WEBVTT - The Rot-Com Bubble 0:00:02.480 --> 0:00:07.040 All Zone Media. Hello and welcome to Better Offline. I'm 0:00:07.080 --> 0:00:21.200 your host ed ze Tron. In the next two episodes, 0:00:21.280 --> 0:00:23.120 I want to present you with a theory about why 0:00:23.120 --> 0:00:25.759 the tech industry has felt so weird for the last 0:00:25.760 --> 0:00:28.400 few years and why there are so many products that 0:00:28.480 --> 0:00:30.840 have popped up that don't seem to really do anything 0:00:30.960 --> 0:00:33.120 or be things that people have actually asked for. And 0:00:33.200 --> 0:00:36.760 it comes down to a few simple questions, chief of them, 0:00:37.000 --> 0:00:39.040 what if the next big thing in tech is actually 0:00:39.120 --> 0:00:43.360 years or decades away? What if the era of hypergrowth 0:00:43.400 --> 0:00:47.680 in tech is over now? As I've mentioned before, I 0:00:47.760 --> 0:00:50.000 believe the rot economy is to blame for a lot 0:00:50.000 --> 0:00:51.879 of this. It's a growth that all cost mindset that 0:00:51.960 --> 0:00:53.960 sits at the core of pretty much everything I've written 0:00:54.080 --> 0:00:57.240 or spoken about. It's this force that drives businesses to 0:00:57.280 --> 0:00:59.960 grow bigger rather than better, and make products to conu 0:01:00.240 --> 0:01:03.880 markets and show growth to the public markets, rather than 0:01:03.960 --> 0:01:06.600 fixing a problem that you or I might have or 0:01:06.640 --> 0:01:09.320 a business might have, or provide a necessary service that 0:01:09.440 --> 0:01:13.560 was nevertheless popular and profitable. And the row economy it 0:01:13.600 --> 0:01:16.320 doesn't feel like any other economic period I've seen. It's 0:01:16.319 --> 0:01:18.800 not like, say, I don't know the post two thousand 0:01:18.840 --> 0:01:22.040 and eight financial crisis, or that stagnation that lingered afterwards. 0:01:22.319 --> 0:01:24.920 And what's different was there isn't really a single obvious 0:01:24.959 --> 0:01:27.959 event that started the declient of the services we're using, 0:01:28.480 --> 0:01:30.880 all the companies that make them, and there's not really 0:01:30.920 --> 0:01:33.520 like a Layman Brothers crater we can point at and say, 0:01:33.520 --> 0:01:36.080 there you go, that's the thing. The closest I can 0:01:36.120 --> 0:01:40.200 come is kind of FTX, which was the big crypto crash, 0:01:40.280 --> 0:01:42.720 the big massive Ponzi scheme that no one really saw 0:01:42.760 --> 0:01:45.800 coming other than many people who were looking behind the scenes. 0:01:46.400 --> 0:01:49.480 But other than that, that was kind of what crashed crypto. 0:01:49.720 --> 0:01:51.680 And maybe it was the end of the zero interest 0:01:51.720 --> 0:01:53.640 free era where interest rates went up and it was 0:01:53.720 --> 0:01:55.640 harder to get money. But it was no one thing 0:01:55.640 --> 0:01:58.360 you could point out. But I do want to try, 0:01:59.120 --> 0:02:02.000 and I have one epoch I think for when the 0:02:02.080 --> 0:02:04.760 rat economy kind of took over, and I'd want to 0:02:04.800 --> 0:02:07.880 point to the latter point of the twenty tens. Think 0:02:07.920 --> 0:02:10.120 about it, like really think about it for a second. 0:02:10.440 --> 0:02:13.840 Sometime after twenty nineteen, the tech industry it kind of 0:02:13.840 --> 0:02:17.600 lost its sizzle. There were new gadgets, there were new apps, 0:02:17.680 --> 0:02:22.040 new services, but tech started to feel iterative rather than innovative. 0:02:22.680 --> 0:02:25.399 Yet they were making more money than ever, and by 0:02:25.400 --> 0:02:29.359 twenty twenty one, even the pretense of any gradual improvement 0:02:29.440 --> 0:02:32.720 was really dropped. It felt like, I don't know, they 0:02:32.720 --> 0:02:34.560 were trying to sell us things that didn't really exist. 0:02:35.200 --> 0:02:39.040 We were told that NFTs would replace physical, tangible collectibles 0:02:39.080 --> 0:02:43.240 and that cryptocurrency would replace regular money, while also emancipating 0:02:43.280 --> 0:02:47.600 customers for an unstoppable market force like inflation or big tech. 0:02:47.840 --> 0:02:50.920 Because of course cryptocurrency came with it the idea and 0:02:51.000 --> 0:02:54.680 a mean idea of decentralized software, and this was all 0:02:54.720 --> 0:02:56.920 meant to get rid of rent seeking middle men that 0:02:56.960 --> 0:03:00.680 were taking parts of every purchase, despite the very same 0:03:00.840 --> 0:03:05.080 middle men investing in cryptocurrency. Yet the actual services that 0:03:05.200 --> 0:03:08.200 came out of these movements didn't really seem to do 0:03:08.280 --> 0:03:12.480 anything or improve our lives in any meaningful way. And 0:03:12.480 --> 0:03:15.240 we were told at one point that our futures were 0:03:15.280 --> 0:03:17.600 in the meta verus and we lived in this massive 0:03:17.680 --> 0:03:21.799 interconnected called New Internet. YEP, when we actually got there, 0:03:21.840 --> 0:03:25.799 it was just this really wonky VR virtual reality space 0:03:25.840 --> 0:03:29.320 that Mark Zuckerberg's somehow burned thirty six billion dollars on. 0:03:30.040 --> 0:03:33.480 It's all so weird, and today we're told that we 0:03:33.560 --> 0:03:37.200 have this glorious AI powered future that's just imminent. Yet 0:03:37.200 --> 0:03:40.840 what we've actually got is this unprofitable, unsustainable generative AI 0:03:40.960 --> 0:03:46.200 that has this horrible, unastainable problem of hallucination where it 0:03:46.240 --> 0:03:51.680 spits out incorrect information authoritatively, which, worryingly, Google CEO Sander 0:03:51.680 --> 0:03:54.160 Pesha has said in an interview with The Verge is 0:03:54.200 --> 0:03:57.560 an inherent feature of a technology that he's now plugged 0:03:57.560 --> 0:04:01.280 into Google Search, which means it's generating these horrible answers 0:04:01.360 --> 0:04:03.840 to queries based on the links of a search engine 0:04:03.840 --> 0:04:08.520 that Sundar Pieshai has helped decay. It's all just very frustrating, 0:04:08.920 --> 0:04:12.760 and it's also quite useless. Kind of it logical too. 0:04:13.720 --> 0:04:16.159 And at the forefront of this AI boom is Sam 0:04:16.200 --> 0:04:18.880 Moltman and his eighty billion dollar Jugger or open Ai, 0:04:19.160 --> 0:04:22.720 a company that claims it's going to build artificial general intelligence, 0:04:23.120 --> 0:04:27.040 one that experiences human like cognition, which is just not 0:04:27.160 --> 0:04:30.080 possible with generative AI. The tech he is selling today 0:04:30.200 --> 0:04:32.360 is not going to give us AGI. I just want 0:04:32.440 --> 0:04:35.560 to be abundantly clear about that. Anytime you read Sam 0:04:35.560 --> 0:04:38.520 Mortman talking about AGI, he is talking about tech the 0:04:38.680 --> 0:04:41.240 open AI does not have and is not building. They 0:04:41.279 --> 0:04:43.559 may claim they're building it behind the scenes, but they're 0:04:43.560 --> 0:04:47.760 only working on generative AI. And the frustration you hear 0:04:47.760 --> 0:04:50.000 in my voice you might have felt yourself. You might 0:04:50.040 --> 0:04:53.159 not have, but it's this prevailing sense of you keep 0:04:53.200 --> 0:04:55.240 telling me the future is here, but when I look 0:04:55.240 --> 0:04:59.320 at what the future is, it isn't even close. And 0:04:59.400 --> 0:05:03.640 the products so selling me aren't actually useful. Let me 0:05:03.640 --> 0:05:07.160 give you another example. Windows laptops will soon integrate an 0:05:07.200 --> 0:05:10.760 AI powered search feature called Recall that allows you to 0:05:10.800 --> 0:05:13.520 search everything you've ever done on your computer in the 0:05:13.600 --> 0:05:16.800 last three months, and it does so by recording everything, 0:05:17.480 --> 0:05:20.640 everything from the meetings you've been into to the things 0:05:20.800 --> 0:05:23.560 you've written. I should be clear, I don't think anybody 0:05:23.640 --> 0:05:26.160 actually asked for a feature like this, and it's also 0:05:27.240 --> 0:05:31.560 inherently invasive. It directly encroaches on your privacy and your security, 0:05:31.560 --> 0:05:35.279 and it takes screenshots of your machine every few seconds 0:05:35.360 --> 0:05:38.880 and stores them, along with AI generated inferences, in a 0:05:38.960 --> 0:05:42.839 locally held database. This isn't good, and the fact that 0:05:42.839 --> 0:05:45.920 they're not sending anywhere doesn't really make it better. It 0:05:46.120 --> 0:05:49.120 is in essence a pre installed screen recorder, the kind 0:05:49.120 --> 0:05:51.480 of thing that hacker might install on a victim's computer, 0:05:51.920 --> 0:05:54.599 and if an attacker gains access to it, it's obvious 0:05:54.640 --> 0:05:59.679 how catastrophic the ramifications are, or let's be honest, domestic 0:05:59.680 --> 0:06:03.440 abuse people at work. There are people who can get 0:06:03.480 --> 0:06:06.839 on your computer, force access by forcing you or just 0:06:06.920 --> 0:06:10.440 getting your password, and they can now see everything you've done. 0:06:11.440 --> 0:06:14.280 Despite this being an inherently AI powered feature, it just 0:06:14.440 --> 0:06:18.040 it can't distinguish between your regular computer usage and say, 0:06:18.600 --> 0:06:23.800 sensitive information passwords, health information, trade secrets, the very obvious 0:06:23.800 --> 0:06:27.120 stuff you would not want your computer recording. It treats, 0:06:27.320 --> 0:06:29.520 I don't know, like an email from your doctor with 0:06:29.640 --> 0:06:33.359 the same level of concern and copying as it would 0:06:33.400 --> 0:06:37.200 like YouTube or a chat conversation. It's just really bad 0:06:37.560 --> 0:06:40.680 and already white hat security researchers they've created a proof 0:06:40.720 --> 0:06:44.640 of concept malware applications that can pull sensitive data obtained 0:06:44.720 --> 0:06:48.120 or generated by Microsoft Recall from your computer and with 0:06:48.240 --> 0:06:53.640 pretty minimal effort, and now the UK's Information Commissioner's Office, 0:06:53.680 --> 0:06:55.920 the nation's privacy watchdog, by the way, they can actually 0:06:55.920 --> 0:06:58.920 do quite steep fines. It's not great they're now probing 0:06:58.960 --> 0:07:01.880 whether the tech actually sen's an unacceptable risk to consumers, 0:07:01.920 --> 0:07:04.880 which as anyone who thinks about it for more than 0:07:04.880 --> 0:07:09.320 twelve seconds or even five can confirm it does. It's 0:07:09.440 --> 0:07:14.200 just very frustrating. And who asked for this? Who actually 0:07:14.280 --> 0:07:19.000 asked for this? Now every major tech company they're integrating 0:07:19.040 --> 0:07:21.600 AI into their products and services. Yeah, underneath the hood, 0:07:21.640 --> 0:07:24.920 the AI they're integrating doesn't actually seem to do anything new, 0:07:25.120 --> 0:07:29.240 or generate a profit or solve anyone's actual needs, even 0:07:29.280 --> 0:07:32.640 the companies themselves seeming capable of explaining why AI is 0:07:32.680 --> 0:07:35.000 such a big deal. To the point, the Microsoft Super 0:07:35.000 --> 0:07:39.000 Bowl commercial for its AI powered co pilot assistant featured 0:07:39.080 --> 0:07:42.200 multiple things that it cannot do, like generate the code 0:07:42.240 --> 0:07:45.400 for an open world game. When you, by the way, 0:07:45.440 --> 0:07:47.320 you type in the prompt, which on the commercial is 0:07:47.360 --> 0:07:49.960 three D generate the code for an open world three 0:07:50.040 --> 0:07:52.200 D game, and you type that in and it will 0:07:52.240 --> 0:07:54.680 give you a list of things you should do to 0:07:55.000 --> 0:08:00.120 build an open world game. It's so strange, and it's 0:08:00.120 --> 0:08:03.160 so strange how so many of these companies just can't 0:08:03.200 --> 0:08:06.600 really explain why this is the next best thing. They 0:08:06.680 --> 0:08:10.800 just need you to believe them, and maybe that might 0:08:10.880 --> 0:08:24.200 actually be the problem. For decades, the tech industry and 0:08:24.280 --> 0:08:27.680 its various venture capital funders, they've been remarkably good at 0:08:27.720 --> 0:08:30.600 coming up with both innovative new products and waste to 0:08:30.640 --> 0:08:34.079 turn them into huge new markets for hypergrowth, one hundred 0:08:34.160 --> 0:08:36.720 billion trillion dollar markets that they could then sell in 0:08:36.760 --> 0:08:40.920 to investing companies. Within actual industries, you had search engines, 0:08:41.080 --> 0:08:45.000 digital maps, smartphones and apps, social media, cloud computing, software 0:08:45.000 --> 0:08:48.640 as a service, electro cars, streaming audio and video, and 0:08:48.760 --> 0:08:52.600 also another thing. In the period between like two thousand 0:08:52.600 --> 0:08:55.280 and five and twenty twenty four, we've tripled the amount 0:08:55.280 --> 0:08:57.200 of people on the Internet. It's now over five billion 0:08:57.200 --> 0:09:00.679 people who use it. And that's also an problem I'll 0:09:00.679 --> 0:09:03.480 get to in a little bit. There were obvious meaningful 0:09:03.520 --> 0:09:06.160 markets to move into, ways to connect people, ways to 0:09:06.160 --> 0:09:08.839 get people content. They wanted algorithms to present it to them, 0:09:09.080 --> 0:09:11.800 ways to sell people. Things that solve problems that they 0:09:11.840 --> 0:09:14.640 had or either for the first time or solving them faster, 0:09:14.840 --> 0:09:17.439 like the transition from physical to digital media, and problems 0:09:17.480 --> 0:09:22.760 that were both important to solve and actually solvable. Teke 0:09:22.880 --> 0:09:27.200 has perpetually succeeded at building things, new things that neatly 0:09:27.240 --> 0:09:30.480 create these new markets, and they've been incentivized by both 0:09:30.480 --> 0:09:34.240 the public and private markets in growing these companies as 0:09:34.280 --> 0:09:36.959 fast and as big as possible to dominate these new markets, 0:09:37.000 --> 0:09:39.400 with the assumption that there would always be more of them, 0:09:39.720 --> 0:09:43.319 more massive, multi billion and multi trillion dollar markets to conquer. 0:09:44.480 --> 0:09:47.880 And it must be clear you should never assume anything. 0:09:49.000 --> 0:09:52.560 Between twenty twenty two and twenty twenty three, only one 0:09:52.640 --> 0:09:56.680 hundred million additional people got online, which is the slowest 0:09:56.800 --> 0:10:00.160 rate of growth in the last eighteen years. That it's 0:10:00.240 --> 0:10:02.520 not because the need to bring connectivity to the masses 0:10:02.880 --> 0:10:07.520 is actually solved, especially in the global South. It hasn't been, 0:10:07.720 --> 0:10:10.040 and as of the most recent figures from the UN's 0:10:10.080 --> 0:10:13.760 International Telecoms Union shows thirty three percent of the world's population, 0:10:13.880 --> 0:10:16.400 or about two point six billion people, have never actually 0:10:16.480 --> 0:10:21.240 used the Internet. But I have more worrying stuff. I've 0:10:21.280 --> 0:10:23.560 received some data from similar Web that shows that the 0:10:23.600 --> 0:10:27.000 majority of the Internet's top one hundred web properties have 0:10:27.080 --> 0:10:30.960 seen significant declines in traffic since twenty twenty one. In 0:10:31.000 --> 0:10:34.160 the years since the world slowly emerged from lockdown, Google 0:10:34.200 --> 0:10:36.160 dot Com has seen the decline of five point three 0:10:36.160 --> 0:10:39.280 percent in web visits, as has YouTube, which lost three 0:10:39.360 --> 0:10:42.360 point eight percent of its traffic, Facebook, which lost a 0:10:42.480 --> 0:10:47.360 remarkable twenty seven point seven percent, Twitter which lost three 0:10:47.360 --> 0:10:50.320 point five percent, Amazon which lost eleven point six percent, 0:10:50.520 --> 0:10:53.840 Twitch dot tv seventeen point five percent lost. There they 0:10:53.880 --> 0:10:57.400 are owned by Amazon. Sadly, Wikipedia which lost twenty four 0:10:57.400 --> 0:10:59.559 point eight percent of its traffic. And here's the thing 0:10:59.600 --> 0:11:02.880 that really worried me. Porn sites like ex videos twenty 0:11:02.960 --> 0:11:06.000 seven point four percent loss and porn harp seventeen point 0:11:06.080 --> 0:11:10.240 one percent loss. When the pawn's down, that's that's when 0:11:10.240 --> 0:11:13.600 you start worrying. Though you might be tempted to dismiss 0:11:13.640 --> 0:11:16.000 this all as a result of life returning to normal 0:11:16.080 --> 0:11:19.880 and the traditional office based environments aren't particularly conducive to 0:11:19.920 --> 0:11:24.120 a crafty mid day wank, you shouldn't. The trend actually 0:11:24.160 --> 0:11:27.040 began earlier, with similar web data showing the declines starting 0:11:27.040 --> 0:11:30.520 in twenty nineteen. My analysis focus is in twenty twenty 0:11:30.520 --> 0:11:32.960 one to twenty twenty four because that's the one I 0:11:32.960 --> 0:11:35.120 have the most detailed month by month and year by 0:11:35.160 --> 0:11:37.520 year breakdowns for. And by the way, I'm going to 0:11:37.600 --> 0:11:40.040 put in the episode notes links to things so that 0:11:40.080 --> 0:11:42.040 you can all see this. I want you to know 0:11:42.559 --> 0:11:45.440 this date is very worrying, but don't trust me. Trust 0:11:45.440 --> 0:11:48.360 the data from similar Web. When you look at the 0:11:48.400 --> 0:11:51.079 trajectory of the web's most valuable properties on a year 0:11:51.160 --> 0:11:56.080 over year basis, things look quite bleak, with Google which 0:11:56.120 --> 0:11:59.400 lost about point nine percent, YouTube lost about four point 0:11:59.480 --> 0:12:02.880 four percent, Facebook seven point seven percent loss, Twitter six 0:12:02.920 --> 0:12:06.160 point two percent loss, Twitch eleven point nine percent loss, 0:12:06.200 --> 0:12:09.480 and Amazon two point seven percent loss, all still seeing 0:12:09.520 --> 0:12:13.000 significant the clients. Only a few sites like Reddit, which 0:12:13.040 --> 0:12:16.079 saw a thirty one point three percent growth, TikTok eleven 0:12:16.080 --> 0:12:18.840 point six percent growth, and Instagram nine point nine percent 0:12:18.880 --> 0:12:21.720 growth but trending down every year since twenty nineteen, and 0:12:21.760 --> 0:12:25.480 also LinkedIn up seventeen point nine percent. They're the only 0:12:25.520 --> 0:12:27.960 ones that are really seeing good year over year growth. 0:12:28.600 --> 0:12:30.680 And while it's important to note that these are visits 0:12:30.800 --> 0:12:33.400 rather than active users, and in fairness, this data only 0:12:33.400 --> 0:12:35.560 covers visits made through a browser rather than an app, 0:12:36.280 --> 0:12:40.480 this is still a truly astounding trend that suggests for 0:12:40.520 --> 0:12:43.280 the most part that the web's largest platforms are seeing 0:12:43.640 --> 0:12:47.000 kind of a digital recession. While there might be revenue 0:12:47.120 --> 0:12:49.680 coming to these companies and they might still be acquiring 0:12:49.720 --> 0:12:52.840 no users. There's really no good way to spin the 0:12:52.840 --> 0:12:56.240 fact that traffic to platforms like Amazon and Google has 0:12:56.280 --> 0:13:00.640 plateaued then declined something shifting downwards, and it's been doing 0:13:00.679 --> 0:13:04.200 so since twenty nineteen. Perhaps this explains why platforms like 0:13:04.200 --> 0:13:07.040 Google and Facebook have kept making changes to make each 0:13:07.120 --> 0:13:10.920 user journey, create more engagement and make it more profitable 0:13:11.200 --> 0:13:14.959 to sustain growth, because fewer people than ever are actually 0:13:15.040 --> 0:13:19.080 visiting the platforms. I believe her at the end of 0:13:19.120 --> 0:13:22.079 something I called the rock coom boom, the tech industry's 0:13:22.160 --> 0:13:25.280 hypergrowth cycle, where there were so many new lands to conquer, 0:13:25.480 --> 0:13:27.760 so many new ways to pile money into, so many 0:13:27.800 --> 0:13:31.680 new innovative, useful ideas, that it felt like every tech 0:13:31.720 --> 0:13:34.760 company could experience perpetual growth just by throwing money at 0:13:34.760 --> 0:13:40.120 a problem. It also explains why so many tech products YouTube, Google, Search, Facebook, 0:13:40.120 --> 0:13:42.920 and so on feel like they're either trapped in amber 0:13:43.400 --> 0:13:46.400 or like they've got tangibly worse, because when you think 0:13:46.400 --> 0:13:48.920 about it, when there's no incentive to improve the things 0:13:48.920 --> 0:13:52.400 you've already built, why would you you should just be 0:13:52.480 --> 0:13:54.520 working on the next big thing or new ways to 0:13:54.600 --> 0:13:57.240 duce the thing you have right now to keep people 0:13:57.320 --> 0:13:59.760 coming back, yeah, maybe, but to keep people on the 0:13:59.800 --> 0:14:03.400 plat sometimes by monopolizing an industry so they have nowhere 0:14:03.440 --> 0:14:10.920 else to go. And that's the thing. All of these companies, Facebook, Google, Amazon, 0:14:11.080 --> 0:14:13.520 I mean all of them. They've all built themselves on 0:14:13.559 --> 0:14:17.199 this very simple idea that they'd always be a next 0:14:17.200 --> 0:14:20.160 big thing. And I'm not even saying that they won't be, 0:14:20.520 --> 0:14:23.560 but they've assumed and the problem that they're facing right 0:14:23.600 --> 0:14:26.920 now is that there would always be one around the corner. 0:14:27.640 --> 0:14:31.160 This belief that exponential growth is not just a reasonable 0:14:31.200 --> 0:14:34.560 expectation but a requirement is central to the core of 0:14:34.600 --> 0:14:36.960 the rot in the tech industry. And as these rapacious 0:14:37.000 --> 0:14:39.880 demands run into reality, I'm sorry to say that the 0:14:39.960 --> 0:14:42.680 rock coombubble is going to deflate. And as we speak, 0:14:42.720 --> 0:14:46.320 the tech industry they grappling with somewhat of a midlife crisis, 0:14:46.800 --> 0:14:50.240 and they're desperately searching for that next hypergrowth market, and 0:14:50.280 --> 0:14:54.040 they're eagerly pushing customers and businesses to adopt this technology 0:14:54.320 --> 0:14:57.360 that nobody actually asked for. They must keep the rot 0:14:57.400 --> 0:15:01.720 economy alive, because if they don't, they're gonna they're gonna 0:15:01.760 --> 0:15:04.760 have to face the fact that they've built pretty unsustainable 0:15:04.760 --> 0:15:08.240 businesses even though they're profitable, even though they keep growing. 0:15:08.560 --> 0:15:24.080 The only thing that grows forever is cancer the row 0:15:24.120 --> 0:15:27.040 economy and takes growth lust. It isn't new, though. Venture 0:15:27.080 --> 0:15:30.480 capital has been incentivising and monetizing rot for over a decade, 0:15:30.560 --> 0:15:33.320 and Mark andrew's An advocated in twenty eleven that we 0:15:33.360 --> 0:15:36.960 should look to expand the number of innovative new software 0:15:36.960 --> 0:15:41.720 companies created rather than constantly questioning their valuations. Yet just 0:15:41.760 --> 0:15:45.320 a year earlier, in March twenty ten, is partner Ben Horowitz. 0:15:45.360 --> 0:15:47.960 He advocated for fat startups, and I'll link to that 0:15:48.000 --> 0:15:50.520 in the notes, saying that you can't save your way 0:15:50.560 --> 0:15:54.000 to winning the market, and that startup purgatory is when 0:15:54.040 --> 0:15:56.280 you don't go bankrupt, but you fail to build the 0:15:56.360 --> 0:15:59.080 number one product in this space and have zero chance 0:15:59.320 --> 0:16:02.400 of becoming a high growth company, which, by the way, 0:16:02.480 --> 0:16:05.800 Horowitz described this as worse than startup hell, because you 0:16:05.880 --> 0:16:08.880 are and I quote stuck with the small company, even 0:16:08.920 --> 0:16:11.760 if it's cash flow positive. At the time, this might 0:16:11.800 --> 0:16:14.080 have made sense to them because this mindset made them 0:16:14.160 --> 0:16:18.960 quite rich. Even though there's something inherently abnormal about describing 0:16:19.000 --> 0:16:23.800 being a staple profitable company as being an estate that's 0:16:23.920 --> 0:16:28.200 worse than hell anyway. I want you to take a 0:16:28.200 --> 0:16:30.640 step back in time with me, though, and think about 0:16:30.680 --> 0:16:34.960 how much has changed in the last ten years, fifteen years. 0:16:35.320 --> 0:16:40.760 Think about it for a second. In twenty ten, it 0:16:40.800 --> 0:16:43.480 felt like we were just making our first steps into 0:16:43.520 --> 0:16:47.200 the digital world. It was still pretty new twenty ten. 0:16:47.240 --> 0:16:49.480 There was no Instacart. There was no Zoom, no Snapchat, 0:16:49.520 --> 0:16:52.080 no Lyft, no Tinder, no Slack, no Snowflake, no door Dash, 0:16:52.120 --> 0:16:55.160 no TikTok, no Discord, no Coinbase, no Robinhood, and there 0:16:55.240 --> 0:17:01.760 wasn't any Venmo or Zel either. Tesla, Facebook, LinkedIn, Airbnb, Uber, Square, Alassian, Octor, 0:17:01.840 --> 0:17:06.040 Mongo dB, work Day, Palo Alto Networks, Asana, UiPath, Spotify. 0:17:06.280 --> 0:17:10.040 They hadn't even gone public yet. Instagram was still independent, 0:17:10.080 --> 0:17:13.280 it wasn't part of Facebook yet, and consumer drones they 0:17:13.280 --> 0:17:16.960 hadn't reached, Ubiquity, Voice assistance hadn't even been launched. Full 0:17:17.040 --> 0:17:21.000 Glte Networks they were brand new, and Amazon Web Services, 0:17:21.040 --> 0:17:23.479 one of the most profitable things in the world, as 0:17:23.520 --> 0:17:26.520 I'll get to, was on course to make six hundred 0:17:26.520 --> 0:17:29.680 million dollars in revenue in twenty ten, which is, by 0:17:29.720 --> 0:17:31.640 the way, two point five percent of the twenty four 0:17:31.680 --> 0:17:35.000 billion the AWS on its own made. In the first 0:17:35.080 --> 0:17:38.120 quarter of twenty twenty four, Google and Apple stock prices 0:17:38.119 --> 0:17:40.400 were worth less than a tenth of what they are today. 0:17:40.400 --> 0:17:43.320 An Nvidia A stock now worth over one thousand dollars, 0:17:43.560 --> 0:17:47.159 traded at under three dollars a share. Between two thousand 0:17:47.200 --> 0:17:50.240 and five and twenty eighteen, we saw this incredible surge 0:17:50.280 --> 0:17:53.760 of innovation and take valuations, and this kind of seemingly 0:17:54.280 --> 0:17:58.160 unstoppable period of growth and big sexy ideas that created big, 0:17:58.200 --> 0:18:02.359 sexier new markets. While applications existed in two thousand and eight, 0:18:02.480 --> 0:18:06.000 Apples app Store and the perpetual nature of connection that 0:18:06.040 --> 0:18:10.600 we get from smartphones. It consumerized the concept of distinct 0:18:10.760 --> 0:18:13.520 service based apps, as well as the overall concept of 0:18:13.520 --> 0:18:18.720 software ecosystems, which has become a multi trillion dollar philosophical 0:18:18.720 --> 0:18:22.640 and economic force, and it's changed just about everything about 0:18:22.640 --> 0:18:25.679 how we communicate and even do business. It's remarkable and 0:18:25.720 --> 0:18:28.600 also was a new market just sitting there waiting for 0:18:28.680 --> 0:18:31.240 the hardware and software to catch up with it and 0:18:31.280 --> 0:18:32.840 for someone to come up with the idea, of course, 0:18:33.960 --> 0:18:37.400 connecting people digitally through social media, voice, video, and so on. 0:18:37.880 --> 0:18:41.640 It's been central to the hypergrowth cycle, with innovations like 0:18:41.840 --> 0:18:45.360 connectivity and cloud infrastructure allowing multiple companies to carve out 0:18:45.359 --> 0:18:49.520 these one hundred billion and trillion dollar ecosystems. On some level, 0:18:49.560 --> 0:18:53.080 big tech companies could put money through research and development, investment, 0:18:53.160 --> 0:18:55.679 or acquisitions wherever they needed to as a means of 0:18:55.680 --> 0:18:58.120 making the future a reality, and thanks to the fact 0:18:58.160 --> 0:19:00.919 that interest rates were rock bottom and there was a 0:19:00.920 --> 0:19:04.400 lot of private money going into startups, they were never 0:19:04.440 --> 0:19:07.840 really short of cash to do so. At some point, 0:19:08.119 --> 0:19:11.760 hype began to outpace innovation, and while there were new ideas, 0:19:12.320 --> 0:19:16.240 the actual fundamental technology required to actually innovate may not 0:19:16.280 --> 0:19:19.800 actually exist, making a lot of these ideas theoretical and 0:19:20.200 --> 0:19:24.040 so far behind the cart that you may as well 0:19:24.040 --> 0:19:28.679 shoot the horse dead. When Mark Zuckerberg renamed Facebook to 0:19:28.720 --> 0:19:30.800 Meta he told Casey Newton, who by the way, should 0:19:30.840 --> 0:19:34.040 feel nothing but shame for accepting this in good faith, 0:19:34.560 --> 0:19:37.359 that he believed the metaverse was an embodied internet that 0:19:37.480 --> 0:19:41.720 was a persistent, synchronous environment that would resembles social media 0:19:41.880 --> 0:19:45.280 but also be an environment where you're embodied in it. 0:19:45.520 --> 0:19:47.639 That's a real quote By the way, this is of 0:19:47.680 --> 0:19:51.640 course total nonsense, a total word salad that will make 0:19:51.680 --> 0:19:56.160 you throw up, conjured up by somebody without any real 0:19:56.240 --> 0:19:59.159 ideas that knows that they won't receive any pushback on 0:19:59.200 --> 0:20:02.679 them anyway, not even from those whose job it is 0:20:02.760 --> 0:20:05.960 to scrutinize the tech industry and ask difficult questions so 0:20:06.000 --> 0:20:10.000 that people don't buy stupid shit anyway. What Zuckerberg had 0:20:10.040 --> 0:20:13.240 actually built, by which for the most part I mean acquired, 0:20:13.800 --> 0:20:16.800 was a half fast virtual world accessed through niche virtual 0:20:16.840 --> 0:20:20.200 reality technology that nobody asked for that already kind of existed, 0:20:20.200 --> 0:20:22.840 that made people sick, and that Meta couldn't actually build. 0:20:23.320 --> 0:20:26.040 And what Mark Zuckerberg wanted to do was built the 0:20:26.080 --> 0:20:28.919 successor to the mobile Internet, in the hopes that quote 0:20:29.000 --> 0:20:32.720 the metaverse would be another hypergrowth industry where people would 0:20:32.720 --> 0:20:35.760 buy land which they didn't, or hang out on mass 0:20:35.840 --> 0:20:38.320 which they didn't, or have meetings which they did not, 0:20:38.760 --> 0:20:41.920 all while sharing data and watching ads served by Meta 0:20:41.960 --> 0:20:45.800 and other companies that Meta could sell ads too. In 0:20:45.840 --> 0:20:49.080 this cynical, horrible version of the future, the Internet, neutral 0:20:49.160 --> 0:20:51.760 standards based and controlled by no single company, would be 0:20:51.800 --> 0:20:55.280 transformed into a platform a feudal system where meta would 0:20:55.320 --> 0:20:58.960 set the rules an exact cut from each engagement, interaction, 0:20:59.280 --> 0:21:02.560 and transaction. It was quite plainly a power grad the 0:21:02.680 --> 0:21:04.960 likes of which the Internet hasn't seen since the bleak 0:21:05.040 --> 0:21:07.479 days of Internet Explorer six and Active X. And if 0:21:07.520 --> 0:21:10.520 you don't know what those are, Microsoft has some evil 0:21:10.560 --> 0:21:14.600 things in the past. The tech, however, it was never there. 0:21:15.200 --> 0:21:17.760 Mark Zuckerberg sold everybody on the concept of a ready 0:21:17.800 --> 0:21:20.800 Player one metaverse and putting aside for a second that 0:21:20.800 --> 0:21:24.080 Ready Player one is a poorly written dystopia. This vision 0:21:24.200 --> 0:21:28.000 hinges heavily on the idea of technology that completely immerses 0:21:28.040 --> 0:21:30.800 the user and their senses and makes them feel like 0:21:30.800 --> 0:21:36.000 they're actually in a world which is just insane. It's 0:21:36.080 --> 0:21:38.720 not possible, It's not even close to possible. We're talking 0:21:38.720 --> 0:21:42.320 about full sensory takeover and the ability to traverse the 0:21:42.320 --> 0:21:46.000 digital world somehow without moving. This would be a revolution, 0:21:46.400 --> 0:21:49.800 both in cloud computing because just the raw data would 0:21:49.800 --> 0:21:55.800 be insane, but also immersive technology. Just what was everyone 0:21:55.960 --> 0:22:00.880 doing accepting this idea, And let's be honest, the reality 0:22:01.000 --> 0:22:03.480 was just so much worse. You had these nausea inducing 0:22:03.520 --> 0:22:07.240 headsets that led you into this horrible, clunky cartoon world 0:22:07.359 --> 0:22:10.919 that wasn't fun or practical or useful, and tens of 0:22:10.920 --> 0:22:13.920 billions of dollars of R and D costs developing headsets 0:22:13.960 --> 0:22:18.200 that lose money on every sale. It's just insane. By 0:22:18.240 --> 0:22:20.840 the way, Mark Zuckerberg has spent tens of billions of 0:22:20.840 --> 0:22:22.679 dollars and I reallyz Sometimes people don't like it when 0:22:22.720 --> 0:22:24.720 I get yelly, and I apologize. But where has the 0:22:24.720 --> 0:22:27.960 thirty billion dollars gone? What has Mark Zuckerberg done with it? 0:22:28.200 --> 0:22:31.000 Where is it going? I don't know. I'm not accusing 0:22:31.040 --> 0:22:34.159 anyone of anything, but the whole thing just feels like 0:22:34.200 --> 0:22:37.960 a con. And Zuckerberg's glossy Metaverse video the first one 0:22:38.000 --> 0:22:41.399 he published when they rebranded Facebook to Meta. It was 0:22:41.440 --> 0:22:45.479 significant in quite a few ways. First of all, the 0:22:45.520 --> 0:22:49.600 most disgusting bullshit I've ever seen a tech company put out, 0:22:49.640 --> 0:22:52.480 just complete lies. But it was also a demonstration of 0:22:52.520 --> 0:22:56.080 the company's future ambitions and directions, and it showed exactly 0:22:56.160 --> 0:23:00.639 what they hoped they could build, And had zucker actually 0:23:00.640 --> 0:23:02.280 done so, I would have said it would have been 0:23:02.320 --> 0:23:05.080 a success, but said success would have been predicated on 0:23:05.119 --> 0:23:07.520 a pace of innovation that we haven't had in over 0:23:07.560 --> 0:23:12.040