(Preview) Microsoft’s Plan for Platform Survival, Meta and the Market’s Permission, A Lack of Situational Awareness

On today’s show Ben and Andrew begin with Microsoft, Meta and Google in the wake of their latest earnings reports. First: Microsoft’s push to be the middle layer for enterprise AI, threats to the company’s competitive position in the long run, and the subtext of the open weights open letter frenzy two weeks ago. Then: Parsing Google and Meta strategies as Google hedges its frontier bets, while Meta continues its frontier spending and announces questionable plans for an enterprise business. At the end: The future of the lending environment for Meta and the other hyperscalers, a bubble check-in, a rundown of what happened between Citadel and the Situational Awareness, close encounters with Ben’s vibe coded app, and an emailer offers a compelling theory on the push for Permanent Daylight Savings Time.

• 0:00Speaker 00

  Hello and welcome to a free preview of Sharp Tech.

• 0:09Speaker 00

  Hello and welcome back to.

• 0:13Speaker 01

  We are in person. This is Sharp Tech.

• 0:15Speaker 00

  Welcome back to Sharp Tech. Here we are.

• 0:18Speaker 01

  When I get the Zoom open or Riverside open, cracks me up every time. Are you?

• 0:23Speaker 00

  Live and in person. I'm good. It's great to be in Madison. It's balmy outside relative to what it was in January. And we're here for some company meetings. There's an AI show and tell that we have planned that I'm already pretty stressed out about. So.

• 0:40Speaker 01

  Because you have no AI in your life. Are you going to demonstrate looking up NBA stats?

• 0:44Speaker 00

  Yeah, demonstrate copy editing, sharp text posts and whatnot. You guys are on a whole other level. We're also going to a Brewers game later today, which I'm very excited about will be my first baseball game in probably five or six years. So here we are, you know?

• 1:00Speaker 01

  Well, you just asked me, are we going to tailgate? And I was just flabbergasted.

• 1:04Speaker 00

  A total noob, East Coast elite question. Of course we'll be tailgating.

• 1:08Speaker 01

  We were just talking about tailgating on, we were talking about tailgating on Sharp or on Dithering. And I was expressing how East Gators say they tailgate and I find it very sort of underwhelming. Something in DC that don't even bother. So.

• 1:20Speaker 00

  Don't even bother. Just show up at game time. Absolutely. Well, for now, before the tailgate, we are going to review big tech earnings, which came down last week. And we're, we're going to start with two companies that are encountering very different reactions from the market. First up is Microsoft. The market is very happy with Microsoft. The company was up 15% and added $450 billion in value in a single day last week. Biggest single day jump in market history, according to Bloomberg. And Microsoft, they are not pushing toward the frontier whatsoever at this point. They haven't been since 2024. What do you think of what they're doing instead?

• 2:04Speaker 01

  If you zoom out, I knew earnings would be last week. I would come back, have all these to sort of digest. And I think all three updates this week were actually interconnected. I arguably should have done like one big post trying to tie them all together.

• 2:18Speaker 00

  An omnibus. Okay.

• 2:20Speaker 01

  But I was trying to look at every different hyperscaler is slightly different in where they are in terms of, do they have a cloud business? Like, you know, where are they at relative to the frontier? What's their focus there? And what is their overall threat from AI? So the one I didn't get into as much as I wanted to is Amazon. I just, we're going to get to them in a little bit. But Amazon's on one extreme. They have a total cloud business. And I think their core business is not very threatened by AI.

• 2:56Speaker 00

  Yeah.

• 2:56Speaker 01

  Like the AI is not delivering my packages.

• 2:59Speaker 00

  Durable, physical infrastructure for Amazon.

• 3:02Speaker 01

  Is a good place to be. Yes. So I think Amazon's like their core business, their, their e-commerce business, I think is fine. Arguably better than ever. And their cloud business, they're, you know, obviously doing very well. And Amazon is also sort of a company that is more accustomed to okay with tighter margins, which I think is one of the concern about hyperscalers in the long run. Once compute is finally everywhere, who's going to have the, you know, who are margins going to compress? They've always thought about having more cost structures. Right. We talked about that sort of last episode. So Amazon's sort of one extreme. Then you have Microsoft, who is taking a strategy that's similar to Amazon in some respects,

• 3:45Speaker 01

  particularly in the fact they're not on the frontier. They're building their own models, but they're not building models that are going to be as good as the models from OpenAI or from Anthropic. But they're serving those models.

• 3:57Speaker 00

  And they got off that train a couple of years ago.

• 3:59Speaker 01

  Yeah, but they weren't really on that train because they were on the train to the extent that they were supporting OpenAI. But then what, what happened, the way to think about what happened with Microsoft and OpenAI. Microsoft is like to OpenAI, we'll keep your inference business. So the business where it's actually customers using your models, your training business, you gotta go find someone else.

• 4:19Speaker 00

  Yeah.

• 4:19Speaker 01

  And so that was the whole shift to talking to Oracle, to talking to SoftBank, building these mega sort of data centers. And, and yeah, that's the train that they sort of got off of. Their software business is, I think, very threatened by AI. I mean, the, the, you know, we're going to talk about vibe coding a little bit. This will be part of AI show and tell, but we are not representative of a large enterprise, to say the least. And there's an aspect of us experimenting with AI, as techery is important to just understand the product.

• 4:50Speaker 00

  Yeah.

• 4:50Speaker 01

  But in a very tangible example, we were mostly still using Teams for one specific use case, which was podcast workflows. We're totally off, like we made our own software, right? Like now, now again, that's a very small example, but that is.

• 5:05Speaker 00

  That's what could happen.

• 5:06Speaker 01

  You could imagine that writ large, at least in the fullness of time. So they, they have a cloud business that in some respects is similar to Amazon, but they have a core business that is very much threatened. You move over, now we're at Google. Google obviously has a big cloud business. I'm sure we're going to talk about that in a little bit. They are also seeking to be on the frontier. And they do have a business that's threatened by AI, which is sort of search generally. We've spent a lot of time talking about that. I think there's more to even say about it than I wrote about this week in that regard. I mentioned a couple of these are passing. So we'll talk about Google a little bit. They're kind of in the middle. Then you get to Meta. Meta is, Meta is maybe between Amazon and Google.

• 5:48Speaker 00

  Okay.

• 5:48Speaker 01

  In that they're seeking to be on the frontier. They don't have a cloud business. That's the difference. But, and they are threatened by AI, but I think less acutely.

• 6:00Speaker 00

  Than Microsoft.

• 6:01Speaker 01

  Than Microsoft or even than Google.

• 6:02Speaker 00

  Yeah.

• 6:03Speaker 01

  Right? You can see very clearly how AI is a threat to search. It's harder to see how AI is a threat to social networking or entertainment or whatever it is. But my sort of thesis is number one, it takes up a lot of time, which is a detraction. So anything that takes up time is, is a detraction from, from Meta in the long run. And just my overall thesis is anything digital is fundamentally threatened by AI. Like, like the opposite of the Amazon thing where physical, the more physical you are, the safer you are. The more digital you are, the more threatened you are. And so that's sort of like the, the gradient of these, of these entities. And so I thought it was interesting to talk about all four of them this week.

• 6:45Speaker 01

  Kind of considering those aspects, even if I wasn't super explicit about it, and what the differences are between them, how the market has responded to them, all these bits and pieces. That's the overall context of Microsoft.

• 6:59Speaker 00

  Where we're at. Yeah.

• 7:01Speaker 01

  Microsoft sort of in this case.

• 7:02Speaker 00

  Well, and so what with Microsoft specifically, they want to be middleware. Is that right? And to what extent is that a function of necessity? Because that's the only option that makes sense for them at this point.

• 7:16Speaker 01

  Yeah. So the way to think about Microsoft is, is exactly that. And it's funny because I wrote an article a few years ago comparing Microsoft to IBM. And it's actually one of my favorite articles. I remember it was, some articles stand out because they were so painful to write. I remember I wrote this one at an Airbnb in Madison before we had a place here. And I remember it took me hours to get it out and I posted it at like three in the afternoon instead of like six in the morning when I wanted to. Like, but I went through Lou Gerstner, who says elephants can't jump or something like that, like his autobiography. And I was talking about the issue IBM faced in the nineties,

• 7:58Speaker 01

  where they're this behemoth that seems way behind the times. Investors are demanding they break up. And he went the opposite direction. He's like, we should not break up. You don't understand, we're not actually good at anything. So all these, all these pieces you want independent are not going to do well in the market.

• 8:18Speaker 00

  They'll all fail independently.

• 8:19Speaker 01

  What we're good at is being big. And actually being big is useful because you're kind of good at everything, but you're not really great at anything.

• 8:32Speaker 00

  Okay.

• 8:32Speaker 01

  Or you're, you're, you're acceptable at many things.

• 8:36Speaker 00

  That certainly describes my Microsoft experience over the last 20 years.

• 8:39Speaker 01

  Well, so this was IBM in the 90s. And so what Gerschner did was he, the internet's coming along. You have all these big companies that are like, how do we handle the, what do we do with the internet? And IBM was like, we'll take care of it. And what IBM did was they built up a huge consulting arm. Uh, which by the way, Microsoft talked a lot about building up their, they actually had a name for it. Like they've always had a big sales force, but like the whole forward deployed engineer thing. I should look up what the name was. It came up on the earnings call.

• 9:06Speaker 00

  I mean, that does make a lot of sense for the next 10 or 15 years here.

• 9:09Speaker 01

  Well, I mean, everyone's doing it for a good reason, right? Palantir really sort of has led the way here. Um, and then also we're going to build up. But they built a bunch of middleware, which basically was they built all these layers for companies to have websites and to have e-commerce and to have all these bits and pieces that we talked about last week. There's still companies, there's companies that are on IBM because they've been on there since the 60s. There's a lot of companies that have been IBM since the 90s because they just built in all these layers to get you online, to get you all, you know, all the things that you needed to do that. And it was a very smart strategy that basically gave IBM an extra 20, 25 years of life.

• 9:46Speaker 00

  Yep.

• 9:46Speaker 01

  And, uh, and the problem, the framing of that article was once you've been a monopoly, you've kind of lost the ability to be great.

• 9:57Speaker 00

  Okay.

• 9:57Speaker 01

  Because you get fat and flabby and life's too easy. And what Gerschner did was always look, we don't have the chops to succeed by being the best at any individual thing. What we're good at is kind of doing everything because that's what we've been doing for a long time. And the analogy there was, look, this is the Microsoft path. Like you're not going to succeed by being the best at stuff. You're there to like, you can kind of do everything and it's good. Actually being big is your biggest asset. And I put that in the context of, I'd been very at that point, uh, a strong endorser of Satya Nadella's approach to deprioritizing windows, being a services layer.

• 10:42Speaker 01

  Sort of, yes, they were late relative to Amazon, late to the cloud, but most everyone else was late to the cloud. So they and all their customers were sort of coming to the cloud together. And I wrote that in the context of a keynote where he spent a long time talking about like pen or like their digital ink, like their ability. I'm like, what are you talking about? Like you should not be, you are not going to win on product differentiation. You're going to win by kind of being good at everything. And I think Microsoft's continued down that path by and large. And you fast forward to AI and now that comparison, I think is becoming very, very tangible.

• 11:17Speaker 00

  Okay.

• 11:17Speaker 01

  So Satya Nadella's been posting on Twitter, like all these articles, like it's coming from my job.

• 11:22Speaker 00

  I know. You said a couple of weeks ago, he's coming for your job. He really is. He's very, very active on Twitter with these essays that he's putting out. And they're always these long tweets and I wish he would put them on a website somewhere because I just can't read that much on Twitter, but he's clearly spooked by the moment and trying to counter the anthropic messaging.

• 11:43Speaker 01

  Yeah. I mean, I, I, I get the sense that spooked happened maybe like a year or so ago. And you do get a, one thing that's interesting, I was at the build keynote in June.

• 11:53Speaker 00

  Mm hmm.

• 11:53Speaker 01

  And usually with Microsoft keynote, Satya Nadella would do the first 10, 15 minutes, do the framing of what's going on, and then he'd hand it off and then a parade of executives would sort of do the rest of the keynote. This keynote was all Satya Nadella. And to the extent, I, I, maybe I overend, I, I, well, part of my take this week is that, uh, actually I'm right to index on the meta of these things. What executives say actually matters.

• 12:21Speaker 00

  Mm hmm.

• 12:21Speaker 01

  And what I took away from that keynote is he felt the need to, I need to take a much firmer hand and much more control of this company because we're actually in bigger trouble than people realize.

• 12:35Speaker 00

  Yeah.

• 12:36Speaker 01

  And I suspect a lot of it was, they have this whole software business, right? Like that, that is very tangibly, uh, you can make the software that Microsoft does.

• 12:49Speaker 00

  Mm hmm.

• 12:50Speaker 01

  Now, are you going to make it?

• 12:51Speaker 00

  We just did.

• 12:52Speaker 01

  Are you, are you going to make it like actually useful and dependable? And are companies going to want to waste time maintaining it, et cetera, et cetera? All these are open questions and we've litigated that and will continue to litigate probably for years to come. But anthropic and OpenAI are coming for Microsoft's business. Like day to day productivity, they want you, your agent to do all of that. They want your agent to do your email, your agent to do your doc. Why do we have documents? Like, why can't we just ask the AI what it is, right?

• 13:20Speaker 00

  Yeah.

• 13:21Speaker 01

  And again.

• 13:22Speaker 00

  Well, and they're both very, very expensive for enterprises as well. And as those costs continue to rise, um, you could envision a future where enterprises are choosing between spending on Microsoft or spending on OpenAI as a platform or anthropic as a platform.

• 13:37Speaker 01

  Right. And again, all this is, this is the thing about tech in general. Even right now, when stuff seems to be moving so quickly. One of the fun things about analyzing tech is how many decisions actually take years to play out. Right? We've talked about this in the context of chips, right? Like Intel was doomed. I wrote in 2013, Intel's in big trouble.

• 13:59Speaker 00

  Took a solid 10 years.

• 14:01Speaker 01

  Yeah. It took for that, that to actually manifest, but it was totally right.

• 14:05Speaker 00

  Yeah.

• 14:05Speaker 01

  And Intel actually needed to make changes. I thought I was too late in 2013 and I was, I think, too late. But it would have been better to make changes in 2013 than to wait till 2021 or whatever. Sort of, um, you know, Galsier ripped the bandaid off again, like there's pluses and minuses to his tenure. But like, there was an extent of certainly ripping the bandaid off and saying, we have to like shift our model over time. But this applies to software too. Building, like building out these big things, by the time your business is tangibly threatened or not tangibly, or like it shows up in the results, it's way too late.

• 14:40Speaker 00

  Yeah.

• 14:40Speaker 01

  Like, and so I, you got that sense from Nadella. And what he's been talking about in his blog posts, there's a bit of both an articulation of the threat to Microsoft and trying to convince everyone else, this is a threat to you as well.

• 14:58Speaker 00

  Totally.

• 14:58Speaker 01

  Which is these companies are trying to understand your business. They're trying to figure out what you actually do with your computer.

• 15:09Speaker 00

  And they will replace you.

• 15:11Speaker 01

  So they can replace you. Like this gets to the question.

• 15:14Speaker 00

  I mean, it's explicit counter messaging relative to anthropic.

• 15:18Speaker 01

  But, but like, so one of the big things with the AI models, right? And the question, there's a, remains an open question in my mind. Will these models generalize, right? Can you learn one thing and then thus know how to do other things? I'm on the, I don't see evidence of generalization yet. Like there's all, like there's all this amazement about like these math discoveries, right? Math is like coding. It's like, it's a knowable thing. Like you're discovering things that, that exist, but like it's, it's a bounded space to an extent, in a way that like maybe some other things aren't. What you need to do is you need to get data, see what works and verify, did it work or did it not work? So at the end of the day, it might be a moot question.

• 16:02Speaker 01

  Like maybe you don't generalize, you just gather data on everything in the world, right? Like, like we'll get neural links to everyone's head and gather the thought processes and then we'll actually be able to do everything. Um, but this is the threat, which is we know for sure, if you can get enough data and you can verify, then you can do it.

• 16:19Speaker 00

  Mm hmm.

• 16:20Speaker 01

  And that's the threat he's putting his finger on. The more you use an OpenAI or an anthropic and you use their harness, you use Claude code, you use CoWork, you use Codex. They are gathering everything. And even if they're saying, oh, we're not keeping your data from inquiring the model. That's actually not the important part. The important part is all the meta around it. What tools are you using? What things worked? What things didn't? And, and if you're relying, if you're using their user facing software, you're giving away the crown jewels of your company, which is how people actually do work. What works? What doesn't? All the metadata.

• 17:00Speaker 00

  You're training the disruption threat.

• 17:02Speaker 01

  Yeah, that's right. That's right. And so, and so what Microsoft is proposing to do is they want to reduce models to being processors.

• 17:13Speaker 00

  Mm hmm.

• 17:13Speaker 01

  They want to recreate the world where Microsoft, Windows is the layer everyone uses. And then underneath that is an Intel chip or an AMD chip or whatever it might be. And what does that chip do? That chip gets sent stuff by the operating system. It does some processing, it sends something back. And it's the operating system as the orchestrator that is figuring everything out. That's passing things to developers on top of that. Microsoft's saying, we don't use their harnesses. We're going to build a harness or we're going to give you the tools to build your own harness such that these models are basically stateless.

• 17:55Speaker 01

  They're just things you send something to and you get something back and they have no other context. All they get sent is exactly what they need to know to do a computation and then it comes back. And they're very explicit about it. Like that's what they're seeking, they're seeking to reduce. The model companies to being processors. The model companies are trying to be.

• 18:17Speaker 00

  Everything.

• 18:17Speaker 01

  Everything.

• 18:18Speaker 00

  Right.

• 18:18Speaker 01

  And so that that's the direct sort of confrontation that's going on.

• 18:22Speaker 00

  Yes, and so when you look ahead, I mean, with Microsoft, is this the right strategy? And it may not work.

• 18:30Speaker 01

  Well, so this is where it's interesting to put Microsoft in contrast to Meta.

• 18:33Speaker 00

  Okay.

• 18:33Speaker 01

  Because Microsoft, like, how do you survive in a world where you're not on the frontier? And what they're saying is, we will be the layer between the frontier.

• 18:45Speaker 00

  You don't have to worry about the models. It's going to be sort of model agnostic. You have your own harnesses with us and you don't have to fork over proprietary data that puts your business at risk.

• 18:55Speaker 01

  I think, I think it's a very.

• 18:56Speaker 00

  It makes sense.

• 18:57Speaker 01

  I know, I think it makes sense. It's a very reasonable strategy. The question, and I think the challenge for Microsoft is most fraught right now. Because in any new technology. The, it doesn't work good enough, right? The AI still isn't good enough for a lot of these workflows. How do you, and so the more you integrate and the more you do all the pieces around it, the better stuff works. And this is like sort of classic Clayton Christensen sort of theory about integration versus modularization. But the idea being early on in a technology's lifecycle, it's not good enough. So the more you do, the better. The integrated solution wins at the beginning. In the long run, modularization takes over where you, you, you want different suppliers. You care about like competing on.

• 19:42Speaker 00

  Care about costs, yeah.

• 19:43Speaker 01

  So there was a huge wave of, oh, these models are so expensive. That felt a little astroturfed over the last few months, to be totally honest.

• 19:55Speaker 01

  And that is a narrative that Microsoft absolutely wants to feed. Cause they want you thinking, oh, we can't, we can't double down.

• 20:04Speaker 00

  We can't burn through the budget in two months on these models.

• 20:08Speaker 01

  And so you think about it, oh, a harness is good because we can use different models. You can do sort of X, Y, Z. And it's kind of funny because I'm not sure how much I buy the multi-model sort of. Like, if you ask a really smart model, a very easy question, it's going to give you a very quick and fast answer. Really, like, a lot of the model capability is more of a ceiling than it is sort of a floor.

• 20:34Speaker 00

  Good point, yeah.

• 20:35Speaker 01

  There's an aspect here where it feels like Microsoft, they love the expense, use lots of models, expensive models, cheap models narrative, because that fuels the, how do I do that? Well, you need a harness, right? You need a harness that shoot, that has a router, that chooses the right model for, for, for the job. And again, I'm not saying there is cost differences, to be clear. I'm not trying to, to overstay, to, to underplay that. But it also is a narrative that feeds what Microsoft wants people to think. Which is, you can't build directly on these. And the, on the flip side, a lot of companies are going to find this appealing. They don't want to try to figure all this out. It's like the cloud, Microsoft's a good friend, what's going on.

• 21:17Speaker 00

  Exactly, they've been working with Microsoft for 35 years at this point.

• 21:21Speaker 01

  There's also a question, though.

• 21:24Speaker 01

  How much better is it actually if you're working directly with the frontier model companies?

• 21:30Speaker 00

  Right.

• 21:31Speaker 01

  Can you actually build stuff that you can't build otherwise? And can that stuff actually accelerate your business such that your competitor is so worried about having multiple suppliers and not getting locked into the model companies? That their products suck compared to yours? Because you gave in. You're like, that's right, I'm all in on, on OpenAI, I'm all in on Anthropic. And I'm so much faster and accelerating so much more quickly. And oh, by the way, they have this feedback loop that is actually extending their lead. The idea that Microsoft is going to be making a harness that is a lowest common denominator functionality.

• 22:10Speaker 00

  And is comparable to what Anthropic and OpenAI are offering.

• 22:13Speaker 01

  That's right. Now, we'll see, I don't know, right? At the end of the day, if you, does the harness actually matter that much?

• 22:20Speaker 00

  Yeah.

• 22:21Speaker 01

  Right? And the, there's a thing where you can feel this with the models. So when I started doing the vibe coding stuff, it was with 5.5, an extra high. And there was like this, there was this, um.

• 22:35Speaker 00

  Extra high, okay.

• 22:36Speaker 01

  No, for, for 5.5, not 5.6.

• 22:38Speaker 00

  Okay, okay.

• 22:39Speaker 01

  So for 5.5, and there was this, um, like a superpowers, like a skill package someone put together that forced it to do this planning and this review and someone recommended it to me. And I was already doing planning and reviewing, but it was still, I thought, kind of useful. You get to 5.6, which overdoes this stuff on its own. You layer on this stuff, it was out of control. That's part of the reason it was out of control, is doing all this crazy stuff. And basically, the point is, as the models got better, they sort of internalized more and more of the functionality that came from the harness.

• 23:08Speaker 00

  Right.

• 23:08Speaker 01

  And like, there's like a, a harness called Pi. They actually had a really interesting blog post this week, talking about, our whole approach is to do the minimum amount necessary in the harness and to make it possible for you to just add on the specific tools that you need. Because everyone's over-engineering this, such that three months down the road, a new model comes out. And you're actually making the whole situation worse because like your harness is like competing with your model. Because you, you did all this work upfront to, because to overcome the model's limitation. But then the model got better and, and like, why, it's all wasted effort, right? You should just let the model do everything. That, it's funny because that's a world that's actually good for Microsoft. If they're like, where, well, possibly good for Microsoft.

• 23:51Speaker 01

  Because you, the, it's all, if it's all about the model and it doesn't matter what harness you use, then yeah, use Microsoft's harness, use your harness. There's also a world where Microsoft's harness is so over-engineered and is so careful to like, try to do things and not let the models get the data they need. They're actually not even coming close to tapping into what the models can do.

• 24:12Speaker 00

  Right.

• 24:12Speaker 01

  Like, the models would be better if you gave them way more stuff, right?

• 24:14Speaker 00

  Yeah.

• 24:15Speaker 01

  So all this stuff is kind of, this is so interesting. It's all fairly unknown. I think what they're doing is logical. There's a lot of benefits that come from being the incumbent. There's a reason why you could look at as a technologist, look at, why would any company use IBM solution to build a webpage in the 1990s? And yet it worked phenomenally well, right? Yeah, yeah, so.

• 24:38Speaker 00

  Well, and it will be interesting. Obviously, it's all sort of TBD, but you look at like the number of companies that sign the open letter, for instance. You look at the weekly SA series from Satya.

• 24:52Speaker 01

  Hilarious, oh, that thing cracked me up.

• 24:54Speaker 00

  And it's clearly a reaction to massive uptake for Anthropic and OpenAI. And the concern that that inspires everywhere else.

• 25:03Speaker 01

  The funniest thing is OpenAI signing the letter.

• 25:05Speaker 00

  I didn't see that OpenAI signed it.

• 25:07Speaker 01

  The most two online company in history.

• 25:10Speaker 00

  Don't worry, guys, we're with you.

• 25:12Speaker 01

  Yeah, we got it, fingers, my fingers up in the wind. Guess we better sign the letter. Of course, they're, they're, they don't want these open models competitors, but.

• 25:21Speaker 00

  But do you know what I mean? Like, that's sort of an indication of the real concern.

• 25:25Speaker 01

  Like, the, you, the fact the whole industry is lining up to sign this letter is not a indicator of strength for the company signing the letter. You don't sign open letters because you're winning. You open, you sign open letters because you're freaking terrified.

• 25:42Speaker 00

  Yeah.

• 25:42Speaker 01

  Because you see these, these entities swallowing everything. They can do stuff you never expected, right? You see, uh, you know, I, you talk about Apple and Apple not seeing the memory crunch sort of coming, as we've talked about. And, or you see even the open, this response, like, like, has Tim Cook vibe coded an app? I'm guessing probably not. And I'm not saying you have to vibe code an app to understand AI. But there is an extent to which the, what these models can do is so far beyond what I think most people really understand.

• 26:20Speaker 00

  Sure.

• 26:20Speaker 01

  But someone like Sunny Dell gets it, right? And so, and when you see this, the, in, in Nvidia too, Jensen Huang, you know, is the, the sort of the guy pushing this letter. Important enough for him to get on Twitter.

• 26:32Speaker 00

  Exactly.

• 26:33Speaker 01

  Were the worst decisions a human can make.

• 26:37Speaker 00

  Well, to the extent that we lack perfect visibility into how enterprises are using these tools today. I think the reaction from the incumbents across tech, the non-Anthropic and OpenAI incumbents, says a lot about what companies are using these things for.

• 26:54Speaker 01

  Right, so Nvidia feels like they're in the catbird seed, right? Everyone uses Nvidia chips. Why are they writing an open letter? Because in a world where there's only two companies that buy chips.

• 27:03Speaker 00

  Yeah.

• 27:05Speaker 01

  Nvidia is the one that gets ordered around. Yes, they, they, they will make, like, they have, they will have the scale. They will have the capability, they have the cash flow to make their own chips. And like, and it's the same thing for all the hyperscalers. In a world where there's only two and all you're doing is competing to serve OpenAI and serve Anthropic.

• 27:25Speaker 01

  Those margins are going to get compressed a lot. You're just going to be a financing vehicle to help them build these sorts of things out. And so like the, the, and the whole, why are VCs on, on this thing?

• 27:38Speaker 01

  Is there even a startup ecosystem?

• 27:40Speaker 00

  Right.

• 27:41Speaker 01

  If you just use the models to everything.

• 27:44Speaker 00

  Startup gets replaced within a year or two if it, it succeeds. Well, shifting gears, you wrote on Monday with respect to Meta, that you came away from the Meta call a bit alarmed. So, scale of one to 10, how alarmed are you by the enterprise pitch from Meta? Or is annoyance a better way to put it with Meta?

• 28:07Speaker 01

  So, the Meta and Microsoft comparison, I think, is super interesting.

• 28:13Speaker 00

  All right, and that is the end of the free preview. If you'd like to hear more from Ben and I, there are links to subscribe in the show notes, or you can also go to sharptech.fm. Either option will get you access to a personalized feed that has all the shows we do every week. Plus, lots more great content from Strategery and the Strategery Plus bundle. Check it out, and if you've got feedback, please email us at email at sharptech.fm.