Apple's XR Misadventure, An Emerging AI Bubble, Elon vs. Bezos

Ranjan Roy of Margins is back for our weekly discussion of the week's tech news. We cover: 1) Apple's mixed reality struggles 2) Whether the stock market is in an AI bubble 3) OpenAI's Sam Altman testimony in Washington 4) Montana's TikTok ban 5) The rise of Shein 6) Whether Musk or Bezos is in a better place today. -- Enjoying Big Technology Podcast? Please rate us five stars ⭐⭐⭐⭐⭐ in your podcast app of choice. For weekly updates on the show, sign up for the pod newsletter on LinkedIn: https://www.linkedin.com/newsletters/6901970121829801984/ Questions? Feedback? Write to: [email protected] Learn more about your ad choices. Visit megaphone.fm/adchoices

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

• 0:00Alex Kantrowitz?

  This episode is brought to you by Genesis. What does it actually take to put Agentic 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, 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?

• 0:43Alex Kantrowitz?

  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.

• 1:11Alex Kantrowitz?

  Welcome to Big Technology Podcast Friday Edition. We break down the news in our traditional cool-headed and nuanced format. We have a great show for you today. There's an unbelievable preview of Apple's mixed-reality device out that we're going to discuss first. Then we're going to be talking about whether there's an AI bubble with stocks like Nvidia going through the roof. Then OpenAI ends up in Washington with Sam Altman testifying before Congress. What can we really learn from that? And after the break, we're going to cover the TikTok ban in Montana. How long is that going to last? And Shein, or Shine, Ron, John, is it Shine?

• 1:48Speaker 01

  It is Shein, and this is going to be the most important story of the week. So stick around and you'll all learn how to pronounce the most important company to watch in American tech.

• 1:58Alex Kantrowitz?

  Let's start this week talking about how Apple's mixed-reality device might not go according to plans. So there is a terrific, terrific story. I'm amazed that it's not getting more play this week by Mark. Gorman in Bloomberg talking about the shortcomings of this device. Let me just kind of run through them pretty quickly. It is something that Apple expects to sell a lot fewer devices than did previously. Three million expected, but now really expects 900,000 units. It has many non-Apple features, big bulky pieces of hardware that just is not very traditional with Apple. We have a, there's a former Apple marketing executive saying that it could be one of the great tech flops of all time.

• 2:44Alex Kantrowitz?

  And it is very different from what the company originally envisioned, making it seem like they're just going to try to ship something. Versus, you know, build until it's perfect, do like cut, measure twice, cut once, which is the way that Apple typically builds. So very, very interesting article. Now I really can't wait for Apple to release this thing. Ranjan, what's your perspective here? Do you think that, I mean, for Gorman to come out and say that this thing, you know, is not going to be what was expected? It's a pretty big deal.

• 3:17Speaker 01

  Yeah, but okay, the most interesting part of the article for me was he writes, Apple's ambition is that customers will eventually wear the device continuously all day. Replacing daily tasks done on an iPhone or a Mac such as playing games, browsing the web, emailing, doing FaceTime, video calls and on and on. It's the idea that this is supposed to become the new iPhone. This is supposed to be your primary computing device. That worries me a little bit, that feels a little overly ambitious. And I think one of the biggest problems I've had with the way Facebook slash Meta approached the metaverse was it was an incredible gaming technology, VR headsets.

• 4:00Speaker 01

  And trying to, you know, force feed it into your everyday life because that's a better total addressable market rather than really evolving it as a gaming device. And then seeing where it goes, I think it was a huge mistake. So I think Apple, if the goal really is to try to match the iPhone rather than make it the watch or AirPods and an accessory. I think that's going to be a huge problem.

• 4:26Alex Kantrowitz?

  And a huge problem is where it's gone. So there's some conflicting reports because Palmer Lucky, a friend of the podcast, has tried these glasses and said this week that he thinks they're amazing. And maybe they are in terms of the current category, right? But you have to think about what Apple was trying to do and where they landed. And this is a passage from the story. So Gervin says, after initially setting its sights on a lightweight pair of augmented reality glasses, Apple gradually drifted towards something that felt more like existing devices because of technological constraints and the desire to get the product on the market. Oh, and internal disagreements. So here's what that points to, to me. First of all, what makes Apple, Apple is that it's able to imagine the future and build that

• 5:11Alex Kantrowitz?

  future, right? Even when the technology says it's impossible. Remember when they introduced the iPhone? Steve Jobs said what? This is years ahead of the nearest competitors and it was because while other competitors were dealing with inferior devices, Apple pushed forward and built something that changed the game. And this seems like an also ran. And then you talk about the internal disagreements, right? What's going on culturally inside this company? And the last thing is, and this is probably the most, you know, the most concerning of the entire statement, is that the desire to get the product on the market led it led the company to basically put out something that is not what it hoped initially. That's

• 5:52Alex Kantrowitz?

  just not what Apple does. It doesn't rush things out to market and is doing that.

• 5:58Speaker 01

  This had me thinking a lot, and I am someone who waited in line for four hours for the first iPhone. I've been a longtime Apple fanboy. But the last few years, it's definitely felt innovation is incremental rather than transformative. You know, every additional iPhone has gotten less and less exciting. Uh, you know, your new watches are a little bit better. So it'll be a huge challenge to see, you know, can this really be that transformative? But, but I do think like, you know, now when we look back, that first iPhone was a game changer. But at the time, I was made fun of because it didn't have copy and paste in the text by people at work.

• 6:42Speaker 01

  Like a lot of people said, it was ridiculous to wait in line and spend that much money on a device for a phone. Cause the idea of like a smartphone as a computing device didn't even really make sense to most people at the time. So, so I think casting it out that easily, it still is Apple. And especially if it fits into their ecosystem, because again, I switched from Amazon Echoes to the Home Pods and it just works and it's not even perfect. It's far from perfect, but now my smart home, I can talk to from my watch and my phone and, and the whole ecosystem still is where Apple wins. So how well they integrate this device and bring in a new form of computing into that ecosystem. I still think they're better positioned than anyone else.

• 7:28Alex Kantrowitz?

  I'm not buying it. All right. I mean, when Steve Jobs came on stage and introduced that iPhone, you know, internet machine, a phone and browser, a phone and an iPod together. Yeah. Okay. And look, watching that, I remember, I remember it's one, it's the only technology announcement that I remember where I was and I'm not a gadget guy. Okay. So I'll say that in the beginning. I remember where I was and it was clear that this was going to change the game. They had so many cool features and those people that were saying, well, it doesn't copy and paste. They were haters. Okay. And frankly, you know, there's going to be people that will find the problem with everything and that's where they were. But, and, and

• 8:11Alex Kantrowitz?

  I don't know. I, I think that it was clear on that day that this was something that was pretty transformative. This device does not look revolutionary. It looks evolutionary. And I'm, I'm willing to admit, if I'm proven wrong, I'll be proven wrong. But I had never seen a story like this about Apple in the Tim Cook era or the Jobs era, where the company's working towards this major, major, major device that it thinks could be the next era of computing. And there are all these concerns about it. Now, if they pull it off, credit to them. Right? They've been, and they've been doing some things, right? Their, their internal chips, the ones they've designed, the M1 and M2 are amazing. I mean, I'm recording this on a laptop with one of those chips and man, it's better than anything I've ever used.

• 8:56Alex Kantrowitz?

  Laptops work well, the phones work well, but it's inability to make that next transformative product is gonna look disastrous if this flops. And it is a legacy thing for Tim Cook.

• 9:09Speaker 01

  Yeah, yeah, but, but this, think about the watch, not the iPhone. When the Apple Watch came out, it was supposed to be this luxury product. Remember they had the gold plated one?

• 9:20Alex Kantrowitz?

  Right, right, right.

• 9:21Speaker 01

  It, it was a watch. It was not a health monitoring device or a fitness tracker. And that's an example where Apple showed they can create a killer product by one, actually, you know, evolving it to meet the ways consumers are using it and the what consumers were demanding. And two, just making it, you know, vital to their ecosystem. And again, I have a watch, I have the iPhone. I, I, for a couple of years I left. I got a Pixel, I got a Surface. I tried to leave and then I came back.

• 9:52Alex Kantrowitz?

  You just couldn't handle being a green bubble, right?

• 9:54Speaker 01

  It's just easier. It's just easier. Actually, I remember at the time, uh, I was married at the time and one of my friends who was single, I was telling him how good the Pixel was and he's like, I'm sorry, man. I just can't, I can't text someone with a green bubble when I'm trying to date.

• 10:09Alex Kantrowitz?

  That's the kiss of death.

• 10:10Speaker 01

  The kiss of death, so.

• 10:12Alex Kantrowitz?

  It is.

• 10:13Speaker 01

  But yeah, it's the ecosystem. And, and again, and we talked about this the other week with Brian from Techmeme, like, for me, the Magic Leap was still one of the coolest technology experiences I've ever had. So, and, and, and it's almost been disappointing for me and like, why has that technology not taken off? And I actually think of, cause I ascribe everything to Zerp. I think like overfunding and just overhype around the Magic Leap is what led to their demise. HoloLens with, from Microsoft, from people I know who used it. You know, they talked about how amazing it was and that kind of got sucked into Microsoft corporate politics when that company was going through a lot of change.

• 10:56Speaker 01

  That technology is waiting to be released into the world and made, you know, into everyday use. So, so I'm pro headset. Well, we can take the opposite sides of the bed on this one.

• 11:07Alex Kantrowitz?

  I again have to disagree with you. I think the problem with Magic Leap wasn't that it was overhyped and overfunded. The problem was that they never released a consumer device. And I mean, they did, they eventually released something, but it was expensive. It didn't work very well and they pivoted to enterprise. And the reason why they pivoted to enterprise is because it just was not convenient to wear those glasses in the pack around as a consumer. That's where the opportunity is for Apple. It's to build something for consumers, to push the envelope forward on technology and create that pair of glasses that you could wear that has this, these capabilities inside that no longer forces you through the constraints

• 11:48Alex Kantrowitz?

  that you used to be with, with other technology. And I think the company's inability to do that, right? And they're, the fact that they're going to ship something that doesn't meet that bar that they set originally because they need to ship something. Whew.

• 12:03Speaker 01

  I'll, I'll agree. If one, one part of the report said, like, you might have to have a battery pack that's like attached to you, which is kind of how the Magic Leap was. You had a pack that you would kind of clip to your belt. If that's the case, this is not, this is not going to work. Maybe though. And, and then maybe Snap Spectacles come out of nowhere and, and, and take over and assume their rightful place as the augmented reality kings. Maybe, maybe. But yeah, I think if there's like a battery pack, if it's not really a cool product, it's not going to do.

• 12:38Alex Kantrowitz?

  Imagine, imagine your single friend who couldn't bear to be a green text showing up to a date with Apple glasses and a battery pack. See ya. Okay.

• 12:48Speaker 01

  The new Google Glass 2023. Here we are.

• 12:51Alex Kantrowitz?

  Gone. So anyway, we'll see what happens. Look, I know that there's, there's a lot of people who are big fans of Apple that listen to the show. Obviously, it's a very impressive company and it would be unfair to judge the company on one product release. And we haven't even seen it yet. So this is clearly speculation and maybe they're going to do a good job with it. But if they don't, it's going to be a problem for them.

• 13:14Speaker 01

  And

• 13:16Alex Kantrowitz?

  it won't necessarily diminish what Apple is, but it could lead to a narrative shift and that would be interesting. So anyway, Apple, good company, potentially, you know, shaky launch coming up. And look, Rajan, here's the thing. If they go ahead and launch this and it's great, then I will come here on the show and I will admit that I was wrong. I just don't think I'm gonna be.

• 13:38Speaker 01

  All right. Let's wait for that.

• 13:41Alex Kantrowitz?

  Speaking of overfunding, the AI stocks this year are ripping. Anything that's touching AI is just basically going through the moon right now. And we like to talk about bubbles here. And there's some talk now, maybe on the stock market, that we are going through a bubble. And front and center is Nvidia, which is up 116.93% year to date, 116%. I mean, is Nvidia, this is sort of the questions we were asking in the zero interest world. Is Nvidia today double the company that it was when we started the year? Double the company? I kind of doubt it. What do you think?

• 14:21Speaker 01

  Yeah, I think stock market valuations, who's gonna win? The hype around it is very problematic because we have no idea what the business models are gonna be. And we've talked about that a lot on this show that, you know, right now, every ChatGPT query is a money suck. OpenAI loses tons and tons of money. They've had to kind of like use financial whiz-bangery with Microsoft around a quote unquote billion dollar and then 10 billion dollar investment, when in reality, it's just using cloud credits and who knows what revenues be being recognized where, but like. No one knows what the business model around any of this will be around the hardware

• 15:06Speaker 01

  side of it, around the software side of it, around the services side of it. And I think like, you know, the last week we had talked about the, or maybe it was a couple of weeks ago, open source versus big tech. Could open source even come out of this as a winner, which would completely eviscerate a lot of the investment theses around this. So, so I think everyone, because all you have to do is say AI and investors come rushing in and probably AI algorithms are driving those investment decisions anyway from quantitative head funds. But I think it's way too early to make these kind of giant bets if people are really trying to figure out who's going to win and who's not.

• 15:48Alex Kantrowitz?

  Yep. So here's the argument for why we're not in a bubble. I was watching CNBC this week. Scott Wapner had the whole crew on. Josh Brown was making the argument that we were in a bubble. By the way, yeah, I think it's definitely a little bit of a bubble going on, looking at that Nvidia number. But Scott put up a chart and I was like, well, okay, let's really be thoughtful about this. So these were the forward PE ratios in the early 2000s. So Qualcomm was at 192 times on the multiple. Yahoo had a multiple of 739. Cisco had a multiple of 134. Okay, here's the multiples today. Alphabet's at 22. Microsoft's

• 16:31Alex Kantrowitz?

  at 31. Nvidia, for all we've talked about, 63.7. Meta's at 19 and Amazon's at 76. So even if there is a slight bubble going on, maybe the market is just being restrained enough that it's not getting too carried away.

• 16:51Speaker 01

  I just had to Google, and I did not know this off the top of my head, Yahoo's peak market cap in 1999 was $90 billion.

• 17:00Speaker 01

  Come on, Amazon is what, one, still a trillion, Meta's 800 billion, Alphabet's 1.4 trillion, Micah, you know, like, these are gigantic companies. So obviously, a Ford P ratio is still kind of extrapolating out future growth. So their growth will never be comparable to, you know, those, at least the potential back in 1999 for Yahoo or Cisco, which were still thoroughly overvalued, but not that, you know, on a relative basis, not that overvalued. But I, I, I think it's, it's fair in the sense that right now, it appears big technology companies are positioned to just kind of squeeze everyone else out and dominate. The

• 17:41Speaker 01

  computing costs are so high, the resources needed are so high, they have the existing ecosystems to deploy any kind of new apps and services. So I think signs are pointing to these are the places to be. And again, like, whatever that says about the economy as a whole is not necessarily great, but that they are, that they're positioned well. But, but I still think like, I don't know, it's still so early in this that I think, and maybe low and behold, there's a new player that comes out that we weren't expecting in this, which would be kind of exciting.

• 18:12Alex Kantrowitz?

  Well, the one that you could say is already that, that new player is OpenAI, right? Which has, I wouldn't say come out of nowhere, but certainly increased its profile to the point where Sam Altman showed up in Washington this week to testify about safe regulation of artificial intelligence. Congress is obviously taking, and Washington and regulators around the world, now we have international audience, so we're not going to make this completely US-centric, right? This is something that governments around the world are worried about, that AI is going to come in and do some things that are quite damaging. And we're already seeing some big bodies out here trying to figure out what exactly to do. So Altman goes into Washington, I found a few things notable. First of all, this is the person

• 18:54Alex Kantrowitz?

  they're asking, is the person who's leading industry. It's interesting. I mean, it does seem like if Sam is the one that's leading the regulation conversation, then aren't we just setting ourselves up for regulatory capture, where the rules are set in a way that favors the incumbents and ice is out those other new entrants that we might expect? And the second thing here is Man, like, I feel like deja vu, really, in some ways, where we spent five years or something like that, talking about the potential to regulate Meta and Amazon and Apple and Microsoft. All of Congress agreed on it. There were actual common sense rules that you could put into place and they did nothing. So why is something gonna happen here?

• 19:37Speaker 01

  Yeah, I am definitely, in terms from like a legislative standpoint, I'm not thoroughly optimistic, but I think it's good that these conversations are starting right now. But I also agree that the fact that it's Sam Altman up there, I don't think is necessarily the best thing. Now, I am genuinely confused as to what exactly OpenAI and Sam Altman are trying to do. Like, is this just some, you know, long-term regulatory capture strategy? Because what kind of regulation they're actually looking for, I never understand this argument that comes from so much of, you know, the biggest, most influential people within AI,

• 20:20Speaker 01

  is the idea that AI could kill us all, that there's these great societal harms, yet we're gonna continue working on it and pushing, you know, wholeheartedly into it, and it's gonna be the greatest business opportunity, and we want to be regulated to this existential, around this existential threat, but we don't know anything past that. And, you know, we don't want to stifle innovation. So I'm genuinely confused as to what is happening, what they're trying to do here and what's happening here.

• 20:49Alex Kantrowitz?

  Well, here's one theory, which might be that Sam Altman just enjoys being the center of attention. And, you know, one of the interesting things that came out of the hearing was that he said he has no equity in the company and just kind of makes enough money to buy his own health insurance and loves what he's doing. And is it crazy to think that Sam might just be like that unicorn-type person who's just like, not, man, I can't even believe I'm saying this, but not doing like evil genius ways to like 4D chess the Congress into not regulating his company, but might actually just kind of enjoy working on this transformative technology and enjoy being the center of attention, and that explains everything?

• 21:28Speaker 01

  Alex can see on the video stream the smile across my face right now. I, there are moments, so, so, one, him saying he has no equity in the company blew me away. Two, this idea that basically there's no salary, you know, he's already rich, so he has enough money that he does not need anything out of this is a really interesting twist is if it is completely confirmed, which I'm not sure, it's, everything is still based on what has been publicly stated, not any kind of actual documentation. But yeah, I think, but if that were really the case, wouldn't he go up and comfortably say, you know,

• 22:12Speaker 01

  we trained and stole the work off of like tens of millions of people, and I know that could be problematic. So maybe you'll have to sue the hell out of us for copyright infringement, or that's a real issue. You know, like, we know that disinformation will be created. No, no, I mean,

• 22:29Alex Kantrowitz?

  He wants to keep working on things, you know?

• 22:32Speaker 01

  Well, he has no equity, he has no equity in this.

• 22:34Alex Kantrowitz?

  Well, that's what I'm saying, that maybe it's just the pursuit of the work and that would inhibit the work.

• 22:38Speaker 01

  To create the genuinely equitable utopian future that maybe he's looking for, then that's where we should start, because it's like, rather than talking about robots killing us all, there's very real problems that are already happening today that could be addressed and are going to have to be addressed at some point. I think copyright to me is one of the most tangible, concrete things that is gonna, we're gonna, there's gonna be a test case. There's gonna be some kind of ruling around this, there's some kind of precedent. I think section 230 has to be part of this conversation, because again, what is new content? What is original content? By definition, you know, every one of these large language models creates new content.

• 23:22Speaker 01

  Of course, they're, you know, synthesizing existing stuff out there on the internet, but it's new content. So who's liable? This stuff is going to have to be addressed, and I think like, Trying to take a proactive stance and say like, you know, maybe when you, if you want to regulate us, let's actually talk regulation, not just theoretical.

• 23:41Alex Kantrowitz?

  Okay. So I'm actually going to point you to a piece of concrete stuff. They did actually talk about, and it wasn't all, we're going to be turned into paper clips, but there was this discussion of something that seems a little bit like an FDA for AI. So here's from the New York Times, echoing an idea suggested by Dr. Marcus, which is of course friend of the podcast, Gary Marcus, he, which is Sam Altman, proposed the creation of an agency that issues licenses for the development of large scale AI models, safety regulations, and tests that the AI models must pass before being released to the public. Okay. So that's actually, people have said this is an interesting approach where people get licensed effectively

• 24:23Alex Kantrowitz?

  to build AI. That's the part where I, you know, I heard that and it was just like, okay, wait a second, maybe this optimistic take I had about like what OpenAI might be doing might be completely wrong because that FDA for AI, however common sense it seems, A, I don't think it addresses a current problem where like the AI is going to turn us all into paper clips. Like that's not happening right now. And B, like who does that benefit? You know, it benefits the incumbents and it benefits OpenAI.

• 24:56Speaker 01

  Yeah. The, the idea of, you know, who has the resources to do a full audit on existing models, even the people, though they have the biggest models, it would still be companies like OpenAI, Google, whoever else. So yeah, I agree. That definitely would push towards benefiting the incumbents. But I think like, to me at a larger level, I, I still can't believe we're back here where, again, rather Gary Marcus, I thought was a very good inclusion into this, this conversation because he's someone who's been deep in the space, you know, like a visionary in it, a successful entrepreneur in it, selling a company to Uber. That was a machine learning company like, and so at least having that as a counterpoint, him as a counterpoint was really good. But there's still this, even in that same, that

• 25:41Speaker 01

  New York Times piece, I still can't get over like. How we talk about the author had written, the appearance of Mr. Altman, a 38 year old Stanford University dropout was as christening as the leading figure in AI. The boyish looking

• 25:55Alex Kantrowitz?

  That also seems so weird.

• 25:56Speaker 01

  Mr. Altman traded in his usual pullover sweater and jeans for a blue suit and tie for the three hour hearing like, like, like Sammy grew up and put on a seat.

• 26:05Alex Kantrowitz?

  Someone writing a book there.

• 26:06Speaker 01

  Yeah, I know. It's like, tell me what happened and get to the facts. Yeah. But there's still this, he, and maybe he is, his PR has been genius. He has established this like cult like figure of thoughtful, wanting to help. Whereas in reality, again, OpenAI has just been, has been just as aggressive as anyone else, if not more so in the space. So, yeah, I still feel there's a lot of other members of civic society that need to be brought into this conversation rather than the people who will stand to poise, to, to profit the most, even though he, I guess he does not stand to profit the most.

• 26:46Alex Kantrowitz?

  Right. And it's also

• 26:47Speaker 01

  So I have no idea what's going on.

• 26:49Alex Kantrowitz?

  Yeah. And the company, I mean, it started out as like a real nonprofit, but now it's cat profit. So, whoa, man, I don't know. It's a very interesting question.

• 26:57Speaker 01

  Maybe, here's my, here's my pro wrestling, uh, uh, hope for this is out of nowhere, Elon pulls out some like amazing early days of OpenAI drama in the next few weeks and we find out more about this story and things that don't quite make sense around equity and pay. That's my hope.

• 27:18Alex Kantrowitz?

  That's coming. Yeah, that would be great. And, uh, look, Sam, if you're listening, come on the show. I want to, love to talk to you about this stuff. Um, I've been trying to get someone from OpenAI. I don't know, maybe they think the show is too skeptical of them. But anyway, I'm not going to change what, what we do here, uh, to land interviews. So I'm just going to put that out there.

• 27:40Speaker 01

  But I, I am not skeptical of OpenAI, the technology at all. I think they're like, they are best positioned to win in this space. I think like, what they've done is incredible. It's just this on the regulatory side, I don't think they're the ones who should be leading the conversation.

• 27:57Alex Kantrowitz?

  No, no doubt. I, I, I think just talking about a PR standpoint, I mean, you've mentioned that the PR has been genius. I think sometimes when

• 28:05Alex Kantrowitz?

  Companies don't want certain questions asked. They'll steer their executives to certain places where those questions won't be asked. Okay, let's take a break. We're here with Ron Jon Roy of Margins. You can get it at readmargins.com. Great newsletter on Substack. We break down the news here every week on Friday, and then we have our flagship interview on Wednesday. If you're listening on the feed, we do these live on LinkedIn, so you can join us Fridays. Typically, we record at 2:00 PM Eastern, 11:00 AM Pacific. You can check my LinkedIn page, Alex Kantrowitz, for weekly updates on when those conversations will be. Sometimes we bring in guests today, one-on-one. All right, if you're a longtime listener of the show, and you can rate us, five stars would go a long way on Spotify

• 28:49Alex Kantrowitz?

  or Apple Podcasts. And if this is your first time here, and you want to subscribe, that would be awesome. Again, two shows on the feed every week. When we come back, we're going to talk about the TikTok potential ban in Montana. We'll see if it ever goes effect. And then we'll hand the floor over to Ron Jon to talk about Shein. 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. All that AI runs on your data, and most teams have no single way to see it, secure it, and prove it's under control. That's exactly what Avpoint does. For 25 years, they've been the trusted layer beneath the world's most demanding data, now extended

• 29:31Alex Kantrowitz?

  across your entire AI estate. Your data, your cloud, and the agents acting on your behalf. It's how more than 28,000 organizations deploy AI with confidence. So innovation scales without scaling risk. Avpoint, the unifying trust layer for AI. Head to avpoint.com to see how enterprises deploy AI with confidence. Learn more at avpt.co/bigtechnologypodcast. That's avpt.co/bigtechnologypodcast.

• 30:05Alex Kantrowitz?

  Violent threats against executives are growing at an alarming rate. When a company experiences backlash, executives are the first people blamed. When their address and other personal details are sitting online, this backlash can lead right to their front door. The team at Ironwell knows this better than anyone. They've protected some of the most targeted executives and individuals on the planet for almost two decades. As a wide glove enterprise security service, they protect your people with continuous personal data removal, proactive prevention tools and human-led emergency support. So when someone goes looking for your executives, Ironwell ensures they hit a dead end. So here's what to do. Go to ironwall.com/bigtechnology, fill in the quick form and request your free risk assessment. Their team will show you just how exposed your executives are

• 30:50Alex Kantrowitz?

  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.

• 31:06Alex Kantrowitz?

  And we're back here on Big Technology Podcast Friday Edition. Ron John Roy is here with us. Let's talk TikTok. It was banned in Montana this week, but it's a very interesting ban. So effectively, Montana is kind of counting on TikTok to like not make itself available to people in the state. What do you think about this?

• 31:28Speaker 01

  I like that this conversation is accelerating in terms of like, it's not a ban, but it's a ban. They banned app stores from offering new downloads of TikTok to users. And you can still use a VPN. So it's still a very like, you know, Swiss cheese type of ban here. But I think it's important that these conversations are moving faster and faster. And I think, I don't know, we've talked about this a lot. I think TikTok gets banned this year. I think there's a number of reasons why it will and why it should. But even more important, I think like this is a reminder that it's not going to be in just one all out blanket ban. If it happens, there's going to be legal challenges,

• 32:13Speaker 01

  different things that happen over time. And then, I don't know, again, my prediction on this is there's going to be a few just gigantic scandals that come out. And then, which there have already been endless things coming out and dripping and dripping. And that's what pushes pushes it over the the edge.

• 32:31Alex Kantrowitz?

  But the question is the legality, right? And there's already a lawsuit from creators against Montana to to roll this back on free speech grounds. So it seems to me like maybe the most likely thing that's going to happen, and Ro Khanna was here a few weeks saying this, is that it's going to be a it's going to be a forced sale by CFIUS, which investigates the deals that we have when it comes to like foreign companies versus like just this is going to kind of show the weakness, I think, of the outright ban via legislation path. You don't agree?

• 33:08Speaker 01

  Yeah, but no, no, no, I think forced sale, and I've said parts of this before, but I mean, I'll reiterate it here again. There's no way a forced sale happens. And there's a couple of reasons. One, the economics of it, TikTok, I mean, this is one of my favorite parts of this whole idea is like ByteDance is another raised a ton of money, had a high valuation. A forced sale of TikTok would require some kind of hard price set around their valuation, around their economics, around the value of TikTok itself. And right now, it's so inflated. So if you can imagine the back and forth arguing when it's essentially a forced sale, but obviously ByteDance is going to want to get as much money as possible out of it

• 33:50Speaker 01

  to try to keep their overall business, you know, looking better than it potentially is. And then there is no way, logistically and operationally, this actually works. Like, how do you really separate an algorithm? The number of, you know, like, connected data points, the number of salespeople, like, do you have to switch out every CRM system and the different pieces of data that are in there for advertisers? There's so much that's co-mingled, I'm sure, already. Or, I mean, that just is that, you know, there's no way that you cleanly just slice it off, sell it at a price that both parties agree to. I think there's no way that that can happen.

• 34:32Alex Kantrowitz?

  Well, the government could just say you have to figure it out and then like government has forced sales before, so it's possible that it happens.

• 34:39Speaker 01

  Yeah, but not at this scale and with this sensitivity around geopolitics because to me at a certain point, there, there's more value in making the US look like they're going after Chinese companies and non-American companies. There's much more value for the Chinese government in terms of that happening from like an overall, I mean, whether it's like a geopolitical or a PR perspective than the idea that it's a forced sale and the negotiations that go around it and the operational challenges that go around that. So yeah, I, I'm still calling it here. No forced sale is possible.

• 35:17Alex Kantrowitz?

  Let's talk about Shein. So they raised $2 billion at a $66 billion valuation, which I thought was the news. But as we intro this show, you've called them the most important tech company or the most important tech story. So floor is yours, Ron John. What should we be thinking about when it comes to this company and why is it important?

• 35:37Speaker 01

  All right. So just for, for listeners.

• 35:40Alex Kantrowitz?

  I love how excited Ron John is right now to, to talk about this.

• 35:43Speaker 01

  Well, no, no. Before we started the show and I was like Shein, Alex said, you know, like, all right, like, let's keep it around. You know, a lot of people might not know of it or it might not, you know, hold interest as much. And also you're not the first person, Alex, who pronounced it to me shine. And this is a company that is the fastest growing retailer in the world that has overtaken or has neared H and M and Zara in sales.

• 36:09Alex Kantrowitz?

  No, no, it surpassed H and M.

• 36:12Speaker 01

  Oh yeah. Sorry. It surpassed H and M. It's at $23 billion in sales and that's almost all growth in the last four or five years. It is overtaking American retail quietly as a Chinese company. So I mean, Tik Tok is headlines, but Shein is actually, you know, quietly taking over American society or, you know, in business just as much. But also what I found interesting was this. Was that Shein was valued in their last round at a hundred billion. Their latest $2 billion fundraise was only at 66 billion. I think this is kind of a cool, like, interesting tidbit around a 33% valuation cut. Didn't seem to be the news or cause any panic.

• 36:57Speaker 01

  It feels almost like a recognition that previous 2021 valuations were just unreasonable. And also starting to position themselves for an eventual IPO that's making, in the past, the game was set expectations as high as possible and then hope that the public markets just go play along and buy at that value. Now it seems like, all right, let's be a little smarter. Let's make this at a reasonable so we don't come out and then lose value right away and actually show some upside to public market investors. So I thought that was another interesting angle. But an even more interesting angle for me is in a Wall Street Journal's long coverage of this, do you know who was quoted?

• 37:43Speaker 01

  Tell me. All right, Marcelo, okay, I don't even know, McClure, Clower, the former SoftBank executive, who I believe became CEO of WeWork for a little bit. You know, like, this is this big name in technology. He is now, he was appointed the head of Shein, the chairman of Shein Latin America a couple of months ago. So he's only chairman of Shein Latin America, but now they're kind of positioning him as the figure, the public face of Shein in America. And I think this is where it gets interesting, the way they're playing this is like trying to distance themselves from the Chinese connection, Chinese origins, and seeing how

• 38:25Speaker 01

  companies like this really are, you know, incorporating geopolitical public relations into all their decision making, into who represents the face of them. Like, again, $66 million company, fastest growing retailer in the world. Do you know the name of the CEO?

• 38:42Alex Kantrowitz?

  No, I don't even know where to buy their stuff.

• 38:45Speaker 01

  Okay, I don't even, I'm talking about this on Shein.com.

• 38:49Alex Kantrowitz?

  It's all online.

• 38:50Speaker 01

  Yeah, it's all online. They've had a couple of pop-ups, I believe, but they're, they're doing collaborations. They launched this thing, Shein X with indie designers. They, they, you know, they're getting into culture, retail culture, fashion culture as much as anyone else. And again, the idea that like H and M and Zara, their global reach and recognition is just so ingrained in just everyone, right? Now here's a company that's overtaken H and M in sales and, and you're, again, I've been on like panels with retail folks who pronounced it shine as well. So.

• 39:28Alex Kantrowitz?

  Stop making fun of me about that.

• 39:29Speaker 01

  No, I'm just saying, you're not, you're not the first, you're not the first.

• 39:35Alex Kantrowitz?

  Hey, their stuff looks amazing. Oh my God, it's so cheap.

• 39:38Speaker 01

  It's so cheap. Well, okay. So this is another reason the story is interesting. What Shein essentially did.

• 39:46Alex Kantrowitz?

  This is amazing. This clothing, they're cool and they're cheap.

• 39:51Speaker 01

  Whose most vulnerable, I think, is Amazon here. Amazon is in a huge potential for disruption because what's happening is what Shein and then Timu's another, it was another really fast growing Chinese startup that's playing the same game. All the Chinese sellers that from like 2012 to 2019, that Amazon was basically arbitraging, that Amazon was finding cheap Chinese sellers, opening up their marketplace and letting them sell to American consumers. Now Shein has built a marketplace that directly connects us to them. Not through Amazon, but we buy from those same manufacturers at a much cheaper price. And also their, their shipping is a little bit slower. It's like 10 days, two weeks.

• 40:35Speaker 01

  So the kind of the deal is we're going to give you stuff that is cheap as hell. You'll wait a little longer for it, but you know, it's especially in this economy, it seems like an unbeatable proposition.

• 40:48Alex Kantrowitz?

  I'm going to fill my cart before this podcast is done. Holy moly, this is wild.

• 40:54Speaker 01

  Wait, hold on. Do you know about Shein halls?

• 40:58Alex Kantrowitz?

  No.

• 40:59Speaker 01

  This is a TikTok trend. When you say you're gonna fill your cart. One of the things that really kind of blew them up was people literally buy boxes of stuff. And like, say, like, this whole box only cost me $180 and then dump it out and like, make just this show of gluttony and consumption. And that's the trend. So, yeah, it's here. Search hashtag Shein Hall on, uh, and your favorite social media platform and you'll see what I'm talking about.

• 41:31Alex Kantrowitz?

  In 10 days to three weeks, if you don't live in Montana, you're gonna see a new video from me on TikTok. Exactly this. Wow, this is amazing. So, well, how do you think this, does this change the, the tech platforms or the retail business in the US at all?

• 41:48Speaker 01

  Yeah, I think Amazon is hugely vulnerable. I think like H and M and Zara, or especially H and M, definitely vulnerable. I think this is the most interesting story in e-commerce and retail that has kind of flown under the radar because, again, their growth is insane. And they've, and just how well and successfully they pulled off the ability to, you know, just like make their way into global retail and do it, you know, in a really quiet way, I think is fascinating.

• 42:22Alex Kantrowitz?

  I mean, I'm stunned. Like, they have wedding dresses for $36.99. I mean, I don't know who's getting married in a Shein dress, but you could do it.

• 42:33Alex Kantrowitz?

  You can. All right, we're gonna, let's, let's, why don't we put a pin on this and let's come back to it on a future episode. We talked about potentially inviting John Herman on from New York Magazine, who's written about Timu, which is another one of these sites. I kind of feel like it merits a full, full hour of discussion, but. Wow, I'm glad we kept it in. You've definitely opened my eyes to this thing. So

• 42:54Speaker 01

  Yep, maybe my, my single friend who wears his Apple headset to the date to marry the girl wearing the Shein dress.

• 43:01Alex Kantrowitz?

  Wouldn't it be beautiful?

• 43:03Speaker 01

  Everyone will be happy.

• 43:04Alex Kantrowitz?

  Exactly. How does that relationship not last? I'm curious, I actually have a question. Like, let's, let me take a moment of self-awareness. How do you think I didn't know about this? I mean, it's bigger than H and M. How was I unaware? Like, am I just like, is my head in the wrong place? Or how do you think I ignored it?

• 43:21Speaker 01

  In fairness to you, you're not a 22-year-old girl. I mean, I think that's as a starting point.

• 43:27Alex Kantrowitz?

  I can confirm that.

• 43:28Speaker 01

  Yeah, but I, I mean, hold on, this, they have not gotten a ton of coverage. I wrote about them in October and like, that's why I was, I was trying to start a layout the case that this is really interesting story. And they still, again, the $2 billion funding only got covered in the Wall Street Journal, who got access to Marcelo Klar, like, so obviously they wrote about it and they wrote a good, long piece around it. Reuters has like a short piece about it. No one else covered that story. $2 billion fundraise in this environment for a Chinese company that's becoming the dominant retailer in the US and it's nowhere to be found.

• 44:09Speaker 01

  And I'm always a little hesitant to say no one is talking about it, but, because when in reality, when a lot of journalists are covering things, but this one really is not being covered.

• 44:20Alex Kantrowitz?

  Except here on Big Technology Podcast.

• 44:22Speaker 01

  Except on Big Technology.

• 44:23Alex Kantrowitz?

  Fun story of the week. Jeff Bezos' $500 million yacht has a sculpture of Lauren Sanchez, who's his partner on the front. And she's wearing the symbol for Kourou, which symbolizes new life, growth, strength and peace. And it's a symbol that's special to the couple. I mean, Jeff Bezos, man, he's gone from this very unassuming nerd to someone who literally sculpted his partner into the front of his boat. I just thought that that was wild.

• 44:57Speaker 01

  I I gotta say, if if we're choosing between world's richest man, who's doing better right now? Elon versus Bezos edition? I gotta give it to Jeff, man. It's ridiculous. It's midlife crisis, but he's having a great time while Elon is doing whatever he is doing at Twitter. Jeff is really leaning into it right now.

• 45:21Alex Kantrowitz?

  It's interesting because, okay, so first of all, I saw that and I was like, my immediate reaction was like, there's no way he's ever returning to Amazon. It doesn't matter what happens with the stock price. My second reaction to that was, uh, well, not, no, actually, now that you're bringing this up, like, who's in a better? I mean, obviously Bezos is doing the world's richest man thing better, but I also wonder who's gonna have like the bigger impact. I mean, Bezos, like, okay, he created, he created Amazon, credit for that. But if you think about, and and he's like, obviously, he's held up as a business genius for good reason. But then you think about the other things he's done. He's actually competing with Elon in a few areas. He's got the space satellite stuff. Starlink is the household name there.

• 46:03Alex Kantrowitz?

  And he's got the rocket company SpaceX is the household name there. And, you know, Amazon invested in Rivian big time. Okay, so Tesla is the winner there. I mean, he didn't invest in, he didn't do the whole Twitter thing, so points to Bezos on that front. But I still think you can make an argument that even though Elon's having a worse time of it, he's gonna be more impactful than Bezos.

• 46:29Speaker 01

  I think I agree. Bezos in the in the history books will be remembered as just a business leader and nothing more than that. Where Elon will certainly be a character more with more stories and depth than.

• 46:45Alex Kantrowitz?

  The state of humanity forward.

• 46:47Speaker 01

  Okay.

• 46:50Speaker 01

  For better, for worse, he will be remembered.

• 46:53Alex Kantrowitz?

  Yeah.

• 46:53Speaker 01

  It'll be more in the history books about Elon than Jeff. Also, hey, maybe, uh, once Shein starts eating Amazon's lunch a little bit, Bezos will be called back into the office and, uh, I mean, yeah, Amazon and what's going on over there? That's for a whole other episode, I think.

• 47:11Alex Kantrowitz?

  Well, I think that Bezos could also just wear those, uh, Shein shirts, fun Shein shirts to

• 47:17Speaker 01

  That would be a move.

• 47:19Alex Kantrowitz?

  Because they certainly, the ones that I've seen on the homepage at least seem to fit his style. All right, Ron John, thanks for joining, man. This was great. This is definitely one of our more fun episodes, so it's nice to go one-on-one with you, man.

• 47:31Speaker 01

  Yep. See you next week.

• 47:32Alex Kantrowitz?

  Okay, see you next week. Thanks, everybody, for listening. Uh, thank you, LinkedIn, for having me as part of your podcast network. Um, folks, I am going to preview two really fun episodes we have coming up. All right, we have a conversation with Astro Teller, who is the captain of moonshots, or also better known as the CEO of X at Alphabet. I just interviewed him and we're going to talk all about the experimental projects that Google's working on and why its experimental arm didn't produce the chatbots first. And speaking of chatbots, I have a conversation with Jack Krajec, who is the senior director on Bard at Google. We get decently into some of the reasons why Google's been slow, although it's kind of tough sometimes to get concrete answers from people,

• 48:18Alex Kantrowitz?

  um, who are working on these projects directly. All right, that'll do it for us here. We'll see you next time on Big Technology Podcast.

• 49:27Speaker 02

  Now, more than ever, we need someone on our side. But Rob Whitman? Whitman's votes drove up costs, cut Medicaid, and risked 350,000 Virginians' health care to pay for tax breaks for himself and his donors. He's not on our side. Shannon Taylor will fight corruption, cut taxes, and bring down costs. This November, vote for Shannon Taylor. She's for us. Paid for by HMP, the House Majority PAC dot com. Not authorized by any candidate or candidate's committee.

• 49:57Speaker 03

  In this life, you can't win.

• 49:59Speaker 04

  When the world gets you down.

• 50:00Speaker 03

  No!

• 50:01Speaker 04

  Escape to Pluto TV.

• 50:02Speaker 03

  This is objectively fantastic.

• 50:04Speaker 04

  Relax into the movies and shows you already know and love, all for free.

• 50:08Speaker 03

  Shwing!

• 50:08Speaker 04

  Even our news is uplifting.

• 50:10Alex Kantrowitz?

  You stay classy, San Diego.

• 50:12Speaker 04

  Watch School of Rock, Crazy Ex Girlfriend, Anchorman: The Legend of Ron Burgundy, The X-Files, Wayne's World, and so much more.

• 50:17Speaker 03

  We're not worthy!

• 50:19Speaker 04

  The best things on TV really are free. You just have to know where to look. Escape to Pluto TV. Stream now, pay never.