WEBVTT - CZM Rewind: The Rot-Com Bubble 0:00:02.400 --> 0:00:06.960 Cau Zone Media. Hey, folks, it's me Ed, So I'm 0:00:06.960 --> 0:00:10.000 off this week, get my wisdom teeth out finally time. 0:00:10.360 --> 0:00:13.160 But I'm going to rerun this episode the rock com Bubble, 0:00:13.440 --> 0:00:14.720 and I want to be clear that this is two 0:00:14.800 --> 0:00:17.360 years old. It's gonna I am sure at some point. 0:00:17.400 --> 0:00:19.120 I'm like, this is going to end in three quarters, 0:00:19.120 --> 0:00:21.680 which I was. I was wrong about that one. Nevertheless, 0:00:21.720 --> 0:00:24.599 this is an important piece because I think everything about 0:00:24.640 --> 0:00:26.840 the AI bubble comes back to the rock com bubble, 0:00:27.000 --> 0:00:29.520 which is the idea that the big companies they run 0:00:29.560 --> 0:00:31.920 out of hypergrowth ideas they don't have a new smartphone, 0:00:32.080 --> 0:00:34.440 they don't have a new cloud computing. And I think 0:00:34.440 --> 0:00:37.159 this episode is super educational, and yeah, I'm taking a 0:00:37.200 --> 0:00:41.479 week off, so enjoy this. Remember it's from like September 0:00:41.520 --> 0:00:44.560 twenty twenty four. But nevertheless, it's very, very important that 0:00:44.600 --> 0:00:46.400 you listen to this as I think that this is 0:00:46.960 --> 0:00:58.000 going to be kind of formative to the future. Anyway. Enjoy, Hello, 0:00:58.120 --> 0:01:00.680 and welcome to Better Offline. I'm your Hoe stad Ze Tron. 0:01:12.640 --> 0:01:14.640 In the next two episodes, I want to present you 0:01:14.680 --> 0:01:17.240 with a theory about why the tech industry has felt 0:01:17.240 --> 0:01:20.080 so weird for the last few years, and why there 0:01:20.080 --> 0:01:22.040 are so many products that have popped up that don't 0:01:22.080 --> 0:01:24.440 seem to really do anything or be things that people 0:01:24.480 --> 0:01:26.520 have actually asked for. And it comes down to a 0:01:26.560 --> 0:01:30.319 few simple questions, chief of them, what if the next 0:01:30.319 --> 0:01:33.240 big thing in tech is actually years or decades away? 0:01:34.200 --> 0:01:38.360 What if the era of hypergrowth in tech is over now? 0:01:38.360 --> 0:01:41.920 As I've mentioned before, I believe the rot economy is 0:01:41.920 --> 0:01:43.360 to blame for a lot of this. It's a growth 0:01:43.360 --> 0:01:45.240 at all cost mindset that sits at the core of 0:01:45.280 --> 0:01:48.240 pretty much everything I've written or spoken about. It's this 0:01:48.400 --> 0:01:51.240 force that drives businesses to grow bigger rather than better, 0:01:51.560 --> 0:01:54.760 and make products to conquer markets and show growth to 0:01:54.960 --> 0:01:57.840 the public markets, rather than fixing a problem that you 0:01:57.960 --> 0:02:00.440 or I might have or a business might have, or 0:02:00.440 --> 0:02:04.080 provide a necessary service that was nevertheless popular and profitable. 0:02:05.320 --> 0:02:07.880 And the rot economy doesn't feel like any other economic 0:02:07.920 --> 0:02:10.120 period I've seen. It's not like, say, I don't know 0:02:10.160 --> 0:02:13.000 the post two thousand and eight financial crisis or that 0:02:13.080 --> 0:02:16.520 stagnation that lingered afterwards. And what's different was there isn't 0:02:16.520 --> 0:02:19.400 really a single obvious event that started the decline of 0:02:19.440 --> 0:02:22.440 the services we're using all the companies that make them, 0:02:22.639 --> 0:02:25.239 and there's not really like a Layman Brothers crater we 0:02:25.280 --> 0:02:27.359 can point out and say, there you go, that's the thing. 0:02:27.800 --> 0:02:31.080 The closest I can come is kind of FTX, which 0:02:31.160 --> 0:02:34.480 was the big crypto crash, the big massive Ponzi scheme 0:02:34.520 --> 0:02:36.960 that no one really saw coming other than many people 0:02:36.960 --> 0:02:40.240 who were looking behind the scenes. But other than that, 0:02:40.240 --> 0:02:42.880 that was kind of what crashed crypto. And maybe it 0:02:42.960 --> 0:02:45.040 was the end of the zero interest free era where 0:02:45.120 --> 0:02:47.160 interest rates went up and it was harder to get money. 0:02:47.200 --> 0:02:49.040 But it was no one thing you could point out. 0:02:49.880 --> 0:02:52.520 But I do want to try, and I have one 0:02:52.639 --> 0:02:55.840 epoch I think for when the rot economy kind of 0:02:55.880 --> 0:02:58.120 took over, and I'd want to point to the latter 0:02:58.160 --> 0:03:01.520 point of the twenty tens. Think about it, like really 0:03:01.600 --> 0:03:04.760 think about it for a second. Sometime after twenty nineteen, 0:03:05.320 --> 0:03:08.560 the tech industry it cand of lost its sizzle. There 0:03:08.600 --> 0:03:11.480 were new gadgets, there were new apps, new services, but 0:03:11.600 --> 0:03:15.600 tech started to feel iterative rather than innovative. Yet they 0:03:15.639 --> 0:03:18.839 were making more money than ever, and by twenty twenty one, 0:03:18.919 --> 0:03:22.840 even the pretense of any gradual improvement was really dropped. 0:03:23.600 --> 0:03:25.720 It felt like, I don't know, they were trying to 0:03:25.720 --> 0:03:28.519 sell us things that didn't really exist. We were told 0:03:28.560 --> 0:03:32.840 that NFTs would replace physical, tangible collectibles, and that cryptocurrency 0:03:32.840 --> 0:03:36.560 would replace regular money, while also emancipating customers for an 0:03:36.640 --> 0:03:40.920 unstoppable market force like inflation or big tech. Because of 0:03:40.920 --> 0:03:44.000 course cryptocurrency came with it the idea and a mean 0:03:44.080 --> 0:03:47.600 idea of decentralized software, and this was all meant to 0:03:47.600 --> 0:03:50.160 get rid of rent seeking middle men that were taking 0:03:50.240 --> 0:03:53.840 parts of every purchase, despite the very same middle men 0:03:54.000 --> 0:03:58.400 investing in cryptocurrency. Yet the actual services that came out 0:03:58.520 --> 0:04:01.720 of these movements didn't really seem to do anything or 0:04:01.720 --> 0:04:05.400 improve our lives in any meaningful way. And we were 0:04:05.440 --> 0:04:08.080 told at one point that our futures were in the 0:04:08.080 --> 0:04:11.600 meta US and we lived in this massive interconnected called 0:04:11.760 --> 0:04:14.920 New Internet. When we actually got there, it was just 0:04:14.960 --> 0:04:19.400 this really wonky VR virtual reality space that Mark Zuckerberg 0:04:19.440 --> 0:04:23.120 has somehow burned thirty six billion dollars on. It's all 0:04:23.240 --> 0:04:26.400 so weird. And today we're told that we have this 0:04:26.520 --> 0:04:30.120 glorious AI powered future that's just imminent. Yet what we've 0:04:30.160 --> 0:04:33.880 actually got is this unprofitable, unsustainable generative AI that has 0:04:33.920 --> 0:04:39.360 this horrible unastainable problem of hallucination, where it spits out 0:04:39.360 --> 0:04:44.840 incorrect information authoritatively, which, worryingly, Google CEO Sander Pesha has 0:04:44.880 --> 0:04:47.359 said in an interview with The Verge is an inherent 0:04:47.440 --> 0:04:50.960 feature of a technology that he's now plugged into Google Search, 0:04:51.200 --> 0:04:54.720 which means it's generating these horrible answers to queries based 0:04:54.760 --> 0:04:57.400 on the links of a search engine that Sandar Peshai 0:04:57.760 --> 0:05:01.880 has helped decay. It's all just very frustrating, and it's 0:05:01.920 --> 0:05:06.600 also quite useless. Kind of it logical too. And at 0:05:06.640 --> 0:05:09.240 the forefront of this AI boom is Sam Moltman and 0:05:09.279 --> 0:05:12.280 his eighty billion dollar Jugger or open AI, a company 0:05:12.320 --> 0:05:15.920 that claims it's going to build artificial general intelligence, one 0:05:15.920 --> 0:05:20.240 that experiences human like cognition, which is just not possible 0:05:20.240 --> 0:05:22.919 with generative AI. The tech he is selling today is 0:05:22.960 --> 0:05:25.120 not going to give us AGI. I just want to 0:05:25.120 --> 0:05:28.480 be abundantly clear about that. Anytime you read Sam Mortman 0:05:28.560 --> 0:05:31.520 talking about AGI, he is talking about tech the Open 0:05:31.560 --> 0:05:34.040 AI does not have and is not building. They may 0:05:34.040 --> 0:05:36.479 claim they're building it behind the scenes, but they're only 0:05:36.640 --> 0:05:40.440 working on generative AI. And the frustration you hear in 0:05:40.480 --> 0:05:42.919 my voice, you might have felt yourself. You might not have, 0:05:43.000 --> 0:05:46.279 but it's this prevailing sense of you keep telling me 0:05:46.360 --> 0:05:48.080 the future is here, but when I look at what 0:05:48.160 --> 0:05:52.560 the future is, it isn't even close. And the products 0:05:52.560 --> 0:05:56.440 you're selling me aren't actually useful. Let me give you 0:05:56.480 --> 0:06:00.240 another example. Windows laptops will soon integrate an AI high 0:06:00.279 --> 0:06:03.719 powered search feature called Recall that allows you to search 0:06:03.760 --> 0:06:06.479 everything you've ever done on your computer in the last 0:06:06.520 --> 0:06:10.680 three months. And it does so by recording everything, everything 0:06:10.880 --> 0:06:14.120 from the meetings you've been into to the things you've written. 0:06:14.680 --> 0:06:16.839 I should be clear, I don't think anybody actually asked 0:06:16.880 --> 0:06:21.080 for a feature like this, and it's also inherently invasive. 0:06:21.400 --> 0:06:24.279 It directly encroaches on your privacy and your security, and 0:06:24.320 --> 0:06:28.120 it takes screenshots of your machine every few seconds and 0:06:28.160 --> 0:06:31.960 stores them, along with AI generated inferences, in a locally 0:06:32.000 --> 0:06:35.680 held database. This isn't good, and the fact that they're 0:06:35.680 --> 0:06:38.840 not sending anywhere doesn't really make it better. It is, 0:06:38.920 --> 0:06:41.800 in essence, a pre installed screen recorder, the kind of 0:06:41.839 --> 0:06:44.640 thing that hacker might install on a victim's computer, and 0:06:44.680 --> 0:06:47.400 if an attack against access to it, it's obvious how 0:06:47.400 --> 0:06:52.840 catastrophic the ramifications are. Or let's be honest, domestic abuses, 0:06:53.520 --> 0:06:56.200 people at work. There are people who can get on 0:06:56.240 --> 0:06:59.760 your computer, force access by forcing you or just getting 0:06:59.760 --> 0:07:03.000 your password, and they can now see everything you've done. 0:07:04.080 --> 0:07:06.880 Despite this being an inherently AI powered feature. It just 0:07:07.040 --> 0:07:10.680 it can't distinguish between your regular computer usage and say, 0:07:11.200 --> 0:07:16.400 sensitive information passwords, health information, trade secrets, the very obvious 0:07:16.400 --> 0:07:19.720 stuff you would not want your computer recording. It treats, 0:07:19.920 --> 0:07:22.120 I don't know, like an email from your doctor with 0:07:22.240 --> 0:07:25.960 the same level of concern and copying as it would 0:07:26.000 --> 0:07:29.800 like YouTube or a chat conversation. It's just really bad 0:07:30.160 --> 0:07:33.280 and already white hat security researchers they've created a proof 0:07:33.320 --> 0:07:37.240 of concept malware applications that can pull sensitive data obtained 0:07:37.320 --> 0:07:40.760 or generated by Microsoft Recall from your computer and with 0:07:40.840 --> 0:07:46.239 pretty minimal effort, And now the UK's Information Commissioner's Office, 0:07:46.280 --> 0:07:48.520 the nation's privacy watchdog. By the way, they can actually 0:07:48.520 --> 0:07:51.520 do quite steep fines. It's not great. They're now probing 0:07:51.560 --> 0:07:54.440 whether the tech actually presents an unacceptable risk to consumers, 0:07:54.520 --> 0:07:57.480 which as anyone who thinks about it for more than 0:07:57.520 --> 0:08:01.920 twelve seconds or even five can confirm it does. It's 0:08:02.040 --> 0:08:06.840 just very frustrating, and who asked for this, who actually 0:08:06.880 --> 0:08:11.640 asked for this? Now, every major tech company they're integrating 0:08:11.640 --> 0:08:14.240 AI into their products and services. Yeah, underneath the hood, 0:08:14.280 --> 0:08:17.520 the AI they're integrating doesn't actually seem to do anything new, 0:08:17.760 --> 0:08:21.800 or generate a profit or solve anyone's actual needs. Even 0:08:21.880 --> 0:08:25.240 the companies themselves seem incapable of explaining why AI is 0:08:25.280 --> 0:08:27.600 such a big deal. To the point of the Microsoft Super 0:08:27.600 --> 0:08:31.600 Bowl commercial for its AI powered co pilot assistant featured 0:08:31.720 --> 0:08:34.839 multiple things that it cannot do, like generate the code 0:08:34.840 --> 0:08:38.000 for an open world game. When you, by the way, 0:08:38.040 --> 0:08:39.920 you type in the prompt, which on the commercial is 0:08:39.960 --> 0:08:42.559 three D generate the code for an open world three 0:08:42.640 --> 0:08:44.839 D game, and you type that in and it will 0:08:44.880 --> 0:08:47.280 give you a list of things you should do to 0:08:47.600 --> 0:08:52.600 build an open world game. It's so strange, and it's 0:08:52.600 --> 0:08:55.760 so strange how so many of these companies just can't 0:08:55.840 --> 0:08:59.199 really explain why this is the next best thing. They 0:08:59.240 --> 0:09:03.400 just need you to be even And maybe that might 0:09:03.480 --> 0:09:16.840 actually be the problem. For decades, the tech industry and 0:09:16.880 --> 0:09:20.320 its various venture capital funders, they've been remarkably good at 0:09:20.360 --> 0:09:23.199 coming up with both innovative new products and ways to 0:09:23.240 --> 0:09:26.720 turn them into huge new markets For hypergrowth, one hundred 0:09:26.760 --> 0:09:29.320 billion trillion dollar markets that they could then sell in 0:09:29.360 --> 0:09:33.520 to investing companies. Within actual industries, you had search engines, 0:09:33.720 --> 0:09:37.600 digital maps, smartphones and apps, social media, cloud computing, software 0:09:37.600 --> 0:09:41.280 as a service, electro cars, streaming audio and video. And 0:09:41.360 --> 0:09:45.199 also another thing. In the period between like two thousand 0:09:45.200 --> 0:09:47.880 and five and twenty twenty four, we've tripled the amount 0:09:47.880 --> 0:09:49.760 of people on the Internet. It's now over five billion 0:09:49.800 --> 0:09:53.280 people who use it. And that's also another problem I'll 0:09:53.280 --> 0:09:56.080 get to in a little bit. There were obvious meaningful 0:09:56.120 --> 0:09:58.760 markets to move into. Ways to connect people, ways to 0:09:58.760 --> 0:10:01.480 get people content, they wanted algorithms to present it to them, 0:10:01.679 --> 0:10:04.400 ways to sell people, Things that solve problems that they 0:10:04.440 --> 0:10:07.240 had or either for the first time or solving them faster, 0:10:07.440 --> 0:10:10.079 like the transition from physical to digital media, and problems 0:10:10.080 --> 0:10:15.360 that were both important to solve and actually solvable. Teke 0:10:15.480 --> 0:10:19.800 has perpetually succeeded at building things, new things that neatly 0:10:19.840 --> 0:10:23.040 create these new markets, and they've been incentivized by both 0:10:23.080 --> 0:10:26.840 the public and private markets in growing these companies as 0:10:26.880 --> 0:10:29.600 fast and as big as possible to dominate these new markets, 0:10:29.600 --> 0:10:32.000 with the assumption that there would always be more of them. 0:10:32.360 --> 0:10:35.920 More massive, multi billion and multi trillion dollar markets to conquer, 0:10:37.080 --> 0:10:40.480 and it must be clear you should never assume anything. 0:10:41.640 --> 0:10:45.160 Between twenty twenty two and twenty twenty three, only one 0:10:45.240 --> 0:10:49.319 hundred million additional people got online, which is the slowest 0:10:49.400 --> 0:10:52.720 rate of growth in the last eighteen years. And that's 0:10:52.760 --> 0:10:55.160 not because the need to bring connectivity to the masses 0:10:55.480 --> 0:11:00.000 is actually solved. Especially in the global South. It hasn't been. 0:11:00.320 --> 0:11:02.640 And as of the most recent figures from the UN's 0:11:02.679 --> 0:11:06.400 International Telecoms Union shows thirty three percent of the world's population, 0:11:06.520 --> 0:11:09.000 or about two point six billion people, have never actually 0:11:09.080 --> 0:11:13.880 used the Internet. But I have more worrying stuff. I've 0:11:13.880 --> 0:11:16.160 received some data from similar Web that shows that the 0:11:16.200 --> 0:11:19.600 majority of the Internet's top one hundred web properties have 0:11:19.679 --> 0:11:23.560 seen significant declines in traffic since twenty twenty one. In 0:11:23.640 --> 0:11:26.760 the years since the world slowly emerged from lockdown, Google 0:11:26.800 --> 0:11:28.719 dot com has seen the decline of five point three 0:11:28.760 --> 0:11:31.880 percent in web visits, as has YouTube, which lost three 0:11:31.960 --> 0:11:34.959 point eight percent of its traffic, Facebook, which lost a 0:11:35.120 --> 0:11:39.920 remarkable twenty seven point seven percent, Twitter which lost three 0:11:40.000 --> 0:11:42.960 point five percent, Amazon which lost eleven point six percent, 0:11:43.120 --> 0:11:46.480 Twitch dot tv seventeen point five percent lost there. They 0:11:46.480 --> 0:11:50.000 are owned by Amazon. Sadly, Wikipedia, which lost twenty four 0:11:50.000 --> 0:11:52.199 point eight percent of its traffic. And here's the thing 0:11:52.200 --> 0:11:55.480 that really worried me. Porn sites like ex videos twenty 0:11:55.559 --> 0:11:58.679 seven point four percent loss and porn harp seventeen point 0:11:58.679 --> 0:12:02.840 one percent loss. When the pawns down, that's that's when 0:12:02.840 --> 0:12:06.200 you start worrying. Though you might be tempted to dismiss 0:12:06.240 --> 0:12:08.640 this all as a result of life returning to normal 0:12:08.679 --> 0:12:12.520 and the traditional office based environments aren't particularly conducive to 0:12:12.520 --> 0:12:16.760 a crafty mid day wank, you shouldn't. The trend actually 0:12:16.760 --> 0:12:19.640 began earlier, with similar Web data showing the declines starting 0:12:19.679 --> 0:12:23.120 in twenty nineteen. My analysis focus is in twenty twenty 0:12:23.120 --> 0:12:25.560 one to twenty twenty four because that's the one I 0:12:25.600 --> 0:12:27.720 have the most detailed month by month and year by 0:12:27.760 --> 0:12:30.160 year breakdowns for. And by the way, I'm going to 0:12:30.200 --> 0:12:32.679 put in the episode notes links to things so that 0:12:32.679 --> 0:12:34.640 you can all see this. I want you to know 0:12:35.200 --> 0:12:38.040 this date is very worrying. But don't trust me. Trust 0:12:38.040 --> 0:12:40.959 the data from similar Web. When you look at the 0:12:41.000 --> 0:12:43.719 trajectory of the web's most valuable properties on a year 0:12:43.760 --> 0:12:48.680 over year basis, things look quite bleak, with Google which 0:12:48.760 --> 0:12:52.040 lost about point nine percent, YouTube lost about four point 0:12:52.080 --> 0:12:55.480 four percent, Facebook seven point seven percent loss, Twitter six 0:12:55.520 --> 0:12:58.760 point two percent loss, Twitch eleven point nine percent loss, 0:12:58.840 --> 0:13:01.720 and Amazon two point seven one percent loss, all still 0:13:01.760 --> 0:13:05.400 seeing significant de clients. Only a few sites like Reddit, 0:13:05.440 --> 0:13:08.319 which saw a thirty one point three percent growth, TikTok 0:13:08.400 --> 0:13:11.120 eleven point six percent growth, and Instagram nine point nine 0:13:11.160 --> 0:13:14.040 percent growth but trending down every year since twenty nineteen, 0:13:14.240 --> 0:13:17.840 and also LinkedIn up seventeen point nine percent. They're the 0:13:17.880 --> 0:13:20.560 only ones that are really seeing good year over year growth. 0:13:21.200 --> 0:13:23.320 And while it's important to note that these are visits 0:13:23.400 --> 0:13:25.959 rather than active users, and in fairness, this data only 0:13:26.040 --> 0:13:28.160 covers visits made through a browser rather than an app, 0:13:28.880 --> 0:13:33.080 this is still a truly astounding trend that suggests, for 0:13:33.120 --> 0:13:35.880 the most part that the web's largest platforms are seeing 0:13:36.280 --> 0:13:39.600 kind of a digital recession. While there might be revenue 0:13:39.720 --> 0:13:42.280 coming to these companies and they might still be acquiring 0:13:42.320 --> 0:13:45.440 no users, there's really no good way to spin the 0:13:45.480 --> 0:13:49.559 fact that traffic to platforms like Amazon and Google has plateaued, 0:13:49.720 --> 0:13:53.360 then declined, something shifting downwards, and it's been doing so 0:13:53.520 --> 0:13:57.120 since twenty nineteen. Perhaps this explains why platforms like Google 0:13:57.160 --> 0:14:00.319 and Facebook have kept making changes to make each USERG journey, 0:14:00.920 --> 0:14:04.360 create more engagement and make it more profitable to sustain 0:14:04.440 --> 0:14:08.760 growth because fewer people than ever are actually visiting the platforms. 0:14:10.320 --> 0:14:12.360 I believe her at the end of something I called 0:14:12.400 --> 0:14:16.160 the rockcom boom, the tech industry's hypergrowth cycle, where there 0:14:16.200 --> 0:14:18.760 were so many new lands to conquer, so many new 0:14:18.800 --> 0:14:22.640 ways to pile money into, so many new innovative, useful ideas, 0:14:22.840 --> 0:14:25.760 that it felt like every tech company could experience perpetual 0:14:25.760 --> 0:14:29.160 growth just by throwing money at a problem. It also 0:14:29.240 --> 0:14:32.720 explains why so many tech products YouTube, Google, Search, Facebook, 0:14:32.760 --> 0:14:35.560 and so on feel like they're either trapped in amber 0:14:36.000 --> 0:14:39.000 or like they've got tangibly worse, because when you think 0:14:39.000 --> 0:14:41.480 about it, when there's no incentive to improve the things 0:14:41.560 --> 0:14:45.000 you've already built, why would you You should just be 0:14:45.080 --> 0:14:47.120 working on the next big thing or new ways to 0:14:47.120 --> 0:14:49.920 reduce the thing you have right now to keep people 0:14:49.920 --> 0:14:53.280 coming back, Yeah, maybe, but to keep people on the platform, 0:14:53.440 --> 0:14:56.240 sometimes by monopolizing an industry so they have nowhere else 0:14:56.280 --> 0:15:03.520 to go. And that's the thing. All of these come companies, Facebook, Google, Amazon, 0:15:03.680 --> 0:15:06.120 I mean all of them. They've all built themselves on 0:15:06.200 --> 0:15:09.800 this very simple idea that they'd always be a next 0:15:09.800 --> 0:15:12.760 big thing. And I'm not even saying that they won't be, 0:15:13.160 --> 0:15:16.200 but they've assumed, and the problem that they're facing right 0:15:16.200 --> 0:15:19.520 now is that there would always be one around the corner. 0:15:20.240 --> 0:15:23.760 This belief that exponential growth is not just a reasonable 0:15:23.800 --> 0:15:27.160 expectation but a requirement is central to the core of 0:15:27.200 --> 0:15:29.560 the rot in the tech industry. And as these rapacious 0:15:29.600 --> 0:15:32.480 demands run into reality, I'm sorry to say that the 0:15:32.560 --> 0:15:35.320 rockcom bubble is going to deflate. And as we speak, 0:15:35.360 --> 0:15:38.920 the tech industry they're grappling with somewhat of a midlife crisis, 0:15:39.400 --> 0:15:42.720 and they're desperately searching for that next hyper growth market, 0:15:42.800 --> 0:15:45.920 and they're eagerly pushing customers and businesses to adopt this 0:15:46.000 --> 0:15:49.760 technology that nobody actually asked for. They must keep the 0:15:49.800 --> 0:15:54.080 rot economy alive because if they don't, they're gonna they're 0:15:54.080 --> 0:15:56.560 gonna have to face the fact that they've built pretty 0:15:56.600 --> 0:16:01.280 unsustainable businesses. Even though they're profitable, they keep growing. The 0:16:01.320 --> 0:16:17.160 only thing that grows forever is cancer. The raw economy 0:16:17.200 --> 0:16:19.960 and takes growth lust. It isn't new, though venture capital 0:16:20.000 --> 0:16:23.080 has been incentivizing and monetizing rot for over a decade, 0:16:23.160 --> 0:16:25.920 and Mark andrew's An advocated in twenty eleven that we 0:16:26.000 --> 0:16:29.560 should look to expand the number of innovative new software 0:16:29.600 --> 0:16:34.320 companies created rather than constantly questioning their valuations. Yet just 0:16:34.360 --> 0:16:37.960 a year earlier, in March twenty ten, his partner Ben Horowitz, 0:16:37.960 --> 0:16:40.560 he advocated for fat startups, and I'll link to that 0:16:40.600 --> 0:16:43.120 in the notes, saying that you can't save your way 0:16:43.160 --> 0:16:46.640 to winning the market, and that startup purgatory is when 0:16:46.640 --> 0:16:48.920 you don't go bankrupt, but you fail to build the 0:16:48.960 --> 0:16:51.680 number one product in this space and have zero chance 0:16:51.960 --> 0:16:55.000 of becoming a high growth company, which, by the way, 0:16:55.120 --> 0:16:58.400 Horowitz described this as worse than startup hell because you 0:16:58.480 --> 0:17:01.520 are and I quote stuck with the small company, even 0:17:01.560 --> 0:17:04.360 if it's cash flow positive. At the time, this might 0:17:04.400 --> 0:17:06.680 have made sense to them because this mindset made them 0:17:06.760 --> 0:17:11.560 quite rich, even though there's something inherently abnormal about describing 0:17:11.600 --> 0:17:16.400 being a staple profitable company as being an estate that's 0:17:16.520 --> 0:17:20.800 worse than hell. Anyway, I want you to take a 0:17:20.800 --> 0:17:23.240 step back in time with me, though, and think about 0:17:23.280 --> 0:17:27.600 how much has changed in the last ten years, fifteen years. 0:17:27.920 --> 0:17:33.359 Think about it for a second. In twenty ten, it 0:17:33.400 --> 0:17:36.120 felt like we were just making our first steps into 0:17:36.119 --> 0:17:39.800 the digital world. It was still pretty new twenty ten. 0:17:39.840 --> 0:17:42.080 There was no Instacart. There was no Zoom, no Snapchat, 0:17:42.119 --> 0:17:44.680 no Lyft, no Tinder, no Slack, no Snowflake, no door Dash, 0:17:44.720 --> 0:17:47.800 no TikTok, no Discord, no Coinbase, no Robinhood. And there 0:17:47.840 --> 0:17:54.320 wasn't any Venmo or Zel either. Tesla, Facebook, LinkedIn, Airbnb, Uber, Square, Alassian, Octa, 0:17:54.480 --> 0:17:58.639 Mongo dB, work Day, Palo Alto networks, Asana, UiPath, Spotify. 0:17:58.880 --> 0:18:02.840 They hadn't even gone public. Instagram was still independent, it 0:18:02.880 --> 0:18:06.960 wasn't part of Facebook yet, and consumer drones they hadn't reached. Ubiquity, 0:18:07.359 --> 0:18:11.320 voice assistance hadn't even been launched. Full gled networks they 0:18:11.359 --> 0:18:14.040 were brand new, and Amazon Web Services, one of the 0:18:14.080 --> 0:18:16.600 most profitable things in the world, as I'll get to, 0:18:17.000 --> 0:18:19.840 was on course to make six hundred million dollars in 0:18:19.920 --> 0:18:22.720 revenue in twenty ten, which is, by the way, two 0:18:22.760 --> 0:18:25.760 point five percent of the twenty four billion that AWS 0:18:25.880 --> 0:18:28.240 on its own made in the first quarter of twenty 0:18:28.240 --> 0:18:31.359 twenty four. Google and Apples stock prices were worth less 0:18:31.359 --> 0:18:33.680 than a tenth of what they are today, and Nvidia, 0:18:33.880 --> 0:18:36.680 a stock now worth over one thousand dollars traded at 0:18:36.760 --> 0:18:40.160 under three dollars a share. Between two thousand and five 0:18:40.240 --> 0:18:43.400 and twenty eighteen, we saw this incredible surge of innovation 0:18:43.520 --> 0:18:48.160 and tech valuations, and this kind of seemingly unstoppable period 0:18:48.200 --> 0:18:51.320 of growth and big sexy ideas that created big, sexier 0:18:51.400 --> 0:18:54.960 new markets. While applications existed in two thousand and eight, 0:18:55.080 --> 0:18:58.639 Apple's App Store and the perpetual nature of connection that 0:18:58.640 --> 0:19:03.200 we get from smartphones. It consumerized the concept of distinct 0:19:03.359 --> 0:19:06.119 service based apps, as well as the overall concept of 0:19:06.160 --> 0:19:11.320 software ecosystems, which has become a multi trillion dollar philosophical 0:19:11.359 --> 0:19:15.240 and economic force, and it's changed just about everything about 0:19:15.280 --> 0:19:18.280 how we communicate and even do business. It's remarkable and 0:19:18.320 --> 0:19:21.199 also was a new market just sitting there waiting for 0:19:21.280 --> 0:19:23.840 the hardware and software to catch up with it, and 0:19:23.880 --> 0:19:25.440 for someone to come up with the idea, of course, 0:19:26.560 --> 0:19:29.920 connecting people digitally through social media, voice, video, and so on. 0:19:30.520 --> 0:19:34.239 It's been central to the hypergrowth cycle, with innovations like 0:19:34.480 --> 0:19:37.959 connectivity and cloud infrastructure allowing multiple companies to carve out 0:19:37.960 --> 0:19:42.120 these one hundred billion and trillion dollar ecosystems on some level, 0:19:42.200 --> 0:19:45.680 big tech companies could put money through research and development, investment, 0:19:45.760 --> 0:19:48.280 or acquisitions wherever they needed to as a means of 0:19:48.280 --> 0:19:50.760 making the future a reality, and thanks to the fact 0:19:50.760 --> 0:19:53.520 that interest rates were rock bottom and there was a 0:19:53.520 --> 0:19:57.040 lot of private money going into startups, they were never 0:19:57.040 --> 0:20:01.080 really short of cash to do so. One point, hype 0:20:01.280 --> 0:20:04.320 began to outpace innovation, and while there were new ideas, 0:20:04.960 --> 0:20:08.879 the actual fundamental technology required to actually innovate may not 0:20:08.880 --> 0:20:12.399 actually exist, making a lot of these ideas theoretical and 0:20:12.800 --> 0:20:16.640 so far behind the cart that you may as well 0:20:16.640 --> 0:20:21.560 shoot the horse dead. When Mark Zuckerberg renamed Facebook to Meta, 0:20:21.640 --> 0:20:23.720 he told Casey Newton, who by the way, should feel 0:20:23.920 --> 0:20:27.240 nothing but shame for accepting this in good faith, that 0:20:27.320 --> 0:20:30.159 he believed the metaverse was an embodied Internet that was 0:20:30.200 --> 0:20:34.560 a persistent, synchronous environment that would resembles social media but 0:20:34.640 --> 0:20:38.320 also be an environment where you're embodied in it. That's 0:20:38.359 --> 0:20:40.560 a real quote. By the way, This is of course 0:20:40.640 --> 0:20:44.359 total nonsense, a total word salad that will make you 0:20:44.480 --> 0:20:49.320 throw up, conjured up by somebody without any real ideas 0:20:49.359 --> 0:20:52.400 that knows that they won't receive any pushback on them anyway, 0:20:53.480 --> 0:20:56.080 not even from those whose job it is to scrutinize 0:20:56.119 --> 0:20:58.679 the tech industry and ask the difficult questions so that 0:20:58.720 --> 0:21:03.520 people don't buy stupid Anyway, what Zuckerberg had actually built, 0:21:03.920 --> 0:21:06.480 by which for the most part I mean acquired, was 0:21:06.480 --> 0:21:09.800 a half fast virtual world accessed through niche virtual reality 0:21:09.800 --> 0:21:12.800 technology that nobody asked for, that already kind of existed, 0:21:12.800 --> 0:21:15.439 that made people sick, and that Meta couldn't actually build. 0:21:15.960 --> 0:21:18.639 And what Mark Zuckerberg wanted to do was built the 0:21:18.680 --> 0:21:21.520 successor to the mobile Internet in the hopes that quote 0:21:21.600 --> 0:21:25.320 the metaverse would be another hypergrowth industry where people would 0:21:25.359 --> 0:21:28.439 buy land which they didn't, or hang out on mass 0:21:28.440 --> 0:21:30.919 which they didn't, or have meetings which they did not, 0:21:31.359 --> 0:21:34.520 all while sharing data and watching ads served by Meta 0:21:34.560 --> 0:21:38.439 and other companies that Meta could sell ads too. In 0:21:38.440 --> 0:21:41.680 this cynical, horrible version of the future, the Internet, neutral 0:21:41.760 --> 0:21:44.359 standards based and controlled by no single company would be 0:21:44.400 --> 0:21:47.920 transformed into a platform, a feudal system where Meta would 0:21:47.920 --> 0:21:51.560 set the rules an exactor cut from each engagement, interaction 0:21:51.880 --> 0:21:55.159 and transaction. It was quite plainly a power grad the 0:21:55.280 --> 0:21:57.560 likes of which the Internet hasn't seen since the bleak 0:21:57.640 --> 0:22:00.200 days of Internet Explorer six and Active X if you 0:22:00.240 --> 0:22:03.400 don't know what those are. Microsoft has some evil things 0:22:03.400 --> 0:22:07.200 in the past. The tech, however, it was never there. 0:22:07.800 --> 0:22:10.399 Mark Zuckerberg sold everybody on the concept of a Ready 0:22:10.400 --> 0:22:13.399 Player one Metaverus and putting aside for a second that 0:22:13.440 --> 0:22:16.680 Ready Player one is a poorly written dystopia. This vision 0:22:16.800 --> 0:22:20.600 hinges heavily on the idea of technology that completely immerses 0:22:20.640 --> 0:22:23.399 the user and their senses and makes them feel like 0:22:23.440 --> 0:22:28.640 they're actually in a world, which is just insane. It's 0:22:28.680 --> 0:22:31.280 not possible, It's not even close to possible. We're talking 0:22:31.320 --> 0:22:34.919 about full sensory takeover and the ability to traverse the 0:22:34.920 --> 0:22:38.600 digital world somehow without moving. This would be a revolution, 0:22:39.000 --> 0:22:42.360 both in cloud computing because just the raw data would 0:22:42.400 --> 0:22:48.400 be insane, but also immersive technology. Just what was everyone 0:22:48.560 --> 0:22:53.480 doing accepting this idea, And let's be honest, the reality 0:22:53.600 --> 0:22:56.080 was just so much worse. You had these nausea inducing 0:22:56.119 --> 0:22:59.919 headsets that led you into this horrible, clunky, cartoon world. 0:23:00.040 --> 0:23:03.520 It wasn't fun or practical or useful, and tens of 0:23:03.560 --> 0:23:06.520 billions of dollars of R and D costs developing headsets 0:23:06.560 --> 0:23:10.840