Speaker 1: Z Media.
Speaker 2: Hello on, Welcome to Better Offline. I'm your host ed
Speaker 2: zetron and I am not a car. Yesterday, a business
Speaker 2: inside of report that Uber COO Andrew McDonald had said,
Speaker 2: and I quote, that its AI costs were becoming harder
Speaker 2: to justify and that the link was not there between
Speaker 2: spending money on AI tokens and creating more useful features.
Speaker 3: Yeah.
Speaker 2: Just gonna throw a bastball through a hoop real quick.
Speaker 2: After three long years of hammering it home, I have
Speaker 2: finally been proven right. AI's outputs and efficacy do not
Speaker 2: match up with its ruinous costs. When organizations have to
Speaker 2: pay the actual token costs of AI versus using subsidized subscriptions,
Speaker 2: they're forced to measure the actual return on investment from
Speaker 2: AI and are immediately balking at the results. Wheeling for mercy.
Speaker 2: They're saying, honey, I can afford it now. To give
Speaker 2: you some context, Anthropic only moved organizations to token based
Speaker 2: billing sometime in Q one, twenty twenty six. This is
Speaker 2: at most four months of having to pay the true
Speaker 2: costs of their AI token burn and they're already squealing.
Speaker 2: They're already begging for mercy. They're already saying, sir, no
Speaker 2: more tokens. AI has a revenue ceiling and an economic
Speaker 2: mismatch with its customer base. It's time to accept it.
Speaker 2: Every time you've heard somebody say that AI is real,
Speaker 2: it's here, and it's transformative, you've heard from somebody paying
Speaker 2: a monthly subscription to a service that allows its customers
Speaker 2: to burn anywhere from three dollars the thirteen dollars worth
Speaker 2: of tokens for every dollar of their subscription. Even get
Speaker 2: hub Copilot, which paid the model providers directly, was letting
Speaker 2: people burn on a thirty nine dollar a month subscription
Speaker 2: thirteen hundred to six thousand dollars in a month. Every
Speaker 2: effervescent booster and captured business idiot editor crowing about the
Speaker 2: power of AI has done so without ever really facing
Speaker 2: its real costs or i think, even using it very much. However,
Speaker 2: useful lms may seem to them as a facade for
Speaker 2: a product that costs far too much money for outputs
Speaker 2: that may or may not actually result in something functional
Speaker 2: or helpful. When you're not paying for tokens, these mistakes
Speaker 2: are easy to ignore. These subscriptions musk the ugly truth
Speaker 2: of AI that you're paying on a per million token basis,
Speaker 2: regardless of whether you get what you want, or even
Speaker 2: if the model makes mistakes or creates more problems that
Speaker 2: you then have to spend more tokens to fix. It's
Speaker 2: a scam, it's a con. It never made sense. An
Speaker 2: uber COO has given everybody permission to talk about the
Speaker 2: inherent economic mismatch of AI, and also revealed that AI
Speaker 2: companies like Anthropic and open Ai have a ceiling far
Speaker 2: below that which they need to justify their valuations. These
Speaker 2: companies need to be making two hundred billion dollars a
Speaker 2: year by twenty thirty or they cannot keep up with
Speaker 2: their own costs. Now, anthropics rapid revenue growth is the
Speaker 2: result of companies spending millillions or tens or even hundreds
Speaker 2: of millions of dollars on its tokens. For its revenue
Speaker 2: story to make sense, this revenue would have to be stable, replicable,
Speaker 2: and sustainable. Instead, it appears that organizations have been burning
Speaker 2: tokens without any real understanding of why, other than that
Speaker 2: the need to do AI and LLLM coding is the future,
Speaker 2: and all of their other dickhead business idiot friends are saying, oh,
Speaker 2: I got, i'm let and everyone spend ten million dollars
Speaker 2: a month on this shit because I have a fucking
Speaker 2: piece of rebar in my skull. For this to make sense,
Speaker 2: the majority of organizations would have to sustain and grow
Speaker 2: a massive spend on AI tokens from anthropic and open AI. Instead,
Speaker 2: it appears that this token bone was inherently experimental and
Speaker 2: entirely disconnected from messy things like I don't know return
Speaker 2: on investment. Uber already noted back in April that it
Speaker 2: blew through its annual token budget in a few months,
Speaker 2: and that conversation reported by Laura Bretton of the Information
Speaker 2: for End of the Show clearly led to an internal
Speaker 2: back and forth that will end in it cutting its
Speaker 2: spend on AI models. I've now spoken to three different
Speaker 2: large organizations that are all echoing similar anxieties about the
Speaker 2: RII of AI. Nobody can actually tell why they're spending
Speaker 2: this much money. Things aren't getting shipped fast, that software
Speaker 2: isn't better, and the only people that seem excited about
Speaker 2: it a business idy it's disconnected from production, and even
Speaker 2: they are becoming cost conscious when faced with millions of
Speaker 2: dollars of token bills anthropic and open ai cannot afford
Speaker 2: for things to slow down, as they've both signed up
Speaker 2: to over a trillion dollars of compute commitments across Google, Microsoft, Amazon,
Speaker 2: Core Weave, Oracle and Cerebrus. Just to be clear as well,
Speaker 2: open ai has to be making two hundred and eighty
Speaker 2: four billion dollars by twenty thirty, and they need to
Speaker 2: be profitable at that point too, otherwise Oracle cannot afford
Speaker 2: its own bills. This is not hyperbole. This is quoting
Speaker 2: back open AI's own projected revenues from their investor dex.
Speaker 2: But in reality, it appears there's a limit to which
Speaker 2: organizations can be abused and manipulated into believing that the
Speaker 2: future is here. And that limit is when they paid
Speaker 2: millions of dollars a month for something that doesn't appear
Speaker 2: to have a measurable return on investment. My friends, the
Speaker 2: business idiots are losing because they never had a plan
Speaker 2: to begin with. As I've said before, Ai is only
Speaker 2: as real as its subsidies. Chat GPT is only free
Speaker 2: to hundreds of billions of people because open ai is
Speaker 2: able to raise hundreds of billions of dollars have Microsoft
Speaker 2: and Google and Amazon and Core. We've built their own
Speaker 2: infrastructure and basically do everything for them, much like Anthropic
Speaker 2: is only able to subsidize its subscribers anywhere from eight
Speaker 2: to thirteen and a half dollars for every dollar of
Speaker 2: revenue because of the endless venture welfare they receive and
Speaker 2: from hyperscalers too. The underlying economics suggests that no subscription
Speaker 2: based AI service, let alone a free one, makes any
Speaker 2: kind of financial sense, and the only reason that everybody
Speaker 2: has had such unrestrained access to AI is because the
Speaker 2: media and the market's approved it, and the people with
Speaker 2: the money are deluded and disconnected from the process of
Speaker 2: value creation on almost every imaginable level. Any statements around
Speaker 2: Anthropic actually being profitable on inference of products of fantasy
Speaker 2: and magical thinking the still copium for people that would
Speaker 2: rather delude themselves into believing that any of this ever
Speaker 2: made sense than face reality or do basic mathematics. Again,
Speaker 2: the assumption is that companies would never just burn a
Speaker 2: lot of money, but that too is catering to the
Speaker 2: grade to myth of executive competence, something that nobody who
Speaker 2: spends any amount of time around managers or CEOs would
Speaker 2: ever believe get hub copilot let people burn thousands of
Speaker 2: dollars on a thirty nine dollars a month subscription as
Speaker 2: a means of expressing growth. I absolutely, one hundred percent
Speaker 2: believe that both open ai and Anthropic are doing exactly
Speaker 2: the same thing, and that neither of them has some
Speaker 2: magical way of making inference cheap enough to justify letting
Speaker 2: people burn thousands of dollars and one hundred or two
Speaker 2: hundred dollars a month subscription. The whole profitable on inference
Speaker 2: thing is a fucking myth, and to give them the
Speaker 2: benefit of the doubt is to empower them to continue
Speaker 2: You're raising money by conning their investors and the general public,
Speaker 2: and to continue perpetuating an era of software that runs
Speaker 2: contrary to what makes technology good. Their goal is simple
Speaker 2: to ram as much of this through to as many
Speaker 2: people as possible, to get them to spend as much
Speaker 2: money as possible, until they work out a way to
Speaker 2: make open AI or Anthropic or these endless data centers
Speaker 2: into something approaching a real business. One of the greatest
Speaker 2: mistakes we can make in our lives is to assume
Speaker 2: that the rich and powerful have any idea what the
Speaker 2: future holds, or that they have any grand plan or strategy.
Speaker 2: It's very likely that Dario Amaday and Sam Mortman's plan
Speaker 2: is to keep burning money until somebody works out for
Speaker 2: them how to stop burning money. And in the interim,
Speaker 2: their plan is to get as many users as they
Speaker 2: can to keep raising money. That's it. That's the entire plan.
Speaker 2: There is no secret thing. They're not building AGI. They
Speaker 2: don't know how to do. Their AGI doesn't exist. They
Speaker 2: don't have secretly super profitable inference. If they did, they
Speaker 2: would only sell model access. That's all they would do,
Speaker 2: and it would be profitable. Right. They don't have that.
Speaker 2: They don't have a plan. There is no secret model
Speaker 2: behind the scenes. Even mythos is a fucking myth. I've
Speaker 2: been over that before. Put a link in the notes.
Speaker 2: And similarly, Microsoft, Google, Meta and Amazon's plan is to
Speaker 2: keep building data centers in the hope they'll have a
Speaker 2: reason to use them by the time they're actually finished.
Speaker 2: There is no other plan. They do not have a
Speaker 2: secret invention coming. They do not have AGI in a
Speaker 2: box in their office. They do not have anything. And
Speaker 2: the reason they're spending so much money and shoving AI
Speaker 2: into everything you use is because they have no fucking
Speaker 2: clue what to do. This is why Warrio Amida makes
Speaker 2: wild claims about AI replacing fifty percent of all white
Speaker 2: collar workers, or Microsoft aiceo Mustafa Suliman claims all white
Speaker 2: collar labor will be automated in eighteen months because the
Speaker 2: products themselves, the actual products aren't impressive enough to win
Speaker 2: you over or to justify the hundreds of billions of
Speaker 2: dollars being sunk into AI. They say these things to
Speaker 2: make you think that they have a scary or powerful
Speaker 2: technology behind the scenes when they do not. And yes, God, yes,
Speaker 2: does that include fucking mythos. I'm so tired of seeing
Speaker 2: news stories about how banks are meeting up to talk
Speaker 2: about the scary monster, the scary Dracula of Mythos. They
Speaker 2: should have called it Dracula. I pretend to take this
Speaker 2: shit seriously, and this forceful harassment grade incursion if AI
Speaker 2: services into our daily lives is not a sign of
Speaker 2: its power, but a gesture of the lack of confidence
Speaker 2: and fear in the hearts of its progenitors. Good shit
Speaker 2: sells by telling you why it's good. Dodgy shit cells
Speaker 2: by tricking and scaring you and taking advantage of business
Speaker 2: idiots who think that using an L and M to
Speaker 2: type emails and spending twelve hours a day on Twitter
Speaker 2: constitutes work. I believe that the vast majority of these
Speaker 2: data centers go unuse and or unfinished, and the most
Speaker 2: AI startups will die once the venture capital subsidies dry up.
Speaker 2: I believe that neither open AI nor anthropic have a future,
Speaker 2: and that their revenues are only made possible through venture
Speaker 2: subsidyce for startups using their models, and the experimental revenue
Speaker 2: of business idiots that don't really know why they're doing
Speaker 2: AI in the first place. AI demand remains a result
Speaker 2: of societal psychosis and a weakness in those who are
Speaker 2: meant to scrutinize the untrustworthy. It's unraveling will be framed
Speaker 2: as impossible to see coming because nobody in power bothered
Speaker 2: to fucking look and look. I've seen some of you
Speaker 2: on the Reddit. I've had some emails from you. You're scared.
Speaker 2: I get him. It's easy to feel hopeless. We're at
Speaker 2: a point where agreed and the shamelessness and the stupidity
Speaker 2: is at its fever pitch. We've reached a time too
Speaker 2: when the maskers started to slip and the c suite
Speaker 2: imbecile classes unabashed and about its loathing of people, as
Speaker 2: was the case when the CEO of a UK bank,
Speaker 2: Bill Winters, talked about how those at risk of losing
Speaker 2: their jobs to AI are lower value human capital the
Speaker 2: same event where he said that the company would likely
Speaker 2: shared nearly eight thousand roles in the coming years due
Speaker 2: to AI. Winters would later apologize for his choice of words,
Speaker 2: although to be clear, he was being absolutely honest when
Speaker 2: he made the remarks. That's what he believes, that's what
Speaker 2: gets him up in the morning, that's what gets him hard.
Speaker 2: Bill Winton's loves him. Now it must be clear for
Speaker 2: legal reasons that was a joke. I don't know about
Speaker 2: Bill Winter's erection. I won't guess it at any further anyway,
Speaker 2: Move it on, though. Everything feels rough because the AI
Speaker 2: industry is equal parts desperate and overconfident. AI executives believe
Speaker 2: that they can cram through enough promises of money into
Speaker 2: the system that the system would rather cannibalize itself than
Speaker 2: admit it made a mistake. Sundarbishai, Andy Jase, Larry Ellison,
Speaker 2: Elon Musk Morg Zuckerberg and Sachinadella will gladly annihilate hundreds
Speaker 2: of billions of dollars to avoid facing the inevitable, but
Speaker 2: once they do, it'll be gruesome. At the same time.
Speaker 2: The things that they need to happen, actual profitability, actual
Speaker 2: time and investment, actual tangible proof that this is a
Speaker 2: real thing rather than something they all have to actively
Speaker 2: conspire to keep alive. Well, they're not happening. Each week
Speaker 2: we hear about new AI megaprojects that will dominate our
Speaker 2: countryside with blinding lights, endless noise, and few belging gas
Speaker 2: turbines at such a scale that it feels impossible it
Speaker 2: could ever stop. The system is absolutely going to try
Speaker 2: and exhaust itself to keep it going. The government bought
Speaker 2: nine billion dollars of Blackwell GPUs, which may seem like
Speaker 2: it's a too big to fail, but what it actually
Speaker 2: is is just the way to keep in Vidia's plates
Speaker 2: spinning for another quarter. Nine billion dollars isn't going to
Speaker 2: be enough. In truth, the amount of money that in
Speaker 2: Nvidia needs to keep this going is so extreme that
Speaker 2: it is now a test of how long the debt
Speaker 2: markets and the hyperscalers can keep sustaining the situation, the hype,
Speaker 2: and the industry itself. A trillion dollars in annual revenue
Speaker 2: is necessary by the end of twenty twenty eight for Invidia,
Speaker 2: which would require over thirty gigawots of actual operational data
Speaker 2: center capacity to be built by then at a time
Speaker 2: when only five gig was It most appears to be
Speaker 2: under construction, and under construction could mean anything from actual
Speaker 2: building happening to a scaffolding yard. Nevertheless, even the sweatiest,
Speaker 2: least trustworthy boosters have begun to sneak in statements about
Speaker 2: how we're probably not in a bubble, or yeah, it's
Speaker 2: a bubble, but it's a good bubble. Jeff Bezos, when
Speaker 2: asked about the AI bubble, said that you shouldn't worry
Speaker 2: about it, which, well, well, Jeff, that that doesn't really
Speaker 2: help anyone. Jeff, I mean, you probably don't need to
Speaker 2: worry about it. You're rich, twap. Anyway, none of this
Speaker 2: is to say that the mood is good. The vibes
Speaker 2: are disastrous. Everybody's exhausted. Those who love AI vibrate with
Speaker 2: a strange soullessness, constantly talking about the incredible power of
Speaker 2: AI without ever showing what it did, or perhaps what
Speaker 2: all that supposed saved time got them. What are you
Speaker 2: doing with the spare time? I don't see any chuckle
Speaker 2: folks providing anything useful to the word. I don't see
Speaker 2: you living lives of leisure. I just see you posting online.
Speaker 2: I can do that without the power of a because
Speaker 2: I have a working brain. What's your fucking excuse, good lord.
Speaker 2: But one thing I'll add though, that adds to the
Speaker 2: malaise is that everyone I talk to to a lot
Speaker 2: of people at hyperscales, they're all fucking miserable. It's terrible there.
Speaker 2: The business idiots are running the show, and they're both saying,
Speaker 2: spend more money on AI, but also don't spend quite
Speaker 2: as much money on AI because it costs a lot.
Speaker 2: Nobody really knows why they're doing this other than the
Speaker 2: fact it's what everyone else is doing. And basically every
Speaker 2: person in every job has had somebody intimate that they're
Speaker 2: going to lose their job to a computer every time
Speaker 2: they open a newspaper or use a website, and every
Speaker 2: app has some sort of desperate, vulgar pop up about
Speaker 2: a feature that will generate some bullshit officscating the features
Speaker 2: you actually want to use in favor of those that
Speaker 2: might lose the company money, because the company has to
Speaker 2: prove to the people that invested in the company that
Speaker 2: they're futuristic and have the AI integrations, even though no
Speaker 2: one likes them and they only seem to lose money. Alternatively,
Speaker 2: their CEO either has my old or severe AI sside
Speaker 2: coosis to the point they have decided to violate your
Speaker 2: user experience because AI is a non consensual technology at
Speaker 2: its heart, this is what it is. Nobody asked for this,
Speaker 2: no one wants this. We've had it forced upon us.
Speaker 2: Even the people excited by it would rather do something else.
Speaker 2: And all of that excitement doesn't seem to amount to anything.
Speaker 2: And they all seem desperate, and they seem anxious and
Speaker 2: scared and vulgar in the way they attack their detractors.
Speaker 2: And that's because they're losing. They all know it. They're desperate,
Speaker 2: they're scared. They're scared that the thing that they mortgage
Speaker 2: their companies and careers and reputations on is all falling apart.
Speaker 2: And it seems that there are nearly as many announcements
Speaker 2: of new large data center developments as there are cancelations
Speaker 2: of said data center projects. While hyperscolars can dismiss that
Speaker 2: as a simple reallocation of capital and nothing to worry about,
Speaker 2: it's hard to ignore the growing backlash against these facilities
Speaker 2: from locals and the success that these locals have had,
Speaker 2: especially in blocking multiple different developments or setting up actual
Speaker 2: what county wide and statewide moratoriums depending on where you look.
Speaker 2: And it gets worse. Anthropic had to conspire with Elon
Speaker 2: fucking Musk to conjure up a single profitable quarter with
Speaker 2: SpaceX deliberately discounting two months of compute costs as a
Speaker 2: means of swindling the media and its investors. One last time,
Speaker 2: I swear to God, the object permanence in the valley
Speaker 2: is not so good, folks. But in response, open Ai
Speaker 2: either leaked or had leaked that it had a negative
Speaker 2: one hundred and twenty two percent non gap operating margin
Speaker 2: in Q one twenty twenty six and chat GPT growth
Speaker 2: that's stalled. Anthropic is either the single most successful grifter
Speaker 2: of all time or speed running a con where it
Speaker 2: fudget together numbers to raise endless amounts of money to
Speaker 2: keep its billion or trillion dollar burn going. These are
Speaker 2: not the actions of honest, sustainable companies that will exist
Speaker 2: in the future. I believe that we are on course
Speaker 2: for a truly horrible crash, the likes of which may
Speaker 2: rewrite the venture capital industry and mortally wound one or
Speaker 2: more hyperscalers, as well as fundamentally divide society on so
Speaker 2: many levels into those that fall for this and those
Speaker 2: that did not. This will, in the short term be
Speaker 2: absolutely fucking horrible for our markets in our wider economy
Speaker 2: is a result of the time bomb of private credit
Speaker 2: and private equity and their failed investments in software and
Speaker 2: their failing investments in data centers. In the long term,
Speaker 2: I see it as that they live moment for many
Speaker 2: millions of secret imbeciles and credits in our mist and
Speaker 2: I don't think it'll be easy to wash the stench off.
Speaker 2: For those that really pledge themselves to the graveyard smash
Speaker 2: of AI, we will win long term, what they are
Speaker 2: doing is not working. The future will not be without pain,
Speaker 2: nor will it be easy or pleasant or something I
Speaker 2: will relish in. But in the long term, I think
Speaker 2: this is a moment where the greater business idiot incursion
Speaker 2: faces a reckoning with a reality it believed it could
Speaker 2: change through sheer force of will. These people don't know
Speaker 2: how to build things that work anymore, and that's the
Speaker 2: only thing they can do is spend money in fire people.
Speaker 2: They believe in nothing other than growth, and one cannot
Speaker 2: exist on belief in hyperlone, at least not forever. And
Speaker 2: I can't wait to watch what happens when it collapses.
Speaker 2: Thank you for listening to Better Offline.
Speaker 3: The editor and composer of the Better Offline theme song
Speaker 3: is Matasowski. You can check out more of his music
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Speaker 3: T O.
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