1
00:00:02,120 --> 00:00:07,600
Speaker 1: Zone Media. Hello on, Welcome to this week's Better Offline Monologue.

2
00:00:07,640 --> 00:00:18,520
Speaker 1: I'm your host ed Zetron. What it's been a peculiar week.

3
00:00:18,800 --> 00:00:22,079
Speaker 1: Two days ago, Sarah Fryar, chief financial officer of open AI,

4
00:00:22,400 --> 00:00:24,560
Speaker 1: said in a stage at a Wall Street Journal conference

5
00:00:24,600 --> 00:00:27,480
Speaker 1: that an IPO isn't on the cards and foolishly said

6
00:00:27,520 --> 00:00:29,880
Speaker 1: the open AI was and I quote looking for an

7
00:00:29,920 --> 00:00:34,120
Speaker 1: ecosystem of banks, private equity, maybe even governmental and that

8
00:00:34,159 --> 00:00:36,400
Speaker 1: the way governments can come to bear can really drop

9
00:00:36,440 --> 00:00:39,240
Speaker 1: the cost of financing but also increase the loan to value,

10
00:00:39,440 --> 00:00:41,120
Speaker 1: so the amount of debt you can take on top

11
00:00:41,159 --> 00:00:44,880
Speaker 1: of an equity portion. Now, she also, according to Bloomberg,

12
00:00:45,000 --> 00:00:48,320
Speaker 1: hinted at some sort of federal backstop, literal government backing

13
00:00:48,360 --> 00:00:52,280
Speaker 1: for loans for data centers. Very strange. Now, I will

14
00:00:52,280 --> 00:00:55,440
Speaker 1: add this as being completely misreported as open AI demanding

15
00:00:55,440 --> 00:00:57,520
Speaker 1: government funds. Had someone ring me the other night say

16
00:00:57,640 --> 00:00:59,760
Speaker 1: did you hear about this? It's not what happened. To

17
00:00:59,800 --> 00:01:03,240
Speaker 1: be clear, I believe absolutely that Sarah Fryer was throwing

18
00:01:03,280 --> 00:01:05,839
Speaker 1: out the idea to see if governments might buy, only

19
00:01:05,880 --> 00:01:08,120
Speaker 1: to find the entirety of social media and most of

20
00:01:08,160 --> 00:01:12,400
Speaker 1: the mainstream media reacting like Friar had kicked the family dog. Nevertheless,

21
00:01:12,400 --> 00:01:14,080
Speaker 1: I want to be clear that open AI has not

22
00:01:14,160 --> 00:01:17,400
Speaker 1: requested a federal backstop, and that as ever, it appears

23
00:01:17,400 --> 00:01:19,520
Speaker 1: that even the big media outlets do not seem to

24
00:01:19,600 --> 00:01:22,119
Speaker 1: go and listen to the things that people say or check.

25
00:01:22,600 --> 00:01:26,040
Speaker 1: It's ridiculous. This is a huge story if you misreported,

26
00:01:26,360 --> 00:01:30,559
Speaker 1: which is what's happened. Nevertheless, as I said on Blue Sky,

27
00:01:30,720 --> 00:01:33,640
Speaker 1: this is an absolute diva moment for open AI. Oh

28
00:01:33,720 --> 00:01:36,760
Speaker 1: I'm so messy. I can't even afford mid data centers. Please,

29
00:01:36,880 --> 00:01:39,240
Speaker 1: Uncle Sam, I promised to spend one point five trillion

30
00:01:39,280 --> 00:01:41,399
Speaker 1: dollars in the next five years. Oh, I'm so weak

31
00:01:41,440 --> 00:01:43,880
Speaker 1: and powerless in the face of all the promises I made.

32
00:01:44,080 --> 00:01:46,919
Speaker 1: Grow up, wipe your own ass. If regular people promised

33
00:01:46,920 --> 00:01:48,480
Speaker 1: a bunch of people a ton of money that they

34
00:01:48,520 --> 00:01:50,520
Speaker 1: couldn't afford, they be sued, but in prison or have

35
00:01:50,560 --> 00:01:52,880
Speaker 1: their assets reduced to zero. Why do we have to

36
00:01:52,880 --> 00:01:55,840
Speaker 1: do something different for open AI? Anyway, this is not

37
00:01:55,920 --> 00:01:58,559
Speaker 1: going to happen. I've never seen a more aggressive bipartisan

38
00:01:58,600 --> 00:02:01,760
Speaker 1: descent for an idea by everyone from better offline listeners

39
00:02:01,760 --> 00:02:03,920
Speaker 1: in the middle of prying hubcaps off of cars to

40
00:02:03,960 --> 00:02:07,960
Speaker 1: the powerful Dunce coalition led by Matty Iglesias. Everybody fucking

41
00:02:08,000 --> 00:02:10,880
Speaker 1: hates this idea, and if I'm honest, I think everybody

42
00:02:10,880 --> 00:02:12,920
Speaker 1: is sick and tired of AI. What was once a

43
00:02:12,960 --> 00:02:15,400
Speaker 1: market wide consensus that AI was the future has now

44
00:02:15,400 --> 00:02:17,880
Speaker 1: become a cacophony of hand ringing in just about every

45
00:02:17,880 --> 00:02:21,079
Speaker 1: major media outlet. What hasn't helped was a very very

46
00:02:21,120 --> 00:02:23,919
Speaker 1: weird post through a Nvidia's social media account, a single

47
00:02:23,960 --> 00:02:27,560
Speaker 1: image that said, statement from Nvidia CEO Jensen Wang. As

48
00:02:27,600 --> 00:02:30,600
Speaker 1: I have long said, China is nanoseconds behind America in AI,

49
00:02:30,760 --> 00:02:33,360
Speaker 1: it's vital that America wins by wrestling ahead and winning

50
00:02:33,400 --> 00:02:38,760
Speaker 1: developers worldwide. Not really sure what that meant, but this

51
00:02:39,040 --> 00:02:41,000
Speaker 1: was I found after the fact, tied to a statement

52
00:02:41,080 --> 00:02:43,440
Speaker 1: Huang made to the Financial Times that mostly said the

53
00:02:43,440 --> 00:02:45,280
Speaker 1: same thing. But I've got to say, this is the

54
00:02:45,320 --> 00:02:49,359
Speaker 1: weirdest statement I've seen. It's so weird. What do you want, Jensen?

55
00:02:49,480 --> 00:02:54,160
Speaker 1: More developers to developers by GPUs or so wait a second,

56
00:02:54,720 --> 00:02:57,720
Speaker 1: China doesn't have the latest in video GPUs. How are

57
00:02:57,720 --> 00:03:02,200
Speaker 1: they nanoseconds behind America? Surely America should be I don't

58
00:03:02,240 --> 00:03:05,639
Speaker 1: know hours days at Jensen, I don't know why you're

59
00:03:05,680 --> 00:03:08,160
Speaker 1: using words that relate to time as measures of distance.

60
00:03:08,200 --> 00:03:11,720
Speaker 1: But nevertheless, why aren't American companies further ahead when they

61
00:03:11,720 --> 00:03:15,000
Speaker 1: have easy access to Blackwell and soon via Rubin GPUs?

62
00:03:15,360 --> 00:03:18,280
Speaker 1: What exactly do you want us to do? Jensen? What

63
00:03:18,480 --> 00:03:21,040
Speaker 1: is the thing? It's like vague posting, being like I

64
00:03:21,080 --> 00:03:23,680
Speaker 1: really shouldn't be alone right now, you know, I just

65
00:03:23,720 --> 00:03:25,840
Speaker 1: I've had such a bad night. I wish someone would

66
00:03:25,919 --> 00:03:30,480
Speaker 1: text me and tell me they're buying a gpu Hanah. No, man,

67
00:03:30,840 --> 00:03:34,080
Speaker 1: you're the CEO of the largest company on the stock market.

68
00:03:34,400 --> 00:03:37,000
Speaker 1: Do you not have a little more bizaz, little more

69
00:03:37,080 --> 00:03:41,720
Speaker 1: riz rizzless? Jensen, You're rizzless even with those beautiful leather jackets.

70
00:03:42,080 --> 00:03:44,320
Speaker 1: And it's almost as if there isn't a coherent reason

71
00:03:44,400 --> 00:03:46,840
Speaker 1: to buy GPUs or any real progress coming out of

72
00:03:46,880 --> 00:03:50,320
Speaker 1: American AI labs, or really any of them were still though,

73
00:03:50,360 --> 00:03:53,000
Speaker 1: and this was the one that really I think was underreported.

74
00:03:53,280 --> 00:03:56,280
Speaker 1: During Microsoft's last earnings, the company reported a four point

75
00:03:56,360 --> 00:03:58,560
Speaker 1: one billion dollar loss on their thirty two point five

76
00:03:58,800 --> 00:04:01,920
Speaker 1: percent staking open air, meaning that due to the company

77
00:04:02,000 --> 00:04:05,600
Speaker 1: using the equity method for accounting OpenAI lost twelve billion

78
00:04:05,640 --> 00:04:09,000
Speaker 1: dollars in the third quarter of this calendar year. Now,

79
00:04:09,280 --> 00:04:13,120
Speaker 1: open Ai CFO Sarah Fryar said that this was way overestimated.

80
00:04:13,240 --> 00:04:16,799
Speaker 1: And I want to be clear about something. Microsoft's earnings

81
00:04:16,800 --> 00:04:20,239
Speaker 1: are public filings as they are a public company, meaning

82
00:04:20,279 --> 00:04:23,640
Speaker 1: that these are looked over by accountants and lawyers. Why

83
00:04:23,720 --> 00:04:27,760
Speaker 1: is the chief financial officer of open ai disputing these numbers.

84
00:04:28,120 --> 00:04:32,200
Speaker 1: That's extremely goddamn weird. And this isn't the first time

85
00:04:32,240 --> 00:04:34,800
Speaker 1: Sarah Friar has said some weird shit, even in this

86
00:04:34,920 --> 00:04:37,680
Speaker 1: conference appearance, but in general. The other time I saw

87
00:04:37,720 --> 00:04:39,919
Speaker 1: her say that it was thirty five dollars a token

88
00:04:40,279 --> 00:04:43,600
Speaker 1: in the past for open AI's models. Thirty five bucks

89
00:04:43,640 --> 00:04:45,680
Speaker 1: per million tokens doesn't even make sense, but I think

90
00:04:45,680 --> 00:04:47,760
Speaker 1: thirty five bucks per token would mean if they spend

91
00:04:47,760 --> 00:04:50,680
Speaker 1: like trillions of dollars a year. Regardless, you're the CFO

92
00:04:50,720 --> 00:04:52,760
Speaker 1: of open Ai. Shouldn't you know this shit a little

93
00:04:52,800 --> 00:04:55,599
Speaker 1: bit better? Now? Before you email me something about gap

94
00:04:55,640 --> 00:04:58,000
Speaker 1: earnings or accounting. I'm going to include links in the

95
00:04:58,040 --> 00:05:00,520
Speaker 1: show notes because I assure you this loss is directly

96
00:05:00,560 --> 00:05:05,120
Speaker 1: reflective of open Eye's actual losses, and that's really weird.

97
00:05:05,200 --> 00:05:08,359
Speaker 1: By the way. It's really weird. Indeed, and now that

98
00:05:08,400 --> 00:05:11,240
Speaker 1: we know that, we have to ask how bad are

99
00:05:11,320 --> 00:05:15,840
Speaker 1: open aye's actual losses? How much worse are things than

100
00:05:15,880 --> 00:05:20,640
Speaker 1: we know? I assure you this loss is real. I

101
00:05:20,800 --> 00:05:24,560
Speaker 1: trust it. It's been well reported, looked over by actual accountants,

102
00:05:24,600 --> 00:05:26,120
Speaker 1: and a link to a Wall Street Journal piece where

103
00:05:26,120 --> 00:05:28,480
Speaker 1: an actual accountant looked at this and made this statement.

104
00:05:29,279 --> 00:05:31,159
Speaker 1: And I got to ask, what is it that Sarah

105
00:05:31,240 --> 00:05:34,640
Speaker 1: Fryar and Clammy Sammy don't want us to know what

106
00:05:34,839 --> 00:05:38,080
Speaker 1: is going on? The Information reported that in the first

107
00:05:38,120 --> 00:05:40,560
Speaker 1: half of this year, open aye made four point three

108
00:05:40,560 --> 00:05:42,520
Speaker 1: billion dollars of revenue but had a net loss of

109
00:05:42,560 --> 00:05:45,320
Speaker 1: thirteen point five billion dollars. But that's in six months.

110
00:05:46,400 --> 00:05:51,600
Speaker 1: Are those indicative of the real numbers? Has someone been fibbing?

111
00:05:52,080 --> 00:05:54,599
Speaker 1: I trust the Information's reporting, by the way, I fully

112
00:05:54,640 --> 00:05:58,720
Speaker 1: believe them, and I at this point am just concerned

113
00:05:58,839 --> 00:06:02,200
Speaker 1: that we're not getting the full picture. I don't know

114
00:06:02,279 --> 00:06:04,400
Speaker 1: what open ai is sharing to people. I don't know

115
00:06:04,440 --> 00:06:08,320
Speaker 1: how these reporters have got these numbers, But that twelve

116
00:06:08,320 --> 00:06:12,120
Speaker 1: billion dollar loss in a quarter that feels quite dramatic,

117
00:06:12,160 --> 00:06:14,960
Speaker 1: and it feels a lot more than open ai has

118
00:06:14,960 --> 00:06:18,919
Speaker 1: been hinting they're losing. What else? Don't we know what

119
00:06:19,040 --> 00:06:21,800
Speaker 1: else is going on in Open Ai that we are

120
00:06:21,839 --> 00:06:26,520
Speaker 1: not Party two? Hopefully we find out soon. In any case,

121
00:06:26,560 --> 00:06:31,040
Speaker 1: it feels like something came unbuckled this week. Glamuel the

122
00:06:31,040 --> 00:06:42,000
Speaker 1: Smiling Man is watching a specter horned Silicon Valley