SBF Convicted, OpenAI Is Vulnerable, Ozempic Effect Gone Overboard

Ranjan Roy from Margins is back for our weekly discussion of the latest tech news. We cover: 1) SBF's conviction 2) Whether FTX will cover the full shortfall 3) Why OpenAI is more vulnerable than many think 4) Google's forthcoming Gemeni model 5) Where the real value in generative AI will land 6) Google's $2 billion Anthropic investment 7) Rebellion against AI doomers 8) Sovereign wealth funds investing in AI? 9) Jeff Bezos moves to Miami 10) The FTC's new revelations about Amazon 11) The Ozempic effect 12) Ozempic's TAM. -- You can subscribe to Big Technology Premium for 25% off at https://bit.ly/bigtechnology 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.

• 0:01Alex Kantrowitz?

  SBF has been convicted on all seven counts. Wait, is OpenAI much more vulnerable than you think? Jeff Bezos is moving to Miami and the real Ozempic effect. All that and more coming up right after this. 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.

• 0:46Alex Kantrowitz?

  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 Razor 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. Welcome to Big Technology Podcast Friday Edition, where we break down the news in our traditional cool-headed and nuanced manner. We have a very big week of news this week, including big news on the FTX front, but

• 1:30Alex Kantrowitz?

  then also plenty more on AI, on Bezos, on Amazon, and of course, on Ozempic, something we haven't talked about yet, but we will today. Joining us as always on Friday is Ranjan Roy of Margins. Welcome, Ranjan.

• 1:43Speaker 01

  I think the COVID and Zerp era is officially over. SBF is going to jail. This is, this is a big day in my life right now.

• 1:52Alex Kantrowitz?

  Absolutely. I mean, it took four hours to decide to convict him. And apparently that was even longer because they knew that if they took like a few extra minutes, they would get free dinner. That's what I'm hearing. But are you surprised that it took such a short amount of time to convict Sam on all seven counts?

• 2:09Speaker 01

  No. And for regular listeners over the last few weeks, Alex and I have regularly tried to play the role of SBF defense lawyer, and we failed miserably. And I'm very glad that the way this ended, the actual conviction went, because it was a reminder that it was very difficult for anyone to try to come up with any reason he can get off. And to me, I think the most important thing is with these kind of trials, there's always the worry that this stuff could be too complicated, the actual intricacies of what market making is and what an exchange is versus a hedge fund and a risk taker. All of these things

• 2:50Speaker 01

  could have been complex, but when all three of your friends and closest coworkers and co-founders all turn against you, I think that was pretty much the nail in the coffin.

• 3:02Alex Kantrowitz?

  Denver McAveaxios put a poll up on Twitter yesterday asking people they think SBF was guilty or innocent, and 99% said guilty and 1% said not guilty. And I was like, wow, like Sam is lucky that Twitter is in his jury pool, but he actually would have been better off because at least there was some doubt there. So seven counts. And what we're seeing now is kind of the reaction from some of the people that were there in the very early days. Of course, Sequoia decided to invest a tremendous amount of money there. And Alfred Lin, who was the Sequoia partner who made the investment, came out and said that this confirms what we already knew. SBF misled and deceived so many, including

• 3:45Alex Kantrowitz?

  myself and Sequoia. But just in June 2023, Ranjan, you point out that speaking at Bloomberg's Tech Summit, he said if he was tasked with evaluating FTX again, and for the first time, he would probably make the same investment decision. What do you take of that, the fact that he's trying to engage in some revisionist history? And all these people who for you who were with Sam up until the end, you know, are finally only now saying, ah, that was a big mistake.

• 4:11Speaker 01

  I do not understand why Alfred Lin is trying to come out and try to make anything of this to deflect blame. Like, all anyone has to say, and it's totally not unreasonable, is, "This was an absolutely manic moment. This was, you know, like, first of all, the rise of crypto in general, then bring in all these other factors around zero interest rate, and then pandemic, and then, like, just masses of money coming in, that, and to do a deal, you had to go along with whatever the hot deal was. And a lot of people, including Sequoia, made a lot of money with this strategy. So just say, 'Yes, we played fast and loose,

• 4:53Speaker 01

  it worked sometimes, and then other times it didn't,' versus, 'Anything was particularly untoward, or it was all SBF's fault.' And let's also not forget, the Sequoia profile of FTX and Sam Bamkinfried, I feel, live forever in infamy. And for those who remember, there was an article on their blog that talked about how he could be the world's first trillionaire. And then the best part was how they talked about, you know, as he pitched them and convinced them, not only would they own crypto, that they would become the future vision of money and have a total addressable market of everyone, which was my favorite line. But then it even got better, because then they said, 'Also, the fucker was playing League of Legends

• 5:38Speaker 01

  the entire time.' And they thought that was somehow funny, or it made him-

• 5:42Alex Kantrowitz?

  Worth including, which is nuts.

• 5:43Speaker 01

  -kind of more of a genius, and worth including, in an investment proposal and justification on their own company blog. Obviously, that was taken down, but, I mean, after you make that many mistakes, just own up to it.

• 5:58Alex Kantrowitz?

  This is why we're so all in on this story, by the way, because it's not just a story of crypto fraud. It really tells you so much about the whole ecosystem, and about an era. You can really go in and dissect it. And, you know, speaking of playing fast and loose- I mean, the Sam, you know, every time there's a big criminal case, I wonder why we don't hear more from the defendant who probably has their side of the story to tell and probably wants facts out there that that aren't out there in their in their central discourse. Well, now I know why they tend to stay quiet because maybe maybe he would have been convicted otherwise. But one thing is for sure is that Sam Bankman Freed, through all of his media appearances and his inability to shut up, effectively cooked his own cooked himself

• 6:40Alex Kantrowitz?

  in this case and said so much stuff that was held against him in court that he personally just could not get out of it. I mean, is that is that a good lesson that you absolutely do not have to tweet through it?

• 6:51Speaker 01

  No, I think that's hopefully the best lesson from this because I think that over the last, let's say, maybe five to seven years, I think it's actually been a really, really bad lesson for future up and coming entrepreneurs or just leaders of any sort that the the the lesson has always been you can always tweet through it. And I won't name names, but that's business leaders, politicians, that's all types of people that the kind of lesson everyone's taken away is the sheer velocity of and like ferocity of communications is is how you would get past any kind of problem and deflect everything.

• 7:34Speaker 01

  And this was a reminder that, I mean, again, how open and shut this case was that it didn't save him. And boy, he tried. I mean, remember the 60 Minutes episode?

• 7:43Alex Kantrowitz?

  Sure do.

• 7:44Speaker 01

  That to me was, I think that was even worse. And I still have not read the Michael Lewis book. You have?

• 7:49Alex Kantrowitz?

  I just finished it.

• 7:50Speaker 01

  Yeah, yeah. Actually, how do you feel now? You finished it right before the conviction. We talked a little bit last week, but but have your feelings on the book changed at all?

• 8:00Alex Kantrowitz?

  I think I'm going to bring that in right now because we're going to go to sentencing predictions. And I think it factors in what I learned at the end of Lewis book. So, okay, so Sam faces up to 115 years in prison. What do you predict he gets? And what do you think he should get?

• 8:18Speaker 01

  This is a tough one for me because I will readily admit and sometimes a rarity in punditry. I have absolutely no idea how criminal sentencing works and I'm happy for that because the actual like nuts and bolts of it, but I mean, if we talk about how much do I think he should get? It's a tough one. Like, there has been no, I mean, once Bernie Madoff got life, basically. Uh, wait, how long did Elizabeth Holmes get?

• 8:50Alex Kantrowitz?

  11 years. I think she got 11 years.

• 8:52Speaker 01

  Yeah, so Elizabeth Holmes, who put people's lives actually physically in danger, only got 11 years. Like, there has been no real, uh, you know, very tough sentence on any kind of white collar criminal and like this. So, is it gonna be something like 10 or 11 years or will it be something much, much more significant? Like a Bernie Madoff. Um, I think it should be interesting, but what I think, I hope he gets enough that it deters people from doing this kind of thing again.

• 9:27Alex Kantrowitz?

  Okay, so I might be a little Lewis Pilled because at the very end of the book, he makes this point that John Ray, who was in charge of the bankruptcy of FTX, was able to find 7 billion of the 8 billion missing assets. 7 billion of 8, right? 8 and change? Then you add in the fact that Bitcoin has appreciated.

• 9:48Speaker 01

  Anthropic, here it comes.

• 9:50Alex Kantrowitz?

  And is FTX in the green right now? And I don't think that should matter for the conviction, but I do think that should matter for the sentencing because if they're able to return the money to the people whose money they lost, then that matters in terms of how long you're gonna put this person in prison.

• 10:07Speaker 01

  Wait, how did they find 7 billion of 8 billion from the money? That's what I'm... I have a hard time wrapping my head around when what like you have some amount of money is spent on renaming the Miami Heat arena, on paying Tom Brady and just like that's money out the door that's gone, that's spent. Then theoretically, you have cash sitting around, cash that's been invested in however many either angel investments, one of which is anthropic, but then a lot that went into total shitcoins. Like, like, how do you're telling me they genuinely recovered seven eighths of all the money that was ever invested into

• 10:50Speaker 01

  FTX, that was ever deposited into FTX?

• 10:53Alex Kantrowitz?

  I mean, I'm not saying it. John Ray is saying it. And he's the guy. I mean, he's not exactly in favor of these folks. So I think a tremendous amount was largely the clawbacks. They probably made some, I don't know if they, if it was the arena that they clawed back from, but they definitely clawed back. And then FTX did make money. I mean, it was making money. The whole problem was that it then took the, you know, the actual customer deposit and lent it elsewhere. But it was making money. So I don't know, maybe, look, I'm not here to defend Sam Bankman-Fried.

• 11:23Speaker 01

  No, no, no, that's fair.

• 11:24Alex Kantrowitz?

  I'm just taking the public pronouncements. And so I do think that that plays in. I think Sam is going to get 20 years. That's my prediction. I think he should get five to 10.

• 11:35Speaker 01

  Okay.

• 11:36Alex Kantrowitz?

  I mean.

• 11:37Speaker 01

  I'll match your 20.

• 11:39Alex Kantrowitz?

  I think 20, 20 to 30 is really most likely. Could you, I mean, given that a lot of this money is going to be clawed back, could you give him five to 10 and bar him from getting anywhere near anything financial, except for a US Treasury bond for the rest of his life? That would seem fair to me.

• 11:56Speaker 01

  I am ready for the 2050 Sam Bankman-Fried redemption tour, where he's going to be giving financial workshops and lessons all over the country.

• 12:09Alex Kantrowitz?

  Okay, so somebody did take a mid-journey photo of Sam Bankman-Fried and put it in my mentions, showing what he would look like after like 40, you know, 40 years in prison or whatever. And It's I I just looking at that image, I just and you know how mid journey makes everybody look better than they actually look. I just have this prediction that Sam is gonna just get in sick shape, you know, cut his hair in prison and become like this

• 12:37Alex Kantrowitz?

  object of romantic fascination among geeps geeks everywhere like he's gonna become like the next weird weirdo sex in the US.

• 12:47Speaker 01

  Martin Shkreli?

• 12:48Alex Kantrowitz?

  Shkreli, yeah.

• 12:48Speaker 01

  Shkreli. All right. Bold predictions here on Big Technology Podcast.

• 12:54Alex Kantrowitz?

  So, speaking of bold predictions and and proclamations, I wrote a story in Big Technology this week that's gonna lead us into a discussion of the state of AI today because and I think we've probably talked about this, but I don't know if we've talked about it as concretely as I laid it out in Big Technology this week. But I wrote this story talking about how OpenAI is a lot more vulnerable than you think. And basically, the main premise is that OpenAI rose to prominence, building great products on top of other people's breakthroughs, including the transformer model. And it had this head start because people didn't fully understand what was gonna happen. In fact, if folks listen to Garav Nmada, who came on the show on Monday, they would have understood that Google itself didn't even realize what it

• 13:37Alex Kantrowitz?

  had on its hands with the transformer model in 2017. But everybody is now cued into what this technology can do. And so therefore, there's a tremendous amount of competition, and there's commoditization. And I listed six areas where OpenAI will face competition and is not stacked up perfectly in terms of its ability to compete. So I'll just go through them very, very, very quickly. One is model commoditization. It owns GPT-4, which is the best model on the market. But you're seeing, you know, new competition from Gemini within Google that's gonna come out imminently. You're seeing Anthropic, right, which is getting these billion dollars of investments, Llama 2, and even who knows, maybe Elon Musk's XAI will factor. So people are gonna have choice.

• 14:22Alex Kantrowitz?

  When people have choice, we go to two, which is margin compression, which is now if there are so many different LLM models, they're going to have to compete based off of cost. The margin comes down. And in fact, one entrepreneur told me that he doesn't even see this as a money-making operation and the infrastructure is really going to be the thing that that makes money, which points to Nvidia. Number three is the hits business. You know, when everybody has access to this technology and everyone's building, you really need hits in order to succeed. And OpenAI has had even a model this year that they were working on that they had to scrap because it wasn't meeting expectations. The fourth is the open source threat. You know about that very much. I had a VC who told me that the trend now is to start on OpenAI, start your company on OpenAI and then build to the point where you're model agnostic,

• 15:05Alex Kantrowitz?

  where you can plug any model in and the the actual experience of the product won't change. And then when you go to a certain point, you go open source and you customize and you build proprietary and so you don't rely on OpenAI anymore. Fifth is this move to smaller models. OpenAI's ChatGPT or GPT four can do everything. And you don't need to do everything if you're a specialized model like Harvey, for instance, for law. And so people are going to move to smaller, more specialized models, which aren't as impressive if you speak with them as a ChatGPT, but might even get the job done better. And the sixth is that it's just too close to Microsoft. And you have Anthropic, which is making deals with Google here and Amazon there. And you have OpenAI that's attached at the hip to Microsoft with $13 billion of funding.

• 15:50Alex Kantrowitz?

  And it's going to make it much more difficult to show up prominently in an AWS or a Google. And all this adds up to a OpenAI looking much more vulnerable than the popular narrative makes it out to be. Okay, I've laid the case out and now I turn it over to you. How do you react?

• 16:07Speaker 01

  I would say, so as a consumer, have you used the recent updates within ChatGPT?

• 16:16Alex Kantrowitz?

  I'm sure I have.

• 16:16Speaker 01

  But but but basically, so now it is incredible. And I have gushed about what they previously called code interpreter. And then called, I think it was data analysis. And now is simply built into the interface where you can throw in a CSV and it can help you do really complex calculations. Now also, DALL-E three, DALL-E three is so much better, so, so, so much better, actually usable. And even cooler, now within ChatGPT, you can simply typed in a basic prompt, like, I want a unicorn on a skateboard. And then, because that's the kind of stuff I look for. And then it'll actually create an image.

• 16:57Speaker 01

  But when creating that image, expand that prompt a great deal and then tell you what that prompt was. So it's actually taking kind of the ChatGPT element of let me help you create a prompt that's better. And let me create you the image that's good. So all this stuff, it was a reminder to me that OpenAI, I actually think one thing that would push against a lot of this is their strength has really been as much on the product design side as it has been on the infrastructure hardware model side. And and like one example for me was, again, GPT-3 existed forever, but ChatGPT, its most brilliant UI mechanism was

• 17:36Speaker 01

  how it kind of looks like it's thinking. Like, it could actually create that answer for you and spit it all out in one big chunk. But instead, the letters appear as though there's this like sentient being thinking and that, I honestly made that make made people feel like it's much more magical. And that's what really helped the virality of it. So all that being said, I think on the consumer side, what they've done just in the last one month is puts them so far ahead for me versus any of the competitors. Claude, which is from Anthropic, their chatbot, and Bard from Google, anything else.

• 18:14Speaker 01

  All that being said, I think the most important thing you said was your fourth point, that a good company that's developing on this technology basically should be able to move to the point that it becomes model agnostic. And I have seen that, I've worked on projects where we've gotten there already, and I really believe that's the future. So to me, the consumer side of OpenAI is way ahead of everyone else, but that's a side that's going to probably lose money. And then on the enterprise side is where they're really going to need to secure and win these deals and make more and more and more money to make up for all the compute that goes in to the consumer product. And I think more and more companies are going to see, I don't need them for this.

• 18:58Speaker 01

  I can actually, again, whether it's the open source side, whether it's more specialized models, all of these things. So I, I went through the entire example of why I think ChatGPT has gotten so good to get to the point where I do agree with you. And I think OpenAI as a business is in a lot of trouble.

• 19:15Alex Kantrowitz?

  Yeah, exactly. And so it's so interesting because there's both the consumer and the enterprise point. And what's going to be the bigger business for them? I think we've always agreed that it's going to be enterprise. And you're right, like their consumer product is great. I think that Dolly 3, which you can also access with Bing, is amazing. It's actually, in some cases, for me surpassed Midjourney, which is wild because Midjourney was so far ahead of Dolly 2.

• 19:42Speaker 01

  I agree, I agree, completely.

• 19:43Alex Kantrowitz?

  That being said, the, the companies are, these, these are demos for the companies to be able to provide their technology to developers, for companies to build on top of the technology. And that is where the competition is very, very, very intense.

• 19:58Speaker 01

  Yep, and, and even more, the Microsoft thing was interesting for me because again, and, and I've gushed about this before, but for anyone who's used their data analysis with it that's now built into ChatGPT, again, throw in a CSV, but rather than having to look up different Excel formulas to do simple analyses or even complicated ones, reminding myself how to do a V lookup, like that stuff just happens instantly, just by querying with natural language questions. But Microsoft's probably going to put that in their copilot and might not even use OpenAI. They've announced partnerships with Facebook's Llama, like, like they're, they've also been operating at a bit of an arm's length, so.

• 20:42Speaker 01

  So where they really have an edge in a way that enterprises need them, I am not sure.

• 20:51Alex Kantrowitz?

  Okay. And that gets to sort of the new models that are starting to come up, right? Because if there's going to be a real commoditization, you need stellar models that are going to show up and are going to be able to make a difference here. And I just read this insider story from a few weeks back as I was researching where the progress is of Google's Gemini, which is the competitor to GPT-4 that I imagine is imminent. And it is fascinating. So there's a Google VP talking about it in the story. And they say, I've seen some pretty amazing things, like I'm trying to bake a cake. Draw me three pictures of the steps how to how to ice a three-layer cake. And Gemini will actually create those images. So these are completely novel pictures. They are not pictures from the internet.

• 21:34Alex Kantrowitz?

  It's able to speak in imagery with humans now, not just text. I mean, to me, that is fascinating, right? The fact that these models are moving multimodal. And Gemini in particular, if you can communicate in imagery, the power is unbelievable.

• 21:50Speaker 01

  Yeah, but so, okay, so on one side, the multimodality, I think, is, I agree, getting really interesting. And, uh, and, and Google, I do think especially from the organize, what's their thing? Organizing and the world's information or whatever the tagline was or used to be.

• 22:09Alex Kantrowitz?

  Yeah, the Google proclamation is we'll organize the world's information or whatever.

• 22:14Speaker 01

  Or whatever.

• 22:16Alex Kantrowitz?

  Make the cars fly. Put that in the whatever.

• 22:19Speaker 01

  Well, no, I was, I was thinking the don't be evil was one of the, that was like the motto. But then they had something to make the world's information. Yeah, searchable. Yeah, that was.

• 22:31Alex Kantrowitz?

  If you can, just don't be evil.

• 22:32Speaker 01

  If you can, you don't have, I mean, maybe a little bit, but, um, but. I uh, yeah, no, so Google and already we generative search getting really interesting. They invented the transformer. So on the pure model strength, I think they're going to be a formidable competitor. It definitely hasn't translated to either the enterprise sales side or the front end consumer side yet. But they clearly should be a competitor. But to me, there's even a, I've talked to you about this offline before. There's a company writer.com. They just raised a hundred million series B. They have a whole, the way I kind of like was thought of them, it's a third way.

• 23:13Speaker 01

  So you have either the Googles and Microsofts of the world, just gigantic. They're going to incorporate generative AI into the products you already are in. Or you have Anthropic, you have OpenAI, these kind of like pure tech AI companies. Writer, what's interesting to me is it's just kind of like a classic enterprise software company. They basically sell full stack generative AI to industries like healthcare, financial services that have really, really specific needs and information structures and hierarchies and regulatory considerations. So at that point, like going in and basically being the company that builds a software

• 23:53Speaker 01

  that brings generative AI into a company's existing proprietary software. Cause a lot of these companies do have existing systems, like it's a different way of approaching it. And I actually think it's a really interesting way because maybe the next giant company is not just a technology company. It's also a more enterprise focused services, sales, consulting. Like a company that brings all this technology across an entire stack of an existing large, complex enterprise. Cause the idea that, you know, like some giant healthcare giant is going to figure this stuff out on their own.

• 24:30Speaker 01

  I think is a far cry from reality. I think the idea that uh, in OpenAI, I just never imagined or is going to have some huge sales team or like, you know, customer success operation that's genuinely. That will work well. So yeah, I think there could be different companies that we're not even talking about right now.

• 24:52Alex Kantrowitz?

  Right.

• 24:53Speaker 01

  That start to actually, which, you know, make an impact. And that's actually kind of exciting.

• 24:57Alex Kantrowitz?

  Exactly.

• 24:58Speaker 01

  Competition.

• 24:59Alex Kantrowitz?

  Yeah, there's going to be real competition. And it's this whole discussion that goes back to like, are you just going to build a thin wrapper on ChatGPT? Well, what's the difference between a thin wrapper on a cloud instance and a successful SaaS company? Right?

• 25:12Speaker 01

  Yeah, yeah, yeah. And so, and what was really interesting that writer they did is, so they have a total consumer facing SaaS product, but then built their own foundation models. And I think that's that kind of full stack approach, you're going to see more and more from companies. Again, you'd mentioned like Harvey Law, you know, other industry or vertical specific, where they don't just build the model and the technology, they build you the model and the software. And you go in and it does is able to do both for you and across the entire stack. To me, that seems like a more reasonable business in the future versus whatever.

• 25:51Alex Kantrowitz?

  Building on the API. API. And that's the issue is customizability. People have been talking about that. And so like, one of the things that one of the founders I spoke with said was that people are going to compete on price or customizability. And maybe Anthropic is the one that's going to do that because they also just ended up with another $2 billion from Google this week. And that's 1.5 billion, billion over time, but 500 million in upfront cash. And Ron, John, you texted this to me this week and I was like, you know, get that compute. But the cash actually, as you pointed out, makes a lot of, makes a big difference for them. So how do you read this investment for Anthropic?

• 26:30Speaker 01

  Yeah, well, they are playing everyone very well because again, they were, they had Google investment, then suddenly a splashy Amazon announcement, then suddenly Google's back in with cash upfront as opposed to just those, those juicy cloud credits. So I think it's a reminder that like, and we talked about this very thing last week. Anthropic realizes, OpenAI certainly has realized already, their brands empower enterprise sales teams at these giant cloud providers. At the Azure salesperson being able to say, "Oh, we have OpenAI as part of our whole suite," makes him closing that, or her

• 27:15Speaker 01

  closing that deal a lot faster. Same way, Google understands that to say Anthropic is getting buzzy right now. So, but I also, what are, I don't know, what they're going to do with all that cash and how they're going to realize those valuations in an actual revenue and monetary level? That one always worries me and we'll see, we'll see what they come up with.

• 27:37Alex Kantrowitz?

  Especially because they have somebody else to worry about, and that is none other than Mr. Elon Musk, who this Saturday-

• 27:42Speaker 01

  Oh, wait, wait, sorry. Sorry, we do have a comment in the, from LinkedIn about IBM Watson. So-

• 27:49Alex Kantrowitz?

  We've got Watson love here.

• 27:51Speaker 01

  Instead of, and we'll get into Elon Musk, but let's also just take a moment to recognize IBM Watson. What are your thoughts on IBM Watson in this entire competitive battle, Alex?

• 28:02Alex Kantrowitz?

  I'm speechless. I don't know what to say about IBM Watson. I really, I don't know. I'm gonna just turn it over to you.

• 28:11Speaker 01

  I'm setting Alex up with that one, but I, I went to IBM Watson conference in 2015, and I'll never forget, they had, they were walking around, they were handing out chocolates, and they said, "These chocolates were designed by Watson." And I was like, "What does that mean?" And they're like, "It's a recipe that's been generated by AI." And this is what they were doing instead of actually building these products. Like, they were, they could have been, I mean, they, they literally had the branding, they won the chess, or Jeopardy chess, all these things. They were the first, and then they threw it all away.

• 28:56Alex Kantrowitz?

  Turns out you need technology and not just marketing. And by the way, you've kicked off a Watson war in the comments, Ron Johnson, so I'm proud of yourself on that.

• 29:03Speaker 01

  Yep, we got Watson. I love Watson is trash.

• 29:06Alex Kantrowitz?

  Okay, all right. So let's talk about Elon. Okay. Elon is introducing his XAI model this week on Saturday. And it's gonna be, it's gonna be interesting. I mean, it's coming to limited folks, according to Reuters. And it looks like it's another LLM. He did recruit some real talent, people from DeepMind, people from, I think, people from OpenAI. So I wouldn't count it out right away. What's your expectations here?

• 29:36Speaker 01

  It's Elon vaguely tweeting about a technology that will help Tesla's stock in the short term. So as a typical thing, I'll say my expectations are not, not profound, but, but you.

• 29:50Alex Kantrowitz?

  Hold on, you're missing the fact that this guy, there would be no OpenAI if it wasn't for this guy. He not only founded it, he recruited its chief scientist. There'd be nothing without Elon.

• 30:00Speaker 01

  No, no, I agree, but it's kind of like, in a way, it now got to where it is. And this whole revolutions happened because he went hands off. Yeah.

• 30:11Alex Kantrowitz?

  Yeah.

• 30:11Speaker 01

  I'm saying it, I'm saying it. If he, if he was all in, hands on over there, I don't think any of this is happening in the way it is today. But again, we'll see. The point you made, and I think it was a few months ago when they first announced it, the talent that they recruited was insane. So like, they have, they have the team.

• 30:31Alex Kantrowitz?

  And resources, doesn't help, doesn't hurt to have his money behind you also.

• 30:36Speaker 01

  No. Team and resources, but.

• 30:39Alex Kantrowitz?

  Elon is also in favor of regulation, or at least some might touch AI regulation. But now, I don't know if you've seen it, this week, and I think I should probably write about this next week, because it got so juicy. Like, the entire DeepMind conspiracy, like some of the, sorry, the entire deep learning conspiracy, some of the real original researchers of this technology.

• 31:00Alex Kantrowitz?

  It uh, they fought pretty publicly on Twitter this week about the alarmist like AI will kill us stuff and talking about how, um, you know, actually it won't. Actually, this is just regulatory capture. And then you had Andrew Ng, who is the co-founder of Google Brain. Here's the headline from TechCrunch. Google Brain co-founder says, "Big tech companies are inflating fears about the risks of AI wiping out humanity because they want to dominate the market." And he goes, "There are definitely large tech companies that would rather not have to compete with open source. So they're creating fear of AI leading to human extinction. It's been a weapon for lobbyists to argue for legislation that'll be very damaging to the open source community."

• 31:41Alex Kantrowitz?

  I think what's interesting right now is we're starting to get some like prominent loud voices talk about how this is all about regulatory capture and people should just shut up about the fears that they have about AI wiping us out. What do you think about this?

• 31:55Speaker 01

  I am so happy because we, and we have both talked about this on the podcast. And when we were talking about this like maybe three, four months ago, or even before, when was the letter again? I can't even tell.

• 32:08Alex Kantrowitz?

  Six months ago.

• 32:08Speaker 01

  Because the pause would have been, yeah. Yeah, remember the pause? The pause? Uh, at the time, but that's what both, it was so clear that this is a form of, like, it was such an awkward thing for these companies to say, "This is going to kill us all, but we're still working on it." And I'm very glad that, uh, it's becoming, it is almost becoming a meme right now. And I've seen plenty of pretty good memes about, you know, like, "It's going to kill you all, but sorry, I need to get back to working on that thing that will kill you all." Um, so, yes, it's, yeah, it's, it's, it never made, and again, Elon Musk is, is tripling down on this. He's just talking to Rishi Sunak, the UK Prime Minister, about this entire topic.

• 32:55Speaker 01

  And meanwhile, cars are on the road with full self-driving. Like, it's, it's, the disconnect for me has never made any sense. And I'm very, very glad that like people like Andrew Ng and others, like very, very prominent people who have led this entire revolution are now saying it out loud.

• 33:16Alex Kantrowitz?

  Okay, so now here is a tricky regulation question and a funding question that I think will be fun to discuss. So on the phone with the AI founder this week, he told me that he thinks the next place that these companies are going, these big AI companies are going for funding, sovereign wealth funds. And they've basically tapped out all of the money in the VC community, in big tech. I mean, it doesn't get much bigger than getting multi-billion dollar investments from Amazon and Google. And they're going to need money to pay for Compute Next. So the next place they go, sovereign wealth funds, maybe the Public Investment Fund of Saudi Arabia. Now, that money can help push the, you know, cutting edge forward.

• 33:56Alex Kantrowitz?

  However, if you believe there's some national security benefit in keeping this technology, you know, out of the hands of certain countries, do you then allow these companies to go fundraise anywhere in the world? Or do you restrict their sources of funding to maybe prevent them from raising from sovereign wealth funds? What's your perspective on that, Ron John?

• 34:20Speaker 01

  So my perspective on this is the beauty of the moment is that sovereign wealth funds, because sovereign wealth funds specifically, and there's history here because in the 2000s, I worked in emerging market trading and a lot of the currency work we did was with sovereign wealth funds. They never invested in this kind of stuff until we lived in a zero interest rate world. So sovereign wealth funds might have some small allocation towards adventure or more high-risk assets. But in general, these are gigantic pools of money that we're supposed to invest relatively conservatively.

• 35:02Speaker 01

  Especially the word pension fund, you know, like screams conservatism. But when the rates were zero, that's the only place they can go. And right now, These are like, if you're coming in anthropic series G at a trillion dollar valuation, or what I don't even, what is OpenAI right now? Probably like a hundred billion or something?

• 35:23Alex Kantrowitz?

  Eighty to ninety billion, but we don't totally know until they raise their next round.

• 35:27Speaker 01

  Yeah, exactly. So like, now that there are plenty of vehicles for getting your seven to 10% out there in the world at a low risk for these kind of big pools of money, I think these, the idea that they are going to be able to be tapped for this kind of investment is going to be gone. And I think that's going to be one of the reminders that we're living in a completely different world right now. And that's why I actually think that's what's been interesting about these flashy Google and Amazon deals. And we've talked about it so much that the numbers are big, but already the cash is dwindling. And that's why cloud compute becomes part of it. But the days of the Saudi PIF, Public Investment

• 36:09Speaker 01

  Fund, pushing money into a vision fund for Masayoshi Son and then a dog walking app getting $3 billion or whatever it is, hundreds of millions for billions of valuation, I think that's long gone. And I think that we're going to start to see some pressure on these companies soon.

• 36:27Alex Kantrowitz?

  Yes, but if you have all this oil wealth, you got to put it somewhere, you're not going to spray it freely as you would. Maybe you make a direct investment in that, you know, where are you going to put it? I mean, maybe AI.

• 36:39Speaker 01

  Well, no. So if you're looking for financial return, I mean, treasuries and corporate debt are looking pretty good right now. If you are looking for purely national strategic, like, national geopolitical strategic considerations, then yeah, then if you're looking at this money to-

• 36:57Alex Kantrowitz?

  So do you make a law to prevent that?

• 37:00Speaker 01

  Uh, CFIUS, the Committee for, what is it, Foreign Investment in the US, I think they're going to get busy on this stuff pretty soon.

• 37:08Alex Kantrowitz?

  Yeah.

• 37:08Speaker 01

  I think that, I think they're definitely going to have their hands full very soon because I do agree that- There's going to be so much around the national security elements within this entire space coming soon, unless the open source movement and smaller models and companies make it an even playing field for everybody.

• 37:27Alex Kantrowitz?

  Exactly. All right, here's one comment before we go to break from Noble Akerson, saying that they draw parallels from how folks like Chamath made so much wealth in building social media platforms, only to leave and warn us about social media's influence. And in this case, with the AI concerns, it's like that, but it's even worse because it's en route to making money from AI, trying to warn us of its dangers and ice out other competitors. It's not a great moment. All right, let's go to break and then we'll come back and talk a little bit about Jeff Bezos' move to Miami, this Ozempic effect, and whether it's gone overboard. And then we'll see what else we get to. Maybe we'll wish happy birthday to the unicorns. It's the 10th birthday of unicorns, of the term at least. All right, back right after this.

• 38:12Alex Kantrowitz?

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• 40:13Alex Kantrowitz?

  And we're back here on Big Technology Podcast. Ron John Roy is here with us from margins. We're talking about all the week's news. Some news just dropped. It seems like Jeff Bezos is about three years too late on the move to Miami phenomenon. He posted on Instagram that he's moving to Miami, of course, to spend some time with his parents. But there is another side to this. And this is from Rob Frank from CNBC. Jeff Bezos says he's moving to Florida to be closer to his parents. Another reason, taxes. Washington state has a new 7% tax on capital gains. So he will owe $70 million in state taxes for every 1 billion of Amazon stock he sells. And he sells a lot.

• 40:55Alex Kantrowitz?

  Of course, you go to Florida and you're not paying those taxes. So what do you think about the Bezos move to Florida? It's kind of interesting to me. It's like, I didn't even realize that billionaires like announce that they're moving places as opposed to just acquiring, you know, another property. But maybe the tax situation is what inspires the need to post about it.

• 41:16Speaker 01

  Well, we started this episode saying that the Zerp era is over with SBF getting convicted, but Bezos to Miami sounds like as 2021 as it gets. Like, next thing you know, he's gonna be like high-fiving Mayor Suarez at a crypto conference. And it feels like, it feels like we're back. But I, but I will say, our other lesson from earlier in the episode was to, you can't tweet or post your way through it, and maybe that's a problem. And when this announcement, I was kind of confused. Why say it when there's such clear tax implications? Like, no one cares where you're living or moving. Does he think people care? But when it raises all these kind

• 42:00Speaker 01

  of issues, I do wonder about it. But to me, there's bigger Amazon news this week. Did you see the FTC stuff? Sure did. This is, I think, and we've talked a lot about the FTC and whether they're gonna be successful on this big lawsuit against Amazon. And one of the, out of documents that were on redacted this week, is, is this idea that, starting in basically 2014, when Amazon launched its advertising business, very small, is, at a certain point, in a few years down the road, there, what they call defect ads, ads that were algorithmically very clearly labeled as not relevant to the product or from scammers. At a certain point, it was explicitly told

• 42:45Speaker 01

  that they should accept more defects as a way to increase the total number of advertisements shown and to drive up Amazon's advertising profits. Now, what that means is very interesting, especially in the case of the FTC and Amazon, because that is a necessary price increase on the consumer. The more advertising that needs to be paid, will be, the consumer, suppliers will raise their prices, and now consumers will have to pay more. My favorite example was, if you were to search for bottled water, you would get the result for buck urine, buck urine, not deer urine, but buck urine. That seems reasonable to me.

• 43:29Speaker 01

  Reasonable. I mean, maybe Amazon understands that you are actually looking for buck urine. Then they had simple ones that like-

• 43:40Speaker 01

  The data tells the truth about who we are as a people. You want, you say bottled water, you want buck urine. But then there are simple ones like if you typed in a search for LA Lakers, it would show you a Seattle Seahawks t-shirt instead. And again, like the buck urine one, maybe in some circles would not be considered egregious. The Seattle Seahawks example, maybe you could say they had some understanding that like, that you search for the Lakers, you want the Seahawks. But in reality, it's clear that their algorithms were labeling these ads as defects and still including them.

• 44:23Speaker 01

  And if you think about right now, and we've, you know, it's endless, myself included, the idea of how fast and big Amazon's advertising business has gotten, and then how that high margin business helps subsidize the e-commerce side of the business, and how this whole fly, along with AWS, and how this whole flywheel keeps working. It's a reminder that to get there, there's definitely some not above board things that happened that were very, that clearly happened. So I think, to me, this is a huge moment for the FTC to start. And it was interesting to see how they're going to start dripping more and more of these things. And again, buck urine, I'm not going to forget that.

• 45:07Speaker 01

  That's a memorable one.

• 45:09Alex Kantrowitz?

  That is definitely a memorable one. I still think the FTC doesn't win, but I don't know. They've got more and more data and more and more evidence against Amazon. You know, you get in front of a judge and you never know what's going to happen.

• 45:21Speaker 01

  Well, hold on. How do you argue that, like willfully and knowingly, accepting a certain type of advertisement in order to boost revenue and profits and the overall business as a whole, when that's going to raise prices on consumers? How, like, what do you think the argument against that is going to be?

• 45:40Alex Kantrowitz?

  It's pretty simple. It's, that's not illegal monopoly maintenance. It's, you know, business practice, just maybe a sketchy business practice, but it's not rising to the level of illegal monopoly maintenance. Like, the burden for the FTC is so high that them proving their case is going to be so difficult. They just don't have the laws on their side.

• 46:00Speaker 01

  No, but if you show that increases prices, which it very necessarily does, and then that both passes on price increases to consumers, but then also to suppliers as well because now the advertising business is growing. So suppliers have to buy into that, which previously, if it wasn't growing, that they wouldn't have to to compete, which then turns the entire search part of your business into an advertising driven one where it's essentially pay to play. Like I think on both sides of the marketplace, you're seeing price increases.

• 46:30Alex Kantrowitz?

  Okay, maybe you have a point and maybe this is why Bezos is moving to Miami is just to sell his Amazon stock as soon as he can without state taxes.

• 46:38Speaker 01

  Maybe.

• 46:40Alex Kantrowitz?

  And hopefully get away with it for him. Well, for him. All right.

• 46:43Speaker 01

  And, and he's ripped. And he's ripped right now. So.

• 46:47Alex Kantrowitz?

  I mean, let's be honest.

• 46:47Speaker 01

  He's in great shape.

• 46:49Alex Kantrowitz?

  Yeah.

• 46:50Speaker 01

  You gotta be in Miami when you're ripped.

• 46:52Alex Kantrowitz?

  Exactly. This was already, already his home. He's just actually going there. Let's end with this. There's this Ozempic effect that people have been talking about that these weight loss pills have effectively put a damper on the potential earnings of anything from snacks to, I don't know, even oil companies because airplanes won't need as much fuel to fly fat people around anymore because everybody's going to be skinny and then therefore airline prices are going to be cheaper. No, this is seriously think, this is serious thinking on Wall Street and. Go ahead.

• 47:32Speaker 01

  Hold on. Wait, wait, finish, finish and then I'll go.

• 47:35Alex Kantrowitz?

  Okay, so this is coming from the Wall Street Journal. It's a reputable publication. It says, "The Ozempic effect on Wall Street has gone overboard," but it lays it out that, it says, "These drugs have led to speculation that gigantic opportunities await those that would benefit from the aggregate weight loss. Wild scenarios conjured up by analysts include the notion that junk food companies might pivot to selling carrot sticks and airlines might sell on gas owing to lighter passengers." And look at, let's just listen to this. Okay, sorry. Listen to this. The S and P Food and Beverage Select Industry Index has declined 12% over the past three months.

• 48:17Alex Kantrowitz?

  Shares of Kraft Heinz are down 10% over the same period. Hershey's is down 19% and Coca-Cola and Pepsi are down 9% and 12%. Respectively, what the Wall Street Journal said effectively. Okay, we're going to get to, you know, to the other side of this thing. But just setting up what this looks like. Wall Street Journal has argued this is a real investor phenomenon that they're bailing on junk food and all these other type of stocks because they believe that, you know, skinny pills will make people reject them.

• 48:49Speaker 01

  So I, yes, the fat people on planes, definitely. When the Wall Street Journal starts writing about that, you know, we are at a moment. And perhaps we've gotten ahead of our skis. But I think, so I read one piece. It was in the Atlantic. It was actually from May. Did scientists accidentally invent an anti-addiction drug? And what was so interesting to me about this, and this is where I think it's still very, very early. But I was actually talking to a friend of mine who is a doctor and he was, he's very bullish in terms of overall. He thinks this is going to, quote unquote, change everything.

• 49:30Speaker 01

  Is even addictive behaviors far beyond eating? So again, like junk food and the way it's been manufactured and created. And maybe this is all just kind of a hopeful thing. Like is all centered around triggering dopamine and getting people to want more and buy more and buy things. But even think about online shopping or shopping in general is built in the same way. Meta's entire advertising model is still built on dopamine. Meta's product is built on dopamine. So like the, if this truly does curb addictive behavior. And, and I think normally associating addictive with like eating a, you know,

• 50:13Speaker 01

  like just binge eating or something that's super excessive versus small bits of what is essentially an addictive behavior, even though it's not me opening Twitter again. And, and then even when I'm like, I shouldn't. I think that if it's for real and I've, people I trust have said it's definitely for real. It changes a lot of the way products are designed, things are built, the way a lot of the economy functions. Because right now, that's so much of, especially the US economy, is built on exactly that type of interaction.

• 50:52Alex Kantrowitz?

  You bet. I think we got to get Andrew Huberman on here to have a special episode talking about this, this impact of dopamine and, and how we might be changing that. But okay, so here's the thing, though. This is the other side of it. The Wall Street Journal says that the market has gotten way ahead of this, that these daily, these drugs are nowhere near to where they need to be. And they cost upward of $10,000 a year per person, putting them out of the reach of the majority of more than 100 million obese and overweight people in the US. So I'm kind of curious what you think about this. Like, first of all, can you explain, like, why the market would, the market knows this. Why would the market react this way, understanding that the broader impact won't be felt for quite some time, if ever?

• 51:37Speaker 01

  Yeah, I do agree. I think the market reaction is definitely an overreaction. And when I'm talking about this stuff and thinking about it, it's still in the like, magical, theoretical, exciting visionary, envisioning different futures type of thing, not, you know, Coca-Cola sales are going to be down in Q2 2024. So I think it's definitely gotten ahead of itself. But I think this is where, again, like, I have been surprised, I have talked to people who I was very surprised to have taken Ozempic, or one of the, I think it's like semi-glutides or something like that, semi-glutides.

• 52:17Alex Kantrowitz?

  Those ads are everywhere, by the way. Can't watch a quarter of football without seeing it.

• 52:21Speaker 01

  I've talked to people who I never would have expected who'd take it. So at that point, I'm like, maybe, and maybe. Just hypothesizing, a Wall Street research analyst could be the personality that has felt the magic of one of these Wegovy Ozempic. And then the moment is one of those things that once you undersee it and feel it and understand it at a personal level, then maybe you start extrapolating a lot more quickly. But, but yeah.

• 52:54Alex Kantrowitz?

  Look, I think it's great that we have these tools, right? We have to fight back in some ways against big food. And like, if it's pharmaceutical, so be it. They're using chemicals also. So I think it's good that we have these tools. I'm just interested in the fact that market is like now such a firm believer that it will go years ahead of the broad impact. I'm actually curious now, let's just end with this. Like, talk a little bit about the people that, I mean, if you're willing, you, why, you know, you didn't expect them to be on it, but they're on it. Was that just because that they were skinnier than you imagined?

• 53:23Speaker 01

  Yeah, yeah, that's where I was going with that. It was, it was more, it was more a defensive weight mechanism rather than an active offensive one. Yeah, no, exactly. But so it's almost to help you stay skinny. So then you're like, okay, then the addressable market no longer is only those seeking to lose weight, but also it's, it's no longer Sam Bankman Fried is addressing a total addressable market of everyone. It's these drugs are, so yeah, no, that, to me, that's what made it more interesting. So yeah, I think, to me, it's still very early days. Who knows? Maybe there's going to be some insane side effects that come up pretty soon that derail this entire conversation.

• 54:08Speaker 01

  Remember, two years ago, we were all going to be eating fake meat burgers and didn't quite pan out, so who knows?

• 54:17Alex Kantrowitz?

  I trust the technology. Very interesting stuff. All right. At the end of this, I'm just going to go short Nabisco. Just kidding, but. Maybe not the worst strategy. This is not investment advice, but maybe not the worst strategy. Rajan, thanks so much for joining. Really great to speak with you every week. All right. Great stuff. Thanks, everybody for being here with us. Great, great crowd live. We had comments today and questions, which is awesome. And thanks to everybody at home who's listening. Really appreciate it. We'll be back on Wednesday with a conversation with Rob Copeland about his new Ray Dalio book. That should be fun. About to go record that. And then again, Rajan and I will be back next week and talk about streaming along with the rest of the week's news. All right. Thanks for listening and we'll see you next time on Big Technology Podcast.

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