctuates the uncertain future for fast rising artificial intelligence giants. The maker of ChatGPT hired bankers and lawyers with an eye towards a public offering as soon as the third or fourth quarter of this year. But because that's not going to hit the $1 trillion valuation that Sam Altman has been seeking. It looks like they are going to potentially postpone. It's from the Time Story.

• 25:18Speaker 00

  Top of mind is what happened to Elon Musk's SpaceX after its IPO this month. It had the largest ever, largest IPO ever, raising more than $85 billion at a $1.77 trillion valuation. However, it's fallen back to earth. I'll just share my, my, you know, conspiracy theory on this one and then turn it to you in terms of your views of the implications here. I think OpenAI knows it's important to beat Anthropic to the public markets, given the growth that Anthropic has shown of late. It probably sees a better opening now because Anthropic has been, in a way, held back by the government because of the fable fumble. And OpenAI might be

• 26:02Speaker 00

  just sending out signals that it's gonna wait, but then it will pounce as a lightweight fighter does and cut Anthropic and get there first. That's my conspiracy theory.

• 26:14Speaker 01

  Talking about two potentially trillion dollar companies as lightweight fighters here.

• 26:19Speaker 00

  Gotta be nimble.

• 26:20Speaker 01

  Gotta be nimble. Okay, I do like that because it was surprising to me that that could even be leaked. And I feel a lot of this IPO reporting is very purposefully leaked because, again, in the past, like, and you mean, having seen a lot of this very up close, like, everyone does whatever they can to not allow for any of this kind of reporting. And we've certainly seen plenty of it. So it feels very, like, anything that comes out is purposeful. So then, yeah, the question, why would they signal that they may be delaying? I do like your take there. I think

• 27:01Speaker 01

  that's a fun one. But I also just think, like, right now, what's, to me, what's interesting with the market is, two months ago, everything felt like it had direction. Everything, the ARR was just unreal, like, any kind of number that was being reported out. Overall, you know, everyone's feeling good about things. The Frontier Lab and state of the art models still are the kind of dominant narrative. Meanwhile, to me, the biggest vibe shift has been when you see Bill Gurley or the Coinbase CEO, all Brian Armstrong, like, everyone is just bragging about not using the

• 27:43Speaker 01

  Frontier models. Think about two months ago, three months ago, it was just, oh, my God, have you used Opus 48 or whatever? Like, it was just GPT-5-5 is now the head of 48. That's all anyone talked about. No one had ever even, I mean, most, the average user had never even heard of Quinn, or like, now GLM 5.2 this week. So to me,

• 28:09Speaker 01

  It almost feels like this is a moment to wait because the entire market has shifted from two to three months ago and no one got out other than Elon and he did a great job at that. But I think waiting actually would be the smarter decision.

• 28:28Speaker 00

  But how long do you want to wait? Because if you wait too much longer, you might be in a situation where you've spent a lot of money, you're waiting for more money, and your customers are starting to try to find ways to efficiency max.

• 28:44Speaker 01

  But they are. They already are. They already are.

• 28:46Speaker 00

  But do you want that? Right now, the curve is looking up and to the right. But do you want it to even out as these customers try to find more efficient ways to use your tools?

• 29:00Speaker 01

  I guess, I mean, and I have no direct knowledge either way on this. To me, the curve is no longer up and to the right from where it was a few months ago. Just everything. Yeah, I mean, just again, when the Coinbase CEO is bragging about model routing and here's five different models suited to different tasks and everyone is talking about that, it changes the entire, the growth curve, the entire story from September to February, March, April-ish, all of that has changed. Like, it's just so clear. So to go out, you're gonna have to show your latest results. You're gonna have to show the last few months. So

• 29:44Speaker 01

  I do think versus you have a lot of promising, different business lines, start allowing a little bit more maturity and then go out with a stronger story rather than here's an ARR curve that looks insane.

• 30:00Speaker 00

  Right, and it's not just Coinbase CEO and it's not just Twitter voices who are talking about finding more efficient uses of their models and looking for savings in their engagements with Anthropic and OpenAI. And by the way, there's also some reporting about Anthropic and OpenAI potentially overcharging customers. So it is a broader pullback, not just a micro-influencer pullback. And we have the reporting and we're going to talk about it right after this. This episode is brought to you by Avpoint. Everyone's racing to roll out AI right now. Copilots, chatbots, agents doing real work. But here's the part nobody loves talking about.

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  Go to ironwall.com/bigtechnology, fill in the quick form and request your free risk assessment. Their team will show you just how exposed your executives are and how to lock it down before a threat reaches their front door. That's ironwall.com/bigtechnology. Learn how to stop online threats before they become real world attacks. The link's in the show notes. And we're back here on Big Technology Podcast with Ronjon Roy of Margins. All right, Ronjon, so before the break, we talked a little bit about how there's this, now it's become a meme that people are trying to pull back on their costs with OpenAI and Anthropic and finding ways to do it. But the reporting shows that it's more than a meme, that it's

• 32:51Speaker 00

  a reality that seems like might be more widespread than you would even know by seeing the tweets. This is from the information, how AI customers are lowering their Anthropic and OpenAI bills. As prices for Anthropic and OpenAI's flagship products soar, some large customers are using cheaper AI models from those companies' menus as well as from other providers. Enzamo Health Partners, a provider of software for hospitals that plans to spend up to 100 million on AI this year, said it's had success switching to an OpenAI model that's one-twentieth as expensive as the company's more advanced models. The AI-powered tool for writing, for writing appeal letters to insurance firms that won't reimburse Enzamo's hospital clients

• 33:33Speaker 00

  for care they provide. So the AI powers a tool that does that. Enzamo sends about 15,000 such letters every month. And the chief technology officer of the company said switching to a lower-cost model will result in savings of nearly $700,000 per year. Many Anthropic and OpenAI customers are willing to stomach the rising costs of these two companies' products, but some are hitting the brakes after blowing through their budgets. Okay, so basically what you're seeing now is... It's almost as if these smaller flash models have gotten good enough that you can make these moves and companies are looking at what they're spending and saying, hey, wait a second. This makes zero sense. We are actually just gonna, going to go to the smaller models and

• 34:16Speaker 00

  we're going to route and maybe use the, the more powerful models as a decision make, as a, as a sort of top layer decision maker as opposed to a worker. Pretty interesting, Rajan, wouldn't you say? I mean, it does seem like this is going back to our discussion in the first half here, a, a real, not to use a, you know, jargon, but a real economic headwind for these companies and, and not good. Again, if you're rooting for them to show, you know, exceptional growth as they get to IPO.

• 34:45Speaker 01

  I mean, to me, the most interesting part of what you just said is you called it an economic headwind, but even within that reporting, they're still talking about using an open AI model. Just one twentieth is expensive. So to me, that's an even bigger challenge overall to the narrative is, is like you can be using Anthropic and OpenAI's own products and still that's not good for their overall like IPO narrative and the, the business story because the, it's depended on using the most expensive models, not here's a whole suite of products and models and use all of them the best you can. And that's

• 35:27Speaker 01

  good for all of us. It really feels like the fact that that becomes the, a story in itself versus, oh, you're just using different parts of the open AI ecosystem. I think that is a pretty telling thing.

• 35:40Speaker 00

  Is there a Jevon's paradox side to all this where it's like, yeah, like you switched from using only our frontier model for everything to some of our cheaper models, but you're going to do a lot more now. And so therefore, you know, a, a category that you never would have even spent on in 2023, now you're going to spend, you know, a ton more.

• 35:58Speaker 01

  I think like this is the crazy part of the timing of all this. To me, I firmly believe in a few years' time and especially in like the next decade, there is going to be just massive increases in overall token consumption, a gentification of everything. I believe it. But the timing, because in a, if there's this pressure wasn't so great on the two giant, the frontier lab giants. Then they you would think like the product should actually very clearly you ask it a question. You give it a problem and it tells you and and I've seen Claude do this sometimes where it's like.

• 36:40Speaker 01

  I like it won't actively switch, but if you ask it, which of your models are best suited for which part of this task? It will tell you so, but they don't like core bake that into the product because it's not good for the business overall. Like, and it should be, it should, they should, they could own this and make their portfolio approach. And everything is tightly integrated, but it's given the IPO pressure. That would be a dangerous thing to do over the next six months.

• 37:09Speaker 00

  Sorry, wasn't the entire like big controversy around the GPT five rollout? That it would route your queries to the appropriate model? So they're not doing that anymore or how does that comport with what you're saying now?

• 37:22Speaker 01

  No, no, no, hold on. Those are two separate things because the GPT five rollout. Wait, you're talking about when it would, people were mad that it wasn't sycophantic and they wanted to go back to the forum.

• 37:32Speaker 00

  I'm talking about how when GPT five rolled out, this is just in chat GPT, right? Chat GPT would had its own built in model router and said, oh, this is an easier query. We'll send it to a smaller model or this is a tougher query. We'll send it to our most powerful model and you really couldn't pick. Now you can pick, I guess.

• 37:50Speaker 01

  Well, no, so, okay, I I would put those in two different categories around. Building an agentic workflow that's repeatable and like predictable. And they're spending the time to assign the right model to the right task. Makes a lot of sense. I now, okay, now like when GPT five did have their model router. So, yeah, I I acknowledge people were backlash and because they're like, oh, I'm getting dumber stuff. It's not doing this in the right way. When you're just having a back and forth like turn based conversation. That's not where I think this is valuable. And actually, that's like a good example where it was clumsy, the way it was actually executed.

• 38:33Speaker 01

  And people in that exact kind of like situation, it's probably not the most useful thing. I think it could be useful because again, as we both talked about, like, there's times where you ask Claude a basic question and it creates like a 20 page PowerPoint deck and just goes on, scrapes half the web and does whatever in God's name it's trying to do. And having a little bit of a lighter flash model typey thing might be good, but, but yeah. So, so to me, it's more as you have a workflow that is predictable and kind of like you know what the different pieces of work are, that everyone should be a lot more and they should be trying to lead that and they're not because it's not good for them.

• 39:16Speaker 00

  Right. And by the way, you know, as we're talking, you know, again, this all matters for the IPO because the growth and the dollars are going to be pretty important. Uh, when we see these S1s and when they actually go out, uh, well, uh, there might be some overcharges happening because of the opacity of the system. So this is from the information, Anthropic customers find errant charges auditing startup says some customers may be paying more for Anthropic and OpenAI products than they should due to billing inaccuracies, according to Vodit, which sells an AI bill auditing tool. Okay. Well, obviously they're going to find this stuff. Okay. Let me, I'll just read it. We can talk about it. Between March and June, Vodit audited bills sent to 60 companies totaling

• 39:58Speaker 00

  34 million, mostly for usage of Anthropic's Claude code and found about 1.7 million in mistaken overcharges. Uh, what we are observing in that enterprise AI billing has become increasingly opaque, um, Vodit said. Errant billing isn't unique to AI, of course, and can be seen throughout enterprise software, cloud services and online advertising. Do you think that this is a big problem? And AI is basically like you send these tools like Claude code out to do stuff for you. And because it's so opaque, you have no idea whether you're being overcharged or not. I mean, 1.7 million of overcharges out of 34 million is, is not insignificant at all.

• 40:40Speaker 01

  My favorite part of this story is just hearing you say vaadit audited. I love this name vaadit.

• 40:46Speaker 00

  That was a tongue twister. Yeah.

• 40:47Speaker 01

  Vaadit.

• 40:48Speaker 00

  Better than Tara Luna, but not, not exactly the easiest thing to say on the air.

• 40:52Speaker 01

  Vaadit audited bills. Um, so I think this is an issue. I actually am not as concerned, I think, as normally I would think I would be around it more just because like, yes, okay, out of thirty four million, one point seven is like a pretty significant percentage. But again, when no one has been checking their bills, it makes sense that like without any malice, there would be errors happening. Like it's just if no, if no one had been checking their bills, digging into their bills, even knowing what they're spending. When you hear Uber surprised that they blew through their entire year's AI budget

• 41:37Speaker 01

  in a quarter, that shows that no one was carefully tracking things. So of course there's going to be certain errors. The, actually, one of the ones that was the most interesting part of that to me though, was when the uh, session times out or you don't get an answer, which happens plenty. Are you responsible for the tokens? Cause it actually kind of cited that as an error. I hadn't actually thought of that as a billing error before. It's just kind of something you, you just eat. Like it's just in AI, you're not, it'll timeout sometimes and that's how it works. But like, that actually made me think, are customers responsible for any tokens consumed during that session?

• 42:22Speaker 01

  And that could start to be more and more of an issue.

• 42:27Speaker 00

  Yeah, that could add up. I feel like it happens to me all the time, multiple, like multiple times a day where I ask something to a chatbot. And it thinks a bit and then gives up. Well, whatever's behind that, I don't know, but. It is.

• 42:40Speaker 01

  It's charging you.

• 42:41Speaker 00

  Yeah, all the, all this stuff is going to add up as we start to see these companies head towards the most significant financial event of their lifetimes for sure. And then, of course, we have the press and this will be the last financial, or sorry, financial market story we do on, on this, on this topic, but SpaceX, obviously not faring very well. I mean, it shed about, I think it was down 15% or so on the week. It's trading at 153. That's the way it closed Friday and all this sort of ebullience over the fact that it was on this legendary run has certainly quieted down. It went to two and a half trillion market cap, was bigger than, I think bigger than Amazon for a moment.

• 43:26Speaker 00

  Now it's dropped down to two trillion, which is still nothing to sneeze at, but definitely less frothy than its earlier trajectory seemed like it was going to be at this point. Your thoughts?

• 43:40Speaker 01

  I, two trillion is frothy. I mean, like that's why I had two, two and a half. It, I will say that first week of the post IPO, there are moments in any kind of cycle you remember, and that's going to stick with me when you saw like, I mean, Elon Musk is a trillionaire now, he's heading to two trillion. It's bigger, and remember, this is a company with 18.7 billion dollars of revenue total. I mean, Amazon, it surpassed its market cap. Amazon has 750 billion dollars in revenue, like this is a company that's losing $4 billion. So, which again, if you believe there's going to be data centers in space and you believe

• 44:24Speaker 01

  like all that, it's, it, you can come up with the story behind it, but when you just kept seeing it climb, it got to like 215, I think, 215, uh, at near the highs. And then it's like surpassing Amazon, surpassing Meta, closing in on Microsoft. I don't know, I had, those are the moments that whatever shakes out in the next year or so, you, I will definitely remember.

• 44:55Speaker 00

  Yep. Okay, let's go to our this this our last story, which is that Apple has raised the prices on the Macs iPads by $200 or more on some models. Fascinating thing is happening right now. Memory prices have gone up and now Apple is making its product lineups much more expensive. This is from Bloomberg. Apple raised prices on its Macs and iPads early Thursday morning, a week after chief executive Tim Cook said the soaring cost of memory and storage chips would force the company's hand. The company briefly took down its Apple online store early this morning as it typically does when announcing new products. That was Friday. When it came back online, the price tags for Mac computers

• 45:35Speaker 00

  rose roughly 15 to 20% and iPad prices rose 15 to 25%. Among the price increases, the base MacBook Air rose from rose $200 to $1,299. The base MacBook Pro increased $300 to $1,999. The entry level MacBook Neo increased $106.99. The iPad Air increased $150 to $749 and the iPad Pro increased $200 to $1,199. I have become somewhat of a lightning rod on X this week because of this was my reaction to the news. I wrote that Micron's gross

• 46:18Speaker 00

  margins, Micron's gross margin was 84.9% last quarter and Apple's was 49.3%. Sure, price hikes and supply chain, price hikes and supply and demand, price hikes are supply and demand at work, but at a certain point, it's greed. I don't know, man. I mean, yes, the the memory prices have gone up, but as somebody pointed out, if you're building a data center filled with these things, then it makes sense to raise prices. If you're building a device with a little bit of it, probably not. Here, this is the exact tweet. I sell, this is from Carl Peterson. I sell GPUs for living systems. Integrators buying

• 47:00Speaker 00

  2 terabytes of RAM for a server have an excuse for raising prices. Apple buying 8 gigabytes for a MacBook does not. Greed or supply and demand? What's your take on the Apple price hikes? Greed.

• 47:17Speaker 01

  Do you know what my tell was? I don't know if the HomePod Mini, as an owner of multiple ones, has any kind of storage, but it certainly does not have any meaningful storage. So to raise that by 30%, I think shows that they're just going across the board here. I like, and also, the increase in memory has been, if they're saying that this is here to stay, and maybe that's actually a positive signal for the SanDisk's and memory Microns of the world, but like, to me, you have this kind of massive price hike of an input, but to change these like, long

• 47:59Speaker 01

  supply chain type products and pricing this dramatically, it's, this is actually pretty shocking to me. I, like, you know, you change the price of a flight, you change the price of a flight because the cost of oil goes up, that's dynamic, that's relatively like, quick up and down fluctuations. This is huge relative, and, and once it's done, they can, they're just gonna keep it there.

• 48:26Speaker 00

  Well, unless they have a corresponding decrease in sales, because they need those devices in people's hands for their service businesses to be strong.

• 48:33Speaker 01

  Yeah, but we're all locked in and can't escape the Apple ecosystem. And then, oh, wait, maybe they are so confident that Siri is gonna be so good, that they're like, guess what, everything's going up and you guys aren't going anywhere, because Siri's gonna become your default AI in life. That's what's happening.

• 48:56Speaker 00

  Right. I mean, Tim Cook calling the price hikes unavoidable is just like ridiculous. And, you know, obviously, like, the, when the device goes up 20%, that's the entire price of the device. So DRAM could be going up by whatever it is, but you're not, you're not gonna, it doesn't, the increase in DRAM price does not account for a 20% increase in entire device price. It's crazy. Like, they're gonna make margin off that. And, and not only that, they're responsible for it, to a degree. This is a, an interesting tweet that I read, that, that sort of captures the situation. "Apple spent a decade squeezing memory makers below costs. One of them survived, finally got pricing power, and Apple is calling it gouging." I mean, they didn't use the word

• 49:41Speaker 00

  gouging, but they basically implied it. "Two years ago, Micron was selling DRAM below the cost of making it, gross margins underwater, and the kind of bust that has killed memory makers for 30 years. A field that once had a dozen players, had dozens of players consolidated down to three survivors. Micron is here because it executed the downturns better than the ones that died, not because anyone was generous to it. The buyer is now screaming about 84.9% margins. Apple and the hyperscalers are exactly the players who spent that decade grinding memory to negative margins on every procurement cycle." Sorry, go ahead.

• 50:15Speaker 01

  No, no, actually, I'm curious. So you, do, should Apple do this?

• 50:22Speaker 00

  No, I don't think so. I think it's bad business. I mean, first of all, it's customer hostile, right? You're using an excuse to jack prices up. Second of all, like, it's gonna hit your services business. You want services, the one thing that's really growing within Apple. I mean, recently, we've seen some growth with iPhone. You're gonna want a robust service business if you're, if you're Apple, and the way you do that is you get devices in people's hands.

• 50:45Speaker 01

  But they've been, actually, so they have been, I just looked up, the price of the premium iPhone model in the last seven years is up 65%. So it went from 9.69, which I think anyone who gets the new Pro Max, whatever, always has seen. It just keeps going up and up and up. And, I mean, I think I am a example that I don't buy the new iPhones, because I don't feel I need to, but I'm paying way too much in services businesses for things I forget about. So, so maybe in that case, if you don't have the devices, that's like a good example. I guess it's just... I don't know, the confidence or maybe cockiness to raise prices this much and think

• 51:30Speaker 01

  it's not gonna just like crush demand. They have to be modeling this out somehow, or they have to, something must be behind that.

• 51:40Speaker 00

  If you're Tim Cook and you're trying to do John Turnus a favor, what you do is you maybe aggressively increase prices. Now, of course, the products that are that are being jacked up, they're they're not a massive part of Apple's business, but they're big enough. And the price will go up on the iPhone.

• 51:56Speaker 01

  iPad, MacBook. Yeah, it's iPad and MacBook.

• 51:59Speaker 00

  So if you're Tim Cook and you want to set John Turnus up in the best place, you jack prices up because of global memory shortage. If the if demand remains somewhat consistent, then you deliver Turnus, you know, huge profits as he begins running the company. If demand goes down, you give Turnus the enviable position of saying, I am John Turnus. I am the price cutter. I am going to cut prices to spark demand and you will love me now. So either

• 52:32Speaker 01

  way. Call option Cook. Call option Cook. He's giving, he's giving Turnus the greatest call option of all time. Okay, I like this one. I like this direction. It's a win-win. But yeah, I this I was genuinely shocked by this and trying to kind of like just chalk it up to chalk it up to short-term increases in memory prices that might be here to stay, but still I was pretty shocked.

• 53:05Speaker 00

  Yeah, I mean, someone someone told me like, do you think it's a charity product, project or something about Apple when I said it was greed? And I said, I said, obviously get your bag if you're Apple, but it doesn't mean you're beyond reproach and I'm reproaching. I mean, of course, it's not a charity, but you you don't have to like cheer on companies that are greedy. This is from Scott Hyferman, the founder of Meetup. Apple is was a change the world project, make insanely great products for as many people as possible. Good profit makes sense. Beyond that isn't the point of the project. Asking if it's a charity project or something is the question statement of the truly naive. Preach, Scott. Preach.

• 53:48Speaker 01

  I like you're you're reproaching. I am reproaching. I am reproaching. I'm reproaching you, Tim.

• 53:54Speaker 00

  I'm reproaching. And I don't they don't let me into the next WWDC. I really couldn't care less.

• 54:01Speaker 01

  Ah, too much reproaching. No reproaching if you want entry. But you will reproach.

• 54:08Speaker 00

  I'll reproach. I'll reproach. All right, two things before we leave. I want to say thank you to you, Ranjan, and thanks to everybody who joined us at the summit last week. We've obviously been putting some of the interviews up. We'll have the Greg Brockman interview in full up this coming Wednesday. It was a good time, wasn't it?

• 54:26Speaker 01

  I had a great time. Thank you for everybody who came out and it was fun. It's we do this virtually, sometimes in person together, but just meeting all our listeners in in person. That was a lot of fun.

• 54:41Speaker 00

  It was really cool. So thank you, everybody. And if you weren't there, obviously, we're trying to get as much of the content to you as possible. So we'll have the Brockman interview this Wednesday, and then we will go back to our normal podcast style, aka in studio or remote, one-on-one conversations with no audience, starting the following Wednesday with Meta CTO Andrew Bosworth. So stay tuned for that. All right. Ranjan, before we go, tech industry lost a giant this week. Om Malik, the blogger, founder of GigaOm VC at True Ventures, passed away on June 24. This is from his blog. He passed away at Stanford Hospital after a long health journey with his heart.

• 55:26Speaker 00

  He was surrounded by friends and family. Om was 59. Just a word about Om. I mean, he is he's if you've seen any of the tributes online this week, you could tell that he was very generous with his time and his advice to anybody in the industry. You know, I he's been on the show, of course. We had a great conversation with him not long ago. And we definitely lost one of the good ones. And the night the nice thing about Om is he really he seemed to care about everybody in the industry. I mean, when he started talking to me, I was like, wait, Om knows what big technology is and he knows who I am. That's the craziest thing. But he was red in and humble and.

• 56:10Speaker 00

  And kind of blunt and like in a fun way, I remember I was sitting next to him at WWDC or some Apple event and he had been writing these columns from The New Yorker and another journalist was like, oh, how do you write for The New Yorker? And he just like looked the guy in the face and smiled and he goes, because I'm good. And he really was. So I don't know if you have any, you know, memories or reflections on Ohm, but definitely, you know, he kicked off the modern tech blog era for sure.

• 56:38Speaker 01

  No, I so for me, having never been a full-time writer, but writing plenty, I had gotten in touch with him a number of years ago, never met him in person, but when I was start running a startup in 2013 and just, you know, like trying to get into TechCrunch and Giga Home and stuff like that, what amazed me is he responded and we actually exchanged emails and he was just like, you know, friendly versus so much of the, I mean, just overall ecosystem as a whole. And I think the most important is like, yeah, he, he blogged. I mean, he, he got me, he got me interested. He was one of the first blogs I started to

• 57:22Speaker 01

  read and actually got me interested in the whole new media thing. So yeah, seeing all the outpouring and everything, it was, uh, it was pretty special.

• 57:32Speaker 00

  Yep. I don't know if this, I'm gonna just read this. Uh, this, so Katie Jacob Stanton, who was in a VC and was a Twitter executive, posted this letter that, that Ohm wrote to her, um, when her father passed away. And I think that like when people experience loss, sometimes it can be difficult to like, to hit the right tone. And I think this letter that Ohm wrote really did hit the right tone. I'm just gonna read it and we can sort of end with this. He wrote, Dear Katie, I read the sad news you shared last night on Twitter and I wanted to take a moment and send you my thoughts, prayers and hugs to get you through this tough time. We all have a habit of mourning what we don't have instead of celebrating all the gifts we are bestowed upon. His life was a gift to you. I didn't know your father,

• 58:17Speaker 00

  but it's clear that his grandness lives in you and yours, your compassion and empathy. For the human condition is a gift of your parenting. And I hope you can remember that, I hope you can remember that when there is a moment of sadness that shakes up your world. I hope you find his memories and his lessons a guiding light for the future with much love and prayers for your family. I mean, just beautifully written and honestly, a lot can, a lot of the same can be said about Om today. So rest in peace, Om. One of the good ones. I know we typically end on a laugh, but I think that, uh, that, yeah, Om's, Om's presence in the tech industry, around the tech industry brought a lot of joy to a lot of people.

• 59:00Speaker 00

  And so we'll do our best to, to, to live his legacy on in the ways that we can.

• 59:08Speaker 00

  Okay.

• 59:11Speaker 00

  Well, we'll see you next time on Big Technology Podcast.

• 59:15Speaker 02

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