Speaker 1: Also media.
Speaker 2: Hello and welcome to Better Offline. I'm your host Ed Zichron,
Speaker 2: and we are recording here in beautiful New York City,
Speaker 2: and I have a wonderful pair of guests today. I have,
Speaker 2: of course, Alison Morrow from CNN Nightcap Newsletter and Edward
Speaker 2: Anguiso Junior, the hater himself from the Tech Bubble newsletter.
Speaker 2: Thank you so much for joining me today.
Speaker 3: Great to be here as all.
Speaker 2: So I think we should start with exactly what we
Speaker 2: were just talking about. The open AI claims that they
Speaker 2: have worked out what causes hallucinations. Alison, do you want
Speaker 2: to go over this?
Speaker 3: I should have read the paper a bit more carefully,
Speaker 3: but I can you know. The highlights were getting digested
Speaker 3: yesterday on X and Blue Sky, and it seems like
Speaker 3: it's kind of the test taking problem of when you
Speaker 3: encourage students when they're taking anderdized tests and you don't
Speaker 3: know the answer, you guess, And that's exactly how these
Speaker 3: models are trained, and they don't. You don't get a
Speaker 3: point if you say, I don't know, come up with something,
Speaker 3: and the models are meant to keep guessing until they
Speaker 3: get something close to right. Right, So that's why you
Speaker 3: get a lot of nonsense and hallucinations and open AI
Speaker 3: at least in their reading of it, says oh, this
Speaker 3: is a simple solution. We'll just encourage the models to
Speaker 3: understand better when it's like a binary question and when
Speaker 3: you can say I don't know the answer to that,
Speaker 3: so we'll see.
Speaker 2: I read the paper, albeit not today because my brain
Speaker 2: just immediately read it as marketing copy. Just put that,
Speaker 2: replaced it with another anime theme song. I went through
Speaker 2: it and I was like, okay, so it's going to
Speaker 2: encourage them to say I don't know. This feels like
Speaker 2: a very flat view of what hallucinations are, though, because
Speaker 2: hallucinations as people know them authoritatively stating something that isn't true,
Speaker 2: but hallucinations in life coding model are. It will just
Speaker 2: say yeah, I did that when it didn't. This is
Speaker 2: very common you going through the Cursor and the Claude
Speaker 2: code forums, you can see this or subredits at least,
Speaker 2: and it's not that they say something that's true. They
Speaker 2: don't know that something's not true also, so they might
Speaker 2: say they don't know, and it's just very silly because
Speaker 2: they claim that they're going to fix this problem with
Speaker 2: this solution, but they've done years and hundreds of millions
Speaker 2: of dollars of reinforcement learning. Do they unreinforce do they
Speaker 2: reinforce it? More so that I don't know. I'm fucking
Speaker 2: tired of these companies are going to be completely honest.
Speaker 2: I realized this is kind of cliche for the show,
Speaker 2: but it's the fact that these things get written up
Speaker 2: as very serious things. US is saying, you, guys still
Speaker 2: haven't worked this out. It's kind of frustrating to me.
Speaker 2: And they don't seem to be the models. Some getting
Speaker 2: bad dimension returns and all that, but this is the
Speaker 2: best they've got.
Speaker 4: I mean, does this kind of thrust feel like, you know,
Speaker 4: do you guys feel like it's a downstream of the
Speaker 4: attempts by some of these firms to say, oh, actually,
Speaker 4: like if we dialor bad the sick a fancy, you know,
Speaker 4: then we'll be able to have a much more engaging
Speaker 4: consumer product. We'll be able to have it hallucinate less,
Speaker 4: you know, and do psychosis less.
Speaker 2: You know.
Speaker 4: But does it do they feel linked in that way?
Speaker 4: Does it just feel like a they you know, another
Speaker 4: maybe another dead end.
Speaker 2: I feel like it's just them trying to work shit
Speaker 2: out and trying to like this also feels like a
Speaker 2: very rudimentary answer that they probably already had. It doesn't.
Speaker 2: Anytime someone comes up with an idea that I can
Speaker 2: that's technical, I'm like, okay, mate, you cannot be cooking
Speaker 2: with gas. This is this cannot be that good an idea.
Speaker 2: And the thing is the sick of fancy problem I
Speaker 2: don't think is solvable through solving hallucinations. The problem is
Speaker 2: it should stop. It needs to just It should not
Speaker 2: say I don't understand, it should say no. Actually, you
Speaker 2: sound like you think I'm God King and that you
Speaker 2: are God King, and that as God kings together we
Speaker 2: will destroy the world. Yeah. I mean, I mean my
Speaker 2: case is true.
Speaker 4: But do you think like the emphasis or the attempt
Speaker 4: to overcorrect on that is leading them to go down
Speaker 4: solutions where they think, oh, like if we just like
Speaker 4: this and that, then we.
Speaker 2: Yeah, yes, yes, actually I think that that's right because
Speaker 2: they have the I don't know if you saw the
Speaker 2: Attorney general. Attorney's general from Delaware and California sent a
Speaker 2: letter to open AI last week saying, hey, look, if
Speaker 2: you need to fix these safety protocols, you need to
Speaker 2: actually have them, because what you have right now doesn't work,
Speaker 2: and we will block your nonprofit otherwise. I was really
Speaker 2: happy to read that right up until the bit they
Speaker 2: say we wish you well with your quest for AI dominance.
Speaker 2: I'm just like, these are the fucking people protecting us
Speaker 2: from the They're like, no, it's great, you want to
Speaker 2: dominate everyone with AI. It's just you drove some people
Speaker 2: to a murder suicide situation.
Speaker 3: And wasn't that part of the problem with GPT five
Speaker 3: as they tried to dial back the SICKA fancy and
Speaker 3: then it took away the character and like the humanness
Speaker 3: that people had gotten attached to in GPT four, yeah,
Speaker 3: in earlier models, and like it all seems to come
Speaker 3: back to open. AI doesn't realize that what it's selling
Speaker 3: often is like a companion and a therapist, and it doesn't.
Speaker 3: It reminds me of like Q tips. You're not supposed
Speaker 3: but them in your ear right, but that's all anyone
Speaker 3: uses qtubes.
Speaker 2: I was gonna say they're not meant to do, of.
Speaker 3: Course not, but like that's the consumer, that's how the
Speaker 3: consumer has chosen to use this product. And they're saying like, well,
Speaker 3: we don't condone that, we don't think it's like the
Speaker 3: best use of our product, and you know, we know
Speaker 3: better than the than the consumer, of course.
Speaker 2: I actually I think it's one abstraction high, which is
Speaker 2: I don't think they know what chat GPT is. I don't.
Speaker 2: I did AI boaster piece came out last week, but
Speaker 2: it was I had this whole thing where it was.
Speaker 2: It's so they don't describe what chat GPT does. If
Speaker 2: you're on the website, like it's like, yeah, analyzes data
Speaker 2: and it's it's brainstorming and charts and stuff. The agent
Speaker 2: does things too, Please buy it and then you try
Speaker 2: and like actually look for any use cases and there's nothing.
Speaker 2: I think that they're just guessing. But my favorite thing
Speaker 2: I'm seeing, my favorite thing is that now people are
Speaker 2: like GPT four h isn't the same because they brought
Speaker 2: it back and now people are just freaking out. People like, no,
Speaker 2: it's not the same, it's different. Somehow it's on I
Speaker 2: honestly don't know if it's true. I just think that
Speaker 2: they've entered gamer mode. This is just what. This is
Speaker 2: how gamers react. It's like the gun isn't the same,
Speaker 2: it's literally the same code. No, you've changed something, You've
Speaker 2: I know, and it's what happens when you release an
Speaker 2: imprecise glazing bot onto the world. It's also really funny
Speaker 2: how literally any of these companies could have been open AI.
Speaker 2: There doesn't seem to be anything special about this company
Speaker 2: at all anymore or ever.
Speaker 4: Well you know, I mean, not everybody can lose as
Speaker 4: much money that feels a very special or have the
Speaker 4: connection to you.
Speaker 2: Oh my god. What I haven't heard from Maco's son
Speaker 2: in the minute. We haven't had an announcement of tomorrow
Speaker 2: or tomorrow is gonna be? I like that he bought
Speaker 2: a he bought a Fox count Lab, an old Fox
Speaker 2: con lab too turned into an AI server building place
Speaker 2: in like Ohio. I think it is. It's like, mate,
Speaker 2: what are you doing? Man? Are you okay? Someone needs
Speaker 2: to check in on mass We need to hold space
Speaker 2: for Masso Shei's son.
Speaker 4: Yeah, bring them on.
Speaker 2: I have asked him. I have genuinely emailed soft Banks
Speaker 2: PR and I've emailed Anthropics PR for Dario and han't
Speaker 2: heard back from either. I assume there's an email issue
Speaker 2: because there's no other reason they wouldn't come on this show.
Speaker 2: It's just it now. I what's fun to watch though
Speaker 2: is considering how many times we've had like AI bubble
Speaker 2: conversations on here, everyone seems to be kind of waking
Speaker 2: up to it. It's kind of fun. Must be clear,
Speaker 2: everyone here was early on this. I was new, actually
Speaker 2: very early. You've been early on every day as early
Speaker 2: as you No, I give you credit. You're one of
Speaker 2: like the three people who, when the metaverse was happening,
Speaker 2: was actually calling it out. So it's good. It's good
Speaker 2: to see in here, but also insane that it's still going.
Speaker 2: That's what I don't like. This open a one hundred
Speaker 2: and fifteen billion spurned within by twenty twenty eight, I
Speaker 2: think it is. I don't understand how people keep publishing
Speaker 2: this and being like and that will happen.
Speaker 3: I will say, to my relief, the metaverse went away
Speaker 3: quickly because when it first was announced and I wrote
Speaker 3: a piece just being like what.
Speaker 2: Yeah, what is what?
Speaker 3: And then like everything about it seemed really dumb in
Speaker 3: every iteration coming after, and so I was like, oh, okay,
Speaker 3: I wasn't crazy, but with AI and I know you
Speaker 3: can relate to this, I feel crazy because the lack
Speaker 3: of utility is still there and like the absurdity of
Speaker 3: the investment is still there, and it does seem like that.
Speaker 3: That's why I wrote about the vibe shitt like it
Speaker 3: has been like going in Edzitron's favor in the last
Speaker 3: few weeks.
Speaker 2: Fucking vindication finally. But it's it's funny as well because
Speaker 2: even with them, this open Ai story comes out and
Speaker 2: people are still like, yeah, they're gonna burn one hundred
Speaker 2: and fifteen billion dollars. People reported about a month ago
Speaker 2: that they're going to spend thirty billion dollars a year
Speaker 2: on Oracles starting twenty twenty eight. How how how? I
Speaker 2: just That's what I don't understand. How these articles keep
Speaker 2: coming out. And I understand that reporters have to report
Speaker 2: the news and things they have discovered. I get it,
Speaker 2: But can no one just be like and no one
Speaker 2: has any idea where this money's coming from. No one,
Speaker 2: thirty billion dollars a fucking year from Oracle for service
Speaker 2: that are yet to be built, and all of this.
Speaker 2: They don't need to worry about the fact that the
Speaker 2: servers aren't actually built. In Applene Texas is not finished,
Speaker 2: and the money doesn't exist, and it isn't obvious how
Speaker 2: Oracle affords it they will have to take on debt
Speaker 2: to build this, and Crusoe and primary digital Infrastructure have
Speaker 2: already done that. And I mean, other than that, it
Speaker 2: could happen any day. I just wonder if the media
Speaker 2: is actually not prepared for this. And I don't mean
Speaker 2: in a conspiratle way, I mean just in a is
Speaker 2: the media actually set up for companies just lying or
Speaker 2: just projecting.
Speaker 4: I mean, I feel like it reminds me of kind
Speaker 4: of the relationship that maybe our critics or you know,
Speaker 4: our coverage might have for the medium, where there's not
Speaker 4: an inherent antagonism or skepticism of claims that are being offered,
Speaker 4: an assumption of good faith that continually gets betrayed or
Speaker 4: you know, punished, but gets carried on with over and
Speaker 4: over and over again. I feel like the AI bubble
Speaker 4: discussions that we're seeing. Part of me also feels like
Speaker 4: they are going to disappear the second we start to
Speaker 4: see some of the firms maybe announce some favorable metrics,
Speaker 4: even though, as we've been talking about for a long time, right,
Speaker 4: revenues are not there, profits are not there now, the
Speaker 4: burn is only increasing, right, and there's no way forward
Speaker 4: in the short term. Right, you know that I can
Speaker 4: think of where these companies start to actually do the
Speaker 4: things that they're claiming they're going to be doing with
Speaker 4: transforming the world. But I can see a scenario where
Speaker 4: you know, someone has a favorable quarter for adoption even
Speaker 4: though you know, we just I just saw yesterday Apollo
Speaker 4: Global Management was talking about large firms are actually scaling
Speaker 4: back AI adoption, which already wasn't even providing returns and
Speaker 4: was hurting productivity in the first place.
Speaker 1: Right.
Speaker 2: It's and it's really weird as well, because there was
Speaker 2: the MIT study where it's like they said, ninety five
Speaker 2: percent of generative AI integrations don't have any return on investment.
Speaker 2: There are some people critiquing that number, but something that
Speaker 2: comes out of that study that I really like was
Speaker 2: it was saying that enterprise adoption is high, but the
Speaker 2: actual transformation is low because this shit doesn't work. And
Speaker 2: it's it's so strange, and I think that the only
Speaker 2: reason that things won't immediately unrebel with a good quarter
Speaker 2: is because the media has chosen to follow a direction.
Speaker 2: Now you've got the when you've got the Atlantic, the
Speaker 2: goddamn Atlantic publishing a story saying yeah, it turns out
Speaker 2: that AI isn't really doing much, but it's holding up
Speaker 2: our economy. It's like, holy shit, the Atlantic's willing to
Speaker 2: admit something that happened happened. I didn't even know this
Speaker 2: was in there. I thought that they just wrote up
Speaker 2: whatever was email to them by and dohold.
Speaker 4: Your bread, they just published Mike Solana.
Speaker 2: Yeah, actually I retract all my statements to But it's
Speaker 2: I think with the media.
Speaker 3: I see it in political reporting and business reporting in tech.
Speaker 3: There's a deference to authority that I think American media,
Speaker 3: but all media, have an issue with. And I think
Speaker 3: that sort of speaks to the underlying economics of being
Speaker 3: in media right now, where there's a general chill both
Speaker 3: economically and politically. Reporters are worried about their bylines being
Speaker 3: out there and getting stuff wrong. And I'm not saying
Speaker 3: that that's an excuse, but I do think that is
Speaker 3: an institutional mindset that has taken route, especially in the
Speaker 3: last ten years, that's just become like really hard to
Speaker 3: be a journalist and to do it right. But you
Speaker 3: are starting to see that MIT report was so important
Speaker 3: because it caused people on Wall Street authority figures to
Speaker 3: say hmm, I don't know about this, And then that
Speaker 3: got a lot of mainstream financial media to kind of
Speaker 3: like do that questioning headline about AI that they maybe
Speaker 3: wouldn't have done six months ago.
Speaker 2: I do like that there's a rumor about the next
Speaker 2: deep Seek model doing agents. They're not going to, but
Speaker 2: even just like if that comes out and they even
Speaker 2: claim they can, I think that might have a market
Speaker 2: panic just because they'll be like, ah, China, I.
Speaker 4: Mean yeah, I mean that's I. I actually think there's
Speaker 4: something to that, right, because you know, we did agents here,
Speaker 4: didn't do shed for sales powers really the market did
Speaker 4: the market even?
Speaker 2: Really? Actually and a wonderful story from this information open
Speaker 2: AI in their in their whole projections through twenty twenty nine,
Speaker 2: they've reduced the amount of money of the micromagents by
Speaker 2: twenty six billion dollars. Why I want anyway? So, but yeah,
Speaker 2: it's like that this deep Seek thing could inspire people
Speaker 2: to get scared horribly because no one actually believes that
Speaker 2: agents exist. Looks they don't, but they think they do,
Speaker 2: but they will, but they won't. It's this I don't
Speaker 2: think I've ever actually seen anything like this in tech.
Speaker 2: I'm gonna be honest, it's worse than crypto, even worse
Speaker 2: than just the general generative AI. I think is this
Speaker 2: concept of agents though, because I saw some fucking thing
Speaker 2: about some one political blog saying that Donald Trump would
Speaker 2: do some sort of act he would do the I
Speaker 2: forget the exact thing, but it would be an act
Speaker 2: that would make AI copyright holders just handshit over to
Speaker 2: AI due to us needing to beat China. And it
Speaker 2: mentioned with you know, like, yeah, the growing agency capabilities
Speaker 2: of AI. It's just what the fuck is that. I've
Speaker 2: never seen a tech thing in my life now that
Speaker 2: has not existed like this, and people talk about it
Speaker 2: like it's real.
Speaker 4: And I think also it's interesting to see the more
Speaker 4: it doesn't manifest, the more some of the recommendations to
Speaker 4: make them happen just sound more and more like these
Speaker 4: are also things that might somehow bend the cost curve
Speaker 4: in our direction. Maybe we should make the Internet unusable
Speaker 4: to anything other than some of these programs. Yeah right,
Speaker 4: And you know, I'm curious which one is going to
Speaker 4: give out first, Like the really savvy ability a lot
Speaker 4: of these firms have had in spinning, sputtering or you know,
Speaker 4: spinning you know, a crisis that might drain the markets
Speaker 4: or deter investors and to oh, actually we just need
Speaker 4: even more capital, similar to what they did with deep Seek.
Speaker 4: The solution is even more compute intensive models. You know,
Speaker 4: whether they're going to be able to do that faster
Speaker 4: than people wising up and saying, you know, maybe we
Speaker 4: shouldn't misallocate trillions of dollars a capital over the next
Speaker 4: few years towards this.
Speaker 2: But this is the thing, though, I don't think there's
Speaker 2: anything stopping this, because the suggested thing was the okay,
Speaker 2: so all of these modial companies can steal from everyone,
Speaker 2: which is what happened already even with this anthropic settlement.
Speaker 2: It's not it's great people are getting three thousand dollars.
Speaker 2: I love that, but.
Speaker 4: It's also what the companies are offering that's similar to
Speaker 4: what the your payout would have been if you said, yeah, right,
Speaker 4: I didn't know that. I think like some publishers were offering,
Speaker 4: or you know, trying to ask authors, Hey, if we
Speaker 4: pay you this, would you allow your book to be
Speaker 4: trained on would you allow us, you know, be put
Speaker 4: into a data set. The payment that you're getting from
Speaker 4: the settlement feels or reminds me of the amount of
Speaker 4: money that people are being offered and those sorts of deals.
Speaker 2: I think the thing is, Okay, they already steal everything. Well, okay,
Speaker 2: we need to give them as much money as possible.
Speaker 2: We've already done that. Are we just going to do
Speaker 2: this forever? Because even if we do this for rever,
Speaker 2: nothing's going to change, even if I'm completely wrong and
Speaker 2: open ai keeps going another five years. Okay, so we're
Speaker 2: just going to annihilate one hundred and fifteen billion dollars.
Speaker 2: There is no there are no more things here like
Speaker 2: they're projections open ays projections from the information their chart.
Speaker 2: I don't even need to show you this because this
Speaker 2: is just fan fiction at this point. There is in
Speaker 2: twenty twenty six starting there is this growth of this
Speaker 2: orange thing that is other revenue. Who knows what it is?
Speaker 2: I don't know. Open Ai doesn't seem to And that's
Speaker 2: really important because they're going to make what looks like
Speaker 2: several billion dollars from this next year. What the fuck
Speaker 2: is going Every time I look at this company, I
Speaker 2: feel a little more insane because they've now lowered their
Speaker 2: expectations of selling their access to their models by five
Speaker 2: billion dollars over the next few years. What even is
Speaker 2: open ai at this point? Is it just a wrap?
Speaker 2: Have they become a wrapper company of their own models?
Speaker 2: They're no better than Cursor. It's just it's so weird,
Speaker 2: and I realize them kind of going in circles at
Speaker 2: this point, but it's I even the metaverse, even Crypto,
Speaker 2: even Crypto functioned. It was bad. It's still bad. It
Speaker 2: is bad cloud software, but it still did the thing. Hey,
Speaker 2: I doesn't even seem to be doing it, and they
Speaker 2: need more money to prove that it can't do it.
Speaker 2: And actually they don't have enough right now, but they're
Speaker 2: going to need even more. I don't even know how
Speaker 2: people are still taking this seriously because on top of that,
Speaker 2: did you hear about the Microsoft negotiations over the nonprofit.
Speaker 4: I've been hearing.
Speaker 2: Well, they're delaying it to next year. They have to.
Speaker 2: They need to convert by the end of the year
Speaker 2: otherwise SoftBank comes their round in half. And everyone's just like, yeah,
Speaker 2: I'll be fine, mate, it'll work it out. What the
Speaker 2: fuck have you have either of you ever? I know
Speaker 2: ed you covered Uber a lot. I don't even think
Speaker 2: the economics match with that either.
Speaker 4: No. I mean, you know, it's interesting because I think
Speaker 4: Uber's strategy, central strategy from the beginning was, you know,
Speaker 4: we have a few existing playbooks that we need to reference,
Speaker 4: you know, the coke deregulation of the taxi industry in
Speaker 4: the nineties, as well as Regula deregulatory campaigns that they led,
Speaker 4: you know, in Seattle and historic campaigns in San Francisco.
Speaker 4: There's a lot that we can reference. And if we
Speaker 4: can figure out a way to bootstrap ourselves onto the
Speaker 4: model and onto those previous histories of deregulation while delaying
Speaker 4: scrutiny long enough our economics to actually, you know, get
Speaker 4: to a profitable place, we'll get there, which is what
Speaker 4: they did right. But even then, I mean, I feel
Speaker 4: like from the beginning, as much as I hated a
Speaker 4: lot of the coverage of Uber for years, the people
Speaker 4: who were always correct about it, We're like the labor
Speaker 4: reporters who had actually, you know, if you spend time
Speaker 4: talking to the drivers, that will lead you to be
Speaker 4: a little bit more interested in the you know, what
Speaker 4: can justify the suffering behind this, and then you almost
Speaker 4: always will see that there's no act. At that point,
Speaker 4: there were no way the unit economics worked unless you
Speaker 4: subsidize everything.
Speaker 1: Yeah.
Speaker 2: I feel like.
Speaker 4: Similarly, there's something going on with with artificial intelligence firms
Speaker 4: and the global AI value chain where if you start
Speaker 4: with a labor analysis and you look at you know,
Speaker 4: invisible workers or ghost workers that are integitical.
Speaker 2: The Kenyan people training the models m M yeah.
Speaker 4: Or labeling or you know, an any any laborer that's
Speaker 4: out of sight, out of mind. You know, then the
Speaker 4: you know, starting there and going up, it becomes hard
Speaker 4: to ask, Okay, how are we supposed to allocate all
Speaker 4: this capital towards a model that, as is right now
Speaker 4: is cutting all these corners for costs and it's still
Speaker 4: burning tens and tens and tens of billions of dollars
Speaker 4: and it's asking for trillions of dollars more.
Speaker 2: But I don't know.
Speaker 4: I mean, part of my fear is that they are
Speaker 4: successful in the way that Uber was, where if you
Speaker 4: get enough buy in from military industrial comp well, you know,
Speaker 4: for an AI's case, if you got enough buying from
Speaker 4: military doustrial complex, if you get enough buy in from
Speaker 4: UH you know, social programs and interfacing them and helping
Speaker 4: cut cutting them or redirect traffic through them, if you
Speaker 4: get enough buy in from other tech firms, if you
Speaker 4: get rents from other startups they need to use and
Speaker 4: get access to your product. And also if you graft
Speaker 4: yourself onto everybody's daily interactions, daily lives, the way they
Speaker 4: interface with the Internet, can you actually make it work?
Speaker 4: Which is also another way to say, like, what if
Speaker 4: you just become a massive parasite?
Speaker 2: Funny, the funny and grim thing is is AI is
Speaker 2: a terrible parasite. It's not good at it. It doesn't
Speaker 2: like because Uber's success came from being able to graft
Speaker 2: itself on through utility and subsidized pricing. That meant that
Speaker 2: everyone used it and also cabs kind of fucking sucked. Yeah,
Speaker 2: I mean, yeah, they sucked.
Speaker 4: And also transit in most city sucks, and I mean
Speaker 4: it has only gone worse.
Speaker 2: The inherent colonialism of most technology applies very good from
Speaker 2: Karen Howe. Of course, Empire of Ai. Empires of Ai
Speaker 2: did NEP's a great book, but in this one, it's
Speaker 2: kind of shit colonialism as well, because they don't even
Speaker 2: they haven't found a way to actually exploit in a
Speaker 2: way that's profitable. They haven't found a way to use
Speaker 2: human beings because the fundamental thing they want to do.
Speaker 2: It's kind of like if Uber sometimes you got in
Speaker 2: the car and you got out at the wrong place,
Speaker 2: and I don't mean like in a different country, or
Speaker 2: you got into the car and it just exploded sometimes
Speaker 2: And I sound like I'm joking, but it really is
Speaker 2: that bad. And on top of it, it's not replacing labor.
Speaker 2: And it's also not the kind of tech that can
Speaker 2: replace labor. So I it's my grand theory that they're
Speaker 2: just playing the hits. They just they're trying in the
Speaker 2: same way that you just eloquently put Uber played the
Speaker 2: hits of his how we did deregulation, his how we
Speaker 2: did growth, and this is how software grew in the past.
Speaker 2: I think that AI is trying to do the same thing,
Speaker 2: and it's bad at it. It's like watching a new
Speaker 2: class of dipshit try and do what the more evil
Speaker 2: dipshits of the past did and fail. In fact, these
Speaker 2: lobbying groups lobbying for AI. I hear a lot of
Speaker 2: people saying, oh, they're lobbying their lobby It's like what for.
Speaker 2: Oh no, they're gonna build data centers everywhere. They already do.
Speaker 2: They're gonna steal from it. They already do. They're trying
Speaker 2: to replace, They're already trying everything that they that they
Speaker 2: everyone's scared of. They already can do. Other than the
Speaker 2: doing part, they can't do any of that. I'm sorry,
Speaker 2: I just I just remembered as well yesterday trying to
Speaker 2: read that because I went on the chat gpt pro
Speaker 2: subreddit because I hate myself, and I was trying to
Speaker 2: find someone who'd used the agent, and every post was
Speaker 2: someone saying, anyone ever used the agent, You've got any tips?
Speaker 2: And everyone's just it doesn't fucking work. It's broken. It's actually,
Speaker 2: here's a good question, asn't ed have you? Can you
Speaker 2: think of a company that's ever released something just completely
Speaker 2: broken before? Because the meta us kind of worked. It
Speaker 2: wasn't what they were promising, but it worked. It was
Speaker 2: a virtual world ish.
Speaker 3: I mean, the pharmaceutical industry has a nice long history
Speaker 3: putting out quasi effective drugs that have all kinds of consequences.
Speaker 3: And I can't remember who skeeted it about this a
Speaker 3: few weeks ago. It was after one of the you know,
Speaker 3: it's become such a genre of the journalism right now,
Speaker 3: about AI, about like this man became delusional and had
Speaker 3: a psychotic episode because of his Chatgypt relationship. It was
Speaker 3: one of those going around and someone's skeeded about how
Speaker 3: if there was if this is coming from a pharmaceutical company,
Speaker 3: it would be recalled immediately. There are real regulations in
Speaker 3: place that could actually claw that back and help save
Speaker 3: people's lives. But there are no regulations around AI, so
Speaker 3: we get Chatgypt gods and spiritual awakenings and all these
Speaker 3: psychotic episodes.
Speaker 2: I do think that that stuff is going to genuinely
Speaker 2: be its downfall though, because right now it's burning more
Speaker 2: money than anyone's ever barned before. And the most common
Speaker 2: use case people can talk about is, yeah, it drove
Speaker 2: that guy insane, that guy went crazy. That there are
Speaker 2: children who's horrifying killing themselves because of this thing. That's
Speaker 2: what it's getting known for. And otherwise it's like, yeah,
Speaker 2: your most annoying friend loves this because that really it's them.
Speaker 2: You love them, but they're like I learned about well listen,
Speaker 2: chat JBT is like you didn't well you know on that.
Speaker 4: Part of also part of my a fear I have
Speaker 4: is I think similar to how when firms were rolling
Speaker 4: out facial recognition surveillance and insisting that we need to
Speaker 4: biometric surveillance to help keep city safe, community safe, products safe.
Speaker 4: One angle that people used to attack it was, well,
Speaker 4: you know, like the racial bias of these things will
Speaker 4: allow them to you know, miss identify black or brown
Speaker 4: people more often than not, and they might get arrested,
Speaker 4: they might get targeted by the police, won't wear another
Speaker 4: and that is why we should get rid of the
Speaker 4: technology versus we should get rid of the technology. And
Speaker 4: I think, like, I'm curious, you know, how it's going
Speaker 4: to go, the concern about it inducing psychosis or inducing suicides,
Speaker 4: because I could see a scenario easily where they patch
Speaker 4: together something that like a fix, and it's not until
Speaker 4: later a year, two or three after there's after people
Speaker 4: are much more defended that other harms come to the foreground,
Speaker 4: whereas we lose something God, I think not to say,
Speaker 4: you know, not to say or marginalize the fact that
Speaker 4: it has immense social costs or harm here, but it
Speaker 4: does in some ways remind me of the way in
Speaker 4: which that debate over facial recognition went and then they
Speaker 4: you know, they solved, you know, with quotation marks the
Speaker 4: racial bias problem, and now people have more or less
Speaker 4: accepted that facial recognition is okay, actually long this it's
Speaker 4: not racist.
Speaker 2: And that's the thing. It's people say, this is a
Speaker 2: white bloke. But it's like people really underplay how endemic
Speaker 2: that racism is within all algorithms, you know, Compass, which
Speaker 2: is like this very very very old algorithm for being
Speaker 2: like it's basically minority report, both in the reference to
Speaker 2: the thing and it reports and minorities in that it says, yeah,
Speaker 2: this this person will likely have again, and that should
Speaker 2: be and it isn't a unilateral the judge has to
Speaker 2: take it. But what a surprise. It's often used to
Speaker 2: black people to the jail systems because it's heavily biased
Speaker 2: against them. And yeah, I somewhat fear lllm's doing similar
Speaker 2: they're probably already doing. And I think that every algorithmic
Speaker 2: system is inherently racist. There's not enough people running them
Speaker 2: who actually fucking try. It's inherently biased against a woman.
Speaker 2: I think there's also I wish I had this in
Speaker 2: front of you. But there's also something about how like
Speaker 2: more there were more fans of Generative AI who were
Speaker 2: male than female, or it's just but.
Speaker 4: Do you think it's possible that you know, they'll try
Speaker 4: to say, oh, we can solve for the psychosist problem,
Speaker 4: and then that will undermine a large The problem is
Speaker 4: of the criticism.
Speaker 2: How do you solve it? Because it is probably a
Speaker 2: small it is probably a small scale problem. We actually
Speaker 2: don't know, and it's not that these companies know or
Speaker 2: will tell us. But nevertheless, each one is so horrifying.
Speaker 2: This is horrib like the story in the Wall Street Journal,
Speaker 2: it's Julie Jargon, another person there who wrote that where
Speaker 2: it was like a murder suicide, an actual son of
Speaker 2: Sam Mortman's situation. Whi's fucking terrifying that this is happening.
Speaker 2: I don't know if you can completely solve that, because well,
Speaker 2: it takes is one popping up again for them to
Speaker 2: go fuck. And it's also not just a chat GPT problem.
Speaker 2: There's this woman on TikTok who she has been saying
Speaker 2: what Claude has been telling her, and it's like, ah,
Speaker 2: this is giving me psychic visions. I think it is.
Speaker 2: It's also an the ultimate grifter tool. It's just it's
Speaker 2: that's why I think it's taken off so much on
Speaker 2: social media as well. It's a tool that naturally fits
Speaker 2: into the grifter's toolbox. I think that I actually have
Speaker 2: similar fears that they will try and find ways to
Speaker 2: handwave away from this if it was the only problem,
Speaker 2: but they have so many problems. There have so many
Speaker 2: problems at this point. But I do also think that
Speaker 2: people need to remember how racism in algorithms is. Fairly,
Speaker 2: it's in all of them. I mean, you remember Microsoft
Speaker 2: Connect which literally couldn't see black people, which was a
Speaker 2: joke in the show Better Off Ted if anyone watched that,
Speaker 2: a great show. It's just it's insane the I mean, sadly,
Speaker 2: it's very obvious why this keeps happening. It's because the
Speaker 2: people are predominantly white and male, and it's just they
Speaker 2: can't really and also you can't really fix this stuff
Speaker 2: without intentionally building the data, which would require and spend
Speaker 2: money on something they don't care about.
Speaker 3: And they don't really understand what they're doing when they
Speaker 3: go in to tweak these models. They don't know how
Speaker 3: overcorrecting or undercorrecting their being so they kind of have
Speaker 3: to just try and then put it out in the
Speaker 3: world and then wait for something bad to happen. It's funny.
Speaker 3: It's not funny, it's extremely sad. In that journal story
Speaker 3: that you referenced, which I read twice because I was
Speaker 3: like horrified, and also the reporting was incredible, it was
Speaker 3: really and they said it as this appears to be
Speaker 3: the first instance of a murder resulting like we've seen
Speaker 3: sue sides, but like this is a murder suicide. And
Speaker 3: when OpenAI responded to the question about did the bot
Speaker 3: ever respond to this guy who is clearly having a
Speaker 3: delusional episode, Hey, you need to talk to a real
Speaker 3: life therapist, you need to go to the hospital, you
Speaker 3: need to seek help. And I think they declined to comment.
Speaker 3: It was like a very evasive maneuver. But like ultimately
Speaker 3: the journal had seen. The one time where the bot
Speaker 3: said please go to the emergency room was when the guy,
Speaker 3: the parent guy who was having paranoid delusions, said I
Speaker 3: think my mom is trying to poison me, and the
Speaker 3: bot said, if you think you've been poisoned, you should
Speaker 3: go to the hospital and get your stomach pumped.
Speaker 2: I also, I agree they don't know how to tweet
Speaker 2: these things, but I must be clear worked in tech
Speaker 2: for a long sixteen seventeen years now, and that's not
Speaker 2: even including my game's journalism work. It is not hard
Speaker 2: for them to just have a just a unilateral thing
Speaker 2: of oh, you're talking like this, I'm going to stop.
Speaker 2: I mean, topic just announced that they have a thing
Speaker 2: that will cut a conversation, which is good. All of
Speaker 2: them should do this, but it's they could if someone
Speaker 2: and the whole thing people I've seen where it should be.
Speaker 2: If you start talking like I'm going to do this,
Speaker 2: I am becoming this, it should say, hey, you sound
Speaker 2: like you're having a paranoid like I'm worried about you.
Speaker 2: You should go and speak with it and just stop
Speaker 2: working with them. People will say, well, the way they
Speaker 2: get around that is by telling the chat GPT window,
Speaker 2: Oh yeah, I'm writing a story. I don't know. Do
Speaker 2: we need them to write a story about that? Do
Speaker 2: we need? Of course? What is the answer, And the
Speaker 2: answer is they don't give a rap fucking no one's mate,
Speaker 2: I really, I genuinely think because it's really the same
Speaker 2: thing with like same thing with social networks as well.
Speaker 2: It's you don't ban every slur the moment someone says it.
Speaker 2: But I don't know you have a thing that says, hey,
Speaker 2: someone said a slur. Maybe take a quick look at
Speaker 2: the slur and you could probably just ban that person,
Speaker 2: because I'm guessing that most uses of the N word
Speaker 2: on social media are not used as in culturally sensitive ways.
Speaker 2: They're probably insanely racist.
Speaker 5: You've just calt them down. It's like, well, we can't.
Speaker 5: It's an issue of free speech. Fuck you, no, it's not.
Speaker 5: It's an issue of free speech when a person can't
Speaker 5: exist online without racism happening to them, right, and these models,
Speaker 5: they could stop them. But I do think there's a
Speaker 5: compelling argument of they really don't know what to do
Speaker 5: that every time they touch it, something else breaks.
Speaker 2: It's honestly, it's kind of the most egregious version of
Speaker 2: the most common software problem, which is coding is really
Speaker 2: fucking annoying, and we don't know how these work.
Speaker 3: Also, and generalor AI is not going to fix your
Speaker 3: coding problems, no matter how many times you tell us,
Speaker 3: Sam Altman that a guy is just going to fix
Speaker 3: everything for us.
Speaker 2: That's actually be my favorite thing to do right now.
Speaker 2: It's go on the R slash cursor, AR slash chat,
Speaker 2: GPT pro R slash claude AI and just looking at
Speaker 2: people complaining, and what they're complaining about is, hey, I
Speaker 2: keep hitting rate limits, Hey I keep it keeps breaking things. Hey,
Speaker 2: it's you get one guy every so often who says
Speaker 2: this has changed my life, and then you see what
Speaker 2: the responses being like, yeah, but fucked up all my
Speaker 2: stuff really badly doesn't really work. And we have an
Speaker 2: upcoming episode with a cult vult Voji about this where
Speaker 2: it's like, the average software engineer is not just writing
Speaker 2: code anyway, and so you this is also I think
Speaker 2: this is actually really this is funny, This is a
Speaker 2: good this is a good one to laugh about. So
Speaker 2: their only real growth market right now is writing code.
Speaker 2: The problem is writing code requires you to use reasoning models.
Speaker 2: Reasoning models inherently burn more tokens. And the way they
Speaker 2: burn tokens is because they're think thinking. They don't really think.
Speaker 2: They look over what a prompt ask for and goes, okay,
Speaker 2: what would be the steps to solve this? With code
Speaker 2: that becomes so so complex, And the more models reason,
Speaker 2: the more they hallucinate. So the very product that they
Speaker 2: are building that is going to save them is also
Speaker 2: the one that is going to burn more compute and
Speaker 2: this is a rumor I've heard from a source that
Speaker 2: like it can take like four to twelve GPUs for
Speaker 2: one person's particular particularly rough coding, like a.
Speaker 4: Refactory that's sustainable.
Speaker 2: And that's for one of the smaller models as well.
Speaker 2: That's for like four many which is a reasoning model.
Speaker 2: It's like, what do you think the big ones are?
Speaker 4: Like in the information they talk about open ai having
Speaker 4: a new eighty billion dollars and eighty billion dollars in
Speaker 4: casts that they spend yes over the next three Yeah,
Speaker 4: it's like it's.
Speaker 2: One hundred and fifteen by twenty twenty nine as well.
Speaker 4: It's a good chunk of this come out of Oh,
Speaker 4: it turns out that computer is incredibly expensive and we
Speaker 4: want to center our business model around it.
Speaker 2: I think it's that, and I think it's just they
Speaker 2: don't know what else to do. It's kind of like
Speaker 2: we're saying with the the uber model, they're playing the hits.
Speaker 2: It's like, fuck, what did we do in the past.
Speaker 2: We spent a lot of money ship what do we
Speaker 2: buy GPUs? I guess what may we train more? They're
Speaker 2: going to spend so much money on training and it's like,
Speaker 2: to what end, your last model was a joke. This
Speaker 2: is why it was.
Speaker 4: It was really interesting to see that OpEd that came
Speaker 4: from Eric Schmid and his research where he was you know,
Speaker 4: Eric Smith is someone who was an architect of the
Speaker 4: idea that offormacy of Google, pharmacy of Google, you know,
Speaker 4: chairman of National Security, a group that was trying to
Speaker 4: figure out how to merge artificial intelligence and too defence contractors,
Speaker 4: and how to create a you know, foreign policy that
Speaker 4: would allow America to dominate, you know, really to win
Speaker 4: an arms race and AI arms race with China. And
Speaker 4: he comes away saying the strategy I basically helped craft,
Speaker 4: which was that we need to prioritize a GI so
Speaker 4: that we can get prioritize a GI so that we
Speaker 4: can get like a permanent lead to deter any potential rivals.
Speaker 4: Is scaring everyone, you know, and it doesn't work. It's
Speaker 4: a waste of capital, it's misallocating capital, it's it's imposing
Speaker 4: all these harms. And if we look at the you know,
Speaker 4: competitor that we're going up against against China, that by
Speaker 4: abandoning the AGI pursuited instead prioritizing ways to figure out
Speaker 4: how to experiment with it, integrate with it, build up
Speaker 4: you know, build up practical use applications. You know, there's
Speaker 4: a much more general public acceptance of it, willingness to
Speaker 4: try it out, adopt it. And we're not seeing because
Speaker 4: we're not trying to scale out these massive either monopolies
Speaker 4: or one size fits all models. You see wider you know,
Speaker 4: adoption and something that looks like it's a more sustainable model.
Speaker 4: Are we going to follow it? Probably not, of course not.
Speaker 2: What I love about chasing China as well is China
Speaker 2: has had stories for like a year where it's like, yeah,
Speaker 2: we have a bunch of unused GPU compute. Yes, well
Speaker 2: we're massively overbuilt. The Joseph Sia I think it was
Speaker 2: the Chinese billionaires said, yeah, it's a bubble. We haven't
Speaker 2: really a gp of bubble, and America is just like
Speaker 2: we can need to fucking copy it, we need to
Speaker 2: beat them. We're great, We're gonna run our economy into
Speaker 2: the ground.
Speaker 4: China, it's like we're saying we're gonna confu them, And
Speaker 4: what is it that we're actually doing. We're prioritizing developing
Speaker 4: artificial intelligence that has like a question mark consumer use.
Speaker 4: That's going to be used in you know, killing machines
Speaker 4: and drones maybe and for surveillance purpose. Yeah, that's not
Speaker 4: even generator of a I. But that's where the actual
Speaker 4: excitement for any sort of artificial intelligence future is. And
Speaker 4: this is you know, the generative AI stuff. It's talked
Speaker 4: about as if it is the future, the transformative future
Speaker 4: of artificial intelligence. In reality, it's just the actual you know,
Speaker 4: the actual interest excitement capital is gonna I think go
Speaker 4: back to the center of gravity, which is like, how
Speaker 4: do we just figure out the shiniest, the most fearsome weaponry.
Speaker 2: But I think that what's weird about this is I've
Speaker 2: I don't think we've had a bubble that spreads so
Speaker 2: far into consumers' hearts. I'm not saying it's as bad
Speaker 2: as the housing bubble consumer software. If we go back
Speaker 2: to the dot com boom, I think it's like forty
Speaker 2: five percent of Americans had access to the Internet. It
Speaker 2: was relatively small in comparison, though the massive other investment
Speaker 2: in fiber happened. But I don't think people realize what
Speaker 2: they see to the chat GPT may not exist in
Speaker 2: a year or two at least not in the same
Speaker 2: way it's going to be. So you're already seeing week
Speaker 2: long weight rate limits on anthropics. Claude, like, do people
Speaker 2: not realize that this could have I guess they don't realize,
Speaker 2: and I don't. I think that there's going to be
Speaker 2: a big dunce mask off. There are so many people
Speaker 2: who have fallen behind this. I mean not to bridge
Speaker 2: too aggressively into this, but there is a story in
Speaker 2: the Wall Street Journal that I shared with you, of course,
Speaker 2: about this movie called Critters with a Z or a
Speaker 2: Z from my Canadian UK listeners, where open Ai will
Speaker 2: be providing the compute and the tech to do a
Speaker 2: movie called Creators with a budget of less than thirty
Speaker 2: million dollars. Though it's not obvious whether open ai and
Speaker 2: their computer is part of that. But it's the weirdest
Speaker 2: shit in the world. Alison, you would bring this up
Speaker 2: that like they're still using a bunch of humans.
Speaker 1: Yeah.
Speaker 3: So I was reading the same story and I haven't
Speaker 3: done any This came out this morning, so I haven't
Speaker 3: done my own reporting on it, but I will say
Speaker 3: from the story I read, it seems like they're hiring
Speaker 3: two different animation studios with artists and writers working on
Speaker 3: the script. They're hiring human actors to voice the characters,
Speaker 3: and then some mystery X amount of the movie will
Speaker 3: be put together with AI. And I honestly don't know
Speaker 3: how different that is from a regular Pixar or DreamWorks
Speaker 3: animation process, but it seems like there's When I first
Speaker 3: saw the you know, the teaser image is very cute,
Speaker 3: and I was like, oh God, They're like, this is
Speaker 3: gonna be some AI propaganda and it's gonna be very
Speaker 3: cute and hard for me to refute. But actually it's
Speaker 3: just a human made movie, it seems, and with an
Speaker 3: extra computer help.
Speaker 2: And this picture I'm holding up. Of course we're listening
Speaker 2: to a podcast that you can all see this. It's
Speaker 2: just this generic blue furry creature.
Speaker 3: It looks like an extra from Monsters, Inc.
Speaker 2: It really does. And what it's not a copyright. Yeah,
Speaker 2: it's the same thing, it's different. But what's funny with that?
Speaker 2: As well? As I was mentioned this as a lead
Speaker 2: in it's that thirty million dollar thing. If that doesn't
Speaker 2: include open eyes compute, it probably costs the same as
Speaker 2: a pixel movie. Because you're still like, actually, three D
Speaker 2: animation is one of the few other GPU use cases,
Speaker 2: so really it's just a different thing running. It'll be funny.
Speaker 4: Also if they save money because they don't do any marketing,
Speaker 4: and they're like, see how cheap it is if you
Speaker 4: don't have as a movie at all.
Speaker 3: I think they might be getting around some Hollywood unions.
Speaker 2: Yeah, oh really, they're going completely overseas too.
Speaker 3: I'd have to check. Don't quote me on it, but
Speaker 3: I think I know they were using at least one
Speaker 3: overseas animation studio, so they're probably saving a lot on
Speaker 3: the animation process by not paying animators. I would guess.
Speaker 2: It's so cool. And also another fact from the story
Speaker 2: is we don't know how long the piece will be,
Speaker 2: and it's if it's like five minutes long, I'm so sorry,
Speaker 2: come on, feature length, feature length.
Speaker 4: I should make it as long as the Silent Napoleon film.
Speaker 2: Which one six hours. Yeah, I actually love that they
Speaker 2: should be forced to it. I don't know how they're
Speaker 2: going to do a feature long movie, because I don't
Speaker 2: know if you've cursed yourself by looking at the AI
Speaker 2: generated movies that people try every so often, one pops
Speaker 2: up on Twitter where it's it'll be Yeah, I made
Speaker 2: this entire thing in AI, and you look at the
Speaker 2: front and it's like a different fucking thing each time
Speaker 2: that balloon boy one, different size balloon, different color balloon.
Speaker 2: You read the stories about the balloon Boy one, it's like, yeah,
Speaker 2: they kept putting a face in the balloon. We don't
Speaker 2: know why. I just I and I know I have
Speaker 2: a good amount of film and TV people who listen
Speaker 2: who are quite anxious about this. This doesn't scare me
Speaker 2: because they're very vague about the details. Every other big
Speaker 2: tech innovation, I even other than the metaverse, I guess
Speaker 2: they usually like to show you behind the curtain a
Speaker 2: little bit and like talk up that it. There'd be
Speaker 2: a big, splashy story and like MIT Technology Review or
Speaker 2: something like that, being like all New York Times be like,
Speaker 2: oh look at this, look at that, look at all things,
Speaker 2: and the like, Yeah, we're just using some people somewhere
Speaker 2: in a place and they will make it. And in
Speaker 2: the War Street Journal story as well, they showed sketches
Speaker 2: that would then be turned into AI. I just this
Speaker 2: feels like a death rattle far more than something terribly scary,
Speaker 2: And I understand film TP people are likely a bit scared,
Speaker 2: but it's like they're using out of the country studios.
Speaker 2: They're try that. Of course, I just assume they're skipping
Speaker 2: union stuff because this is all they do. It's like
Speaker 2: this is the best they can squeak out years in
Speaker 2: fucking how is this? And it's like a boring looking
Speaker 2: children's thing, I guess with a name from two thousand
Speaker 2: and one.
Speaker 3: Oh, it does have the producers or writers who worked
Speaker 3: on Paddington and Peru apparently, So what a.
Speaker 2: Movie about a criminal a sequel to a movie about
Speaker 2: a criminal who unfairly attacked you? Grun No, sorry, I
Speaker 2: mean then this is the question of.
Speaker 4: You know where in the Uber analogy is this is
Speaker 4: this you know Uber's failed expansions where they tried different
Speaker 4: models overseas, or is this Uber returning home where they
Speaker 4: take the lessons from overseas or they use those overseas
Speaker 4: things to buy them a bit more time to then
Speaker 4: subsidize operations.
Speaker 2: Here is my comparison, and this is the drone deliveries.
Speaker 2: This is the drone deliveries. It's the Amazon drone deliveries.
Speaker 2: Great job, Casey and Kevin several years ago talk about
Speaker 2: the Amazon drone deliveries and never fucking happened. Mate. It's
Speaker 2: hilarious as well because it is the same thing. It's like,
Speaker 2: we cobbled together this. It sucked. It took so much money.
Speaker 2: It's horribly inefficient. It sucks. We hate it, you hate it,
Speaker 2: the customers hate it. We hate we hate doing this,
Speaker 2: but we did it. M M toada And it's okay,
Speaker 2: Well you sure prove that, do you? Wort Alison. It's like, yeah,
Speaker 2: we use the power of AI to hire a bunch
Speaker 2: of people to do all the real work, because you
Speaker 2: can't trust this to work. It does not work.
Speaker 3: When I saw a headline for an AI movie, I
Speaker 3: was like, it's it's gonna be awful. Yeah, it's gonna
Speaker 3: like writing a movie is hard.
Speaker 2: Well wait a minute. Also, this is the other thing
Speaker 2: of Oh my god, how are they gonna lip sync
Speaker 2: this shit? How do you live sing this? You can't generate,
Speaker 2: you can't generate the same frame. How are they gonna
Speaker 2: Are they gonna go in and post edit it with humans?
Speaker 2: I assume at this point how much you actually relying
Speaker 2: on AI for.
Speaker 3: It's very unclear.
Speaker 2: That's just it all fits. It feels like being at
Speaker 2: a party where everyone's pissed themselves.
Speaker 3: It does feel like some next level like young propaganda. Yeah,
Speaker 3: like if they can get kids to enjoy whatever this
Speaker 3: monstrous movie is going to be, then maybe there's like
Speaker 3: a longer term brand play for open Ai as a
Speaker 3: warm and cuddly but safe for children.
Speaker 2: The thing is French and Korean companies have already already
Speaker 2: been doing slot based three D shows. I don't mean
Speaker 2: the famous one from the career K pop demon Hutness,
Speaker 2: which is apparently very good. I've not watched it, and
Speaker 2: please don't kill me. I'm not attacking that. I'm talking
Speaker 2: about there is a gluttony of like very cheap kids
Speaker 2: three D kids shows, and they've been around for decades
Speaker 2: because you can do this on the cheap. Now you've
Speaker 2: already another thing where the Uber model made sense as
Speaker 2: long as you didn't count the costs, which is, yeah,
Speaker 2: this is a way of getting people around that become
Speaker 2: dependent on because it's useful. This is like we have
Speaker 2: found an extremely expensive and annoying way to do something
Speaker 2: that we already have a cheap alternative to do. It's
Speaker 2: not like there was a cheap, a cheap, reliable cab
Speaker 2: service that Uber replaced there was a slow shit cab
Speaker 2: service that Uber replaced everywhere, and it's like, is it
Speaker 2: a good company? Is it horrible to work us? Yes?
Speaker 2: But does it work? Yes? This is we're going to
Speaker 2: automate everything with the power of AI, other than labor,
Speaker 2: other than stuff.
Speaker 3: That's where the AI story starts to overlap again with Crypto,
Speaker 3: where at least with Uber you understand what you're getting
Speaker 3: as a consumer, and then with AI you're kind of like,
Speaker 3: I don't really know what this is. I don't know
Speaker 3: what problem it's solving. It's like a solution in search
Speaker 3: of a problem. And that was Crypto's same bag. It's
Speaker 3: just like, oh, we invented this cool new alternative money system.
Speaker 2: Why the thing is with Crypto is they always had
Speaker 2: a plan, which sucks. I really should have seen it coming.
Speaker 2: I was not smart enough at the time. It was
Speaker 2: they always wanted to just get embedded in the financial
Speaker 2: system and then just turn the funny money into real money. Hey,
Speaker 2: I doesn't have that. There is no way to turn
Speaker 2: this into new You can't just generate new money. That's
Speaker 2: what Crypto did and it fucking sucks. And by the way,
Speaker 2: the next Crypto crash is going to wash out some
Speaker 2: real like it's gonna really fuck people up. I don't
Speaker 2: think people realize that SBF two, who at this point
Speaker 2: might just be SBF Like if he just gets pardoned
Speaker 2: and comes back, Honestly, if he comes back and does
Speaker 2: it again, no one, no one can complain.
Speaker 4: I'm going to the last clove. I've got to go
Speaker 4: in the hyperbolic time chamber. I joined the fight just
Speaker 4: so I can put him in cuffs.
Speaker 2: You're going to put Sam Backman free back in cuffs, Yes,
Speaker 2: Sam Altman free would be good. It's it's just I
Speaker 2: don't see an end point for this. I don't see
Speaker 2: everyone's that, even the boosters at this point, they're like,
Speaker 2: and then it will be powerful. When how what are
Speaker 2: you seeing that even tells you this. I don't even
Speaker 2: want to fight. Just tell me.
Speaker 3: I do think there's so there's just so much money
Speaker 3: behind it, and there's so many people who've invested. I
Speaker 3: was listening to a VC guy get interviewed on the
Speaker 3: Odd Lots podcast, and I can't remember his name, so
Speaker 3: I apologize, But he was talking about how all these founders,
Speaker 3: like all these smaller startups that are getting in on
Speaker 3: the AI game. All these founders have kind of been
Speaker 3: raised with this idea of Silicon Valley and what it
Speaker 3: will bring you, and it's life changing amounts of wealth
Speaker 3: and when you have enough people, and like the vcs
Speaker 3: are part of that, the actual tech startups are part
Speaker 3: of that. Stanford and like kind of the whole ethos
Speaker 3: of the of the valley is like, if you just
Speaker 3: keep going and work hard enough, you can have generational
Speaker 3: wealth and that is a very powerful force. And I
Speaker 3: feel like I think we're going to be seeing AI
Speaker 3: kind of hype last longer than we have and other
Speaker 3: previous bubbles and tech cycles, in part because the potential
Speaker 3: for the wealth is outstanding and it's like nothing we've
Speaker 3: ever seen.
Speaker 2: But that's the thing. You're completely right, except AI has
Speaker 2: one problem, which is all the companies lose a shit
Speaker 2: ton of money and no one's selling, no one is
Speaker 2: buying that. There's been like three acquisitions. There's one to AMD,
Speaker 2: one to end Video, one to a public company called Nice,
Speaker 2: which sold the customer It was an AI cognitive I
Speaker 2: think they were called. It was like an AI customer
Speaker 2: service thing. Either never really seem that good anyway, But
Speaker 2: that whole thing is true. And I think that that's
Speaker 2: what people and I think that the myth of you
Speaker 2: can just use AI to spin up a startup quickly
Speaker 2: as well has kind of gone into has kind of
Speaker 2: fueled that myth us as well. But the problem is
Speaker 2: this is so different because the whole point of silicon Bag,
Speaker 2: the whole thing where you can just move there and
Speaker 2: start a startup, is because it didn't cost ruinous amounts
Speaker 2: of money to start one. You didn't get three million
Speaker 2: dollars from a VC and expect to spend two and
Speaker 2: a half million of that on compute. You were like, Okay,
Speaker 2: we're gonna we're gonna have to bootstrap a little bit further.
Speaker 2: We've just got a little bit of venture capital. We're
Speaker 2: gonna go this far. This is like every step of
Speaker 2: the way, this cost increases massively. It used to be
Speaker 2: it was sales and marketing and just people. AI is
Speaker 2: people plus compute plus marketing plus this plus that I think,
Speaker 2: you know, perplexity. The AI search engine spent one hundred
Speaker 2: and sixty four percent of their revenue in twenty twenty
Speaker 2: four just on compute and aws like, it's like, this
Speaker 2: is not this whole generational wealthing. I fully agree it's
Speaker 2: what they're using to sell it. I just don't think
Speaker 2: it's gonna work. And it's scary because this could have
Speaker 2: the wide thing, and I really haven't talked about this enough.
Speaker 2: The wider problem is as well, is all of these
Speaker 2: people who went to Silicon Valley raised all this money
Speaker 2: or have pretty much raised to sell companies that will
Speaker 2: never sell, that they can never take public because they've
Speaker 2: barn too much money, they don't really have great user
Speaker 2: bases because they don't really have those, and so they're
Speaker 2: just gonna sit there. And then you've got a bunch
Speaker 2: of VC money tied up in that that will never exit,
Speaker 2: and a bunch of limited partner money that will never exit.
Speaker 2: I think that there is an entirely separate bubble building
Speaker 2: that when that bust is going to, the depression within
Speaker 2: Silicon value is going to be insane. It's already pretty gnolly,
Speaker 2: but I think it's like thirty three percent of bench
Speaker 2: capital when it's a AI last year. It's like, eventually
Speaker 2: people are going to realize there's no exit for anyone.
Speaker 2: And I don't know what that does. I mean, it
Speaker 2: will piss off limited partners. The money that comes to
Speaker 2: VCS is just not going to be there.
Speaker 4: Well, so then that's the question, right, because venture capital
Speaker 4: encourages on one level overvaluing because you need to figure
Speaker 4: out a way to make more money than what you
Speaker 4: put in on the exit within acquisition or some merger. Yeah,
Speaker 4: but on another level, you're also working within a network
Speaker 4: trying to enrich yourself and your friends, or trying to
Speaker 4: build the infrastructure for future startups, portfolio options that you
Speaker 4: and your friends make to come in and make money, whether.
Speaker 2: You're building a platform the other people can invest in bits.
Speaker 4: Of and so you know, on one level, I really,
Speaker 4: I really do. I agree that there's not really much
Speaker 4: of an exit ramp if there's actually no revenue and
Speaker 4: no profits. But then also i'd be curious, like do
Speaker 4: you think they're going to try to ram these things
Speaker 4: through similar to like what we saw with Corey Weve
Speaker 4: right where you know, like you you talked, I think
Speaker 4: extensively about ways in which the financials there do not
Speaker 4: actually make sense if you're interested in a company that
Speaker 4: actually has the capital to do what it's going to
Speaker 4: say is going to do, which is provide gpu compute
Speaker 4: to everybody, and even though it has such a central
Speaker 4: role in this ecosystem. It can't make profits that are
Speaker 4: you know, that justify the capital that's getting it has
Speaker 4: odious and burd burden some debt that should be a
Speaker 4: massive red flag and it might be you know, round tripping, right, yeah,
Speaker 4: but this is supposed to be like the darling of
Speaker 4: the sector and it and it got pushed through. Part
Speaker 4: of me feels like because of.
Speaker 2: Of I mean Invation and Video and Magneto and Magnetar
Speaker 2: Capital of course famous for the CDOs. Yeah, right, start
Speaker 2: they're back. But with core Weave, they pushed it through
Speaker 2: onto the markets. But that doesn't mean it can't die.
Speaker 4: Right, Well, so that's the thing.
Speaker 2: I do you think.
Speaker 4: That it's possible that they'd be successful in pushing it
Speaker 4: onto markets but it dies because I do, Yes, I
Speaker 4: feel like there will will definitely be a lot of
Speaker 4: investment incineration, But I also do think we're gonna have
Speaker 4: bags dumped on everybody.
Speaker 2: I think you could do it with something like core
Speaker 2: Weave and Lambda, which is another situation where Nvidia is
Speaker 2: the customer invested and also sells them the GPUs, which
Speaker 2: they then use as collateral to buy more GPUs using
Speaker 2: debt which is so good. You'll notice that there are
Speaker 2: no software companies going public. There's no software AI companies
Speaker 2: going public. Everyone thinks that open ai goes public here
Speaker 2: and oh they've got the market's gonna if they can
Speaker 2: even convert, the markets are gonna eat them for dinner.
Speaker 2: Oh yeah, we're gonna burn bazillions of dollars forever. No,
Speaker 2: they the markets didn't like Core. Weav that Core We've
Speaker 2: wouldn't have gone public had Nvidia not put more money in.
Speaker 2: Lambda is probably gonna be exactly the same, if they
Speaker 2: even make it. You won't see software companies because that's
Speaker 2: the other thing Core We've had, albeit bunches of debt assets,
Speaker 2: they have data centers kind of through Core Scientific God,
Speaker 2: I hate these fucking companies, but they don't they have
Speaker 2: things that they can point to in relationships, even open Ai.
Speaker 2: That's the thing with them, they don't. They barely have assets.
Speaker 2: Oracle is building their data center in Abilene with Cruso.
Speaker 2: They don't own any of the GPU. They have a
Speaker 2: few GPUs I think for research I've heard, but Microsoft
Speaker 2: owns most of their their infrastructure. They don't own their
Speaker 2: R and D well they do, but Microsoft also has
Speaker 2: access to that their intellectual property. Same deal. So it's
Speaker 2: like what actual value doesn't AI start up have? People
Speaker 2: always say oh, they're getting the data. They get the
Speaker 2: data so that the data will tell them. It's like
Speaker 2: what it's all that these horrible stories about, like oh,
Speaker 2: Dozea's got an LLM, they're doing this one. What's the
Speaker 2: end point? It's scaring, don't get me wrong, But and
Speaker 2: then what and there never is one? And I hope someone,
Speaker 2: I hope a AI software company goes public. I want
Speaker 2: to see this so bad. I want to see you
Speaker 2: have any idea. If you give me the open AI books,
Speaker 2: the anthropic books, you become the official homie better offline.
Speaker 2: I'll mention you on every episode. Get me these books.
Speaker 2: But because I think all of them are going to
Speaker 2: be like a dog's dinner, there's I've actually looked at
Speaker 2: the markets an uber uber by comparison. They did burnish
Speaker 2: it to the money. It's it's like twenty five billion
Speaker 2: between twenty nineteen twenty twenty two. A lot of that
Speaker 2: was on sales and R and D. It's pretty much
Speaker 2: group on. I think also the R and D with
Speaker 2: the autonomous cars, but separate problem but it's like, there
Speaker 2: wasn't a I can't find an example of someone that
Speaker 2: just annihilated fuel unless it's like planes. And I think
Speaker 2: we've established the use case for planes by now clear
Speaker 2: god Old. It's just it's all very frustrating. But you
Speaker 2: know what, I think I'm gonna call it there. I
Speaker 2: think we've had a good conversation. Allison. Where can people
Speaker 2: find you?
Speaker 3: You can find me on Blue Sky at amorrow or
Speaker 3: on CNN dot com slash nightcap ed.
Speaker 4: You can find me on Twitter at Big Black Jacobin.
Speaker 4: You can find me on Blue Sky on Edward and
Speaker 4: Guss Junior, and on substack at the Tech Bubble.
Speaker 2: And you can find me of course at Google dot com.
Speaker 2: Just type in prabagar Ragavan you'll find me. I pop
Speaker 2: right up. That's all me. Thank you so much for
Speaker 2: listening to everyone. This is my episodees are coming out
Speaker 2: in a weird order because I'm recording this knowing there's
Speaker 2: a three part of this week, but this will come
Speaker 2: out with a monologue of some sort. Thank you so
Speaker 2: much for listening everyone, of course, but he thank you
Speaker 2: for producing here out in New York City. And yeah,
Speaker 2: thanks everyone.
Speaker 6: Thank you for listening to Better Offline.
Speaker 2: The editor and composer of the Better Offline theme song
Speaker 2: is Matasowski. You can check out more of his music
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Speaker 6: M A T T O S O W S K I.
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