Speaker 1: Media. I'm mad as hell and I'm not gonna take
Speaker 1: it anymore. Welcome to bear Offline. I'm your host ed Zetron. Now.
Speaker 2: This is the second part of a two part series
Speaker 2: about how.
Speaker 1: Open Ay's stupid, bloody growth myth has gone the entire
Speaker 1: media ecosystem, forcing people who really should know better to
Speaker 1: repeat absolutely insane things as though they're actually perfectly reasonable. Now,
Speaker 1: if you haven't already listened to the last episode and
Speaker 1: come back, just go, just go. I don't I'll need
Speaker 1: you to listen to it otherwise, Let's talk about why
Speaker 1: this bubble actually inflated. And I realized I did a
Speaker 1: monologue about this, but it's so obvious that I needed
Speaker 1: to do a longer episode. But let's start simple. The
Speaker 1: term artificial intelligence is bastardized to the point it effectively
Speaker 1: means nothing and everything at the same time. When people
Speaker 1: hear AI, they think of an autonomous intelligence that can
Speaker 1: do things for them, and generative AI can do things
Speaker 1: for you, like generate an image or a text from
Speaker 1: a simple prompt. As a result, it's easy to manipulate
Speaker 1: people who don't know much about tech, or even try
Speaker 1: it in the first place, into believing that this will
Speaker 1: naturally progress from It can create a bunch of text
Speaker 1: for me that I have to write for my job
Speaker 1: just by me typing in a prompt. Too, it can
Speaker 1: do my job for me just by typing in a prompt. Basically,
Speaker 1: everything you've read about the future of AI extrapolates generative
Speaker 1: AI's ability to sort of generate something a human would
Speaker 1: make and turns it into a It can do whatever
Speaker 1: a human can do, or because some tech in the
Speaker 1: past has sometimes been bad at the beginning and linearly
Speaker 1: improved as time drags on. This illogical thinking underpins the
Speaker 1: entire generative AI boom because we found out exactly how
Speaker 1: many people do not know what the fuck they're talking
Speaker 1: about and are willing to believe the last semi intelligent
Speaker 1: person that they talk to. Generatif AI is kind of
Speaker 1: a remarkable karner, just good enough version of human expression
Speaker 1: to get it past the gatekeepers in finance and the media,
Speaker 1: knowing that neither will apply a second gear of critical
Speaker 1: thinking beyond hook as we'll do an AI now. The
Speaker 1: expectation that general IVAI will transform into this much more
Speaker 1: powerful version requires you to first ignore its existing limitations,
Speaker 1: believing it to be more capable than it is, and
Speaker 1: also ignore the fact that these models have yet to
Speaker 1: show meaningful improvement over the past few years unless you're looking,
Speaker 1: at course, at the benchmarks that they are built specifically
Speaker 1: to pass. They still halluciname, they're still ungodly expensive to run,
Speaker 1: they're still unreliable, and they still don't really do that much.
Speaker 1: We're still chat GPT's growth as galvanized these people into
Speaker 1: believing that this is a legitimate, meaningful movement rather than
Speaker 1: the most successful public relation campaign of all time. Think
Speaker 1: of it like this, and some of you really don't
Speaker 1: like this argument is something couldn't be this big just
Speaker 1: because of the media.
Speaker 2: It really could.
Speaker 1: If almost every single media outlet talked about one thing,
Speaker 1: this thing being generally of AI, and that one thing
Speaker 1: was available from one company, Open Ai, wouldn't it look
Speaker 1: exactly how things look today? Got open ai with hundreds
Speaker 1: of millions of monthly active users, and then a bunch
Speaker 1: of other companies, including big tech firms with multi trillion
Speaker 1: dollar market caps, with somewhere between ten and sixty nine
Speaker 1: million monthly active users, and I don't count Gemini because
Speaker 1: they're cheating. You can't slap it on Google Assistant. That's unfair.
Speaker 1: What we're seeing here is one company taking most of
Speaker 1: the users and money available and doing so because the
Speaker 1: media fucking helped them. People aren't amazed by chat GPT.
Speaker 2: They're curious.
Speaker 1: They're curious about why the media won't shut up about it,
Speaker 1: and we have to realize and recognize and accept that
Speaker 1: part of the reason this bubble was inflated was the
Speaker 1: failure of Google Search. Everyone I talk to that uses
Speaker 1: chat gpt regularly uses it as either a way to
Speaker 1: generate shitty limericks or as a replacement for Google Search,
Speaker 1: a product that Google is deliberately made worse as a
Speaker 1: means of increasing profits. Listen to our award winning episode
Speaker 1: The Man That Destroyed Google Search. I'm going to say
Speaker 1: that forever, and by the way, that's absolutely what you
Speaker 1: should listen to. It's wherebe award winning the best Business episode.
Speaker 2: We won it, folks.
Speaker 1: Anyway, I hate to say this, I really don't like
Speaker 1: saying this. I don't like to give it to them,
Speaker 1: but chat GPT, if I'm honest, is better at processing
Speaker 1: search strings than Google Search, which is not so much
Speaker 1: a sign that chatchpt is good at something as it
Speaker 1: is that Google has stopped innovating in any meaningful way.
Speaker 1: Over time, Google search should have become something that was
Speaker 1: able to interpret searches into kind of like a perfect result,
Speaker 1: which would require the company to improve how it processes
Speaker 1: your requests. It should be how Google used to feel magical. Instead,
Speaker 1: Google search has become dramatically worse, mostly because the company's
Speaker 1: incentives change from help people find something on the web
Speaker 1: to funnel as much traffic and show as many add
Speaker 1: impressions as possible on Google dot Com. It does little
Speaker 1: annoying things like ignoring random words in the search string,
Speaker 1: even though those words were there for a reason. And
Speaker 1: Google doesn't know better than you what you want ideally,
Speaker 1: though they should when it comes to a search product.
Speaker 1: That's ideally what you get someone to search something for you,
Speaker 1: You want them to bring back the best thing. And
Speaker 1: by this point, Google search should have been far more magical,
Speaker 1: more capable of taking a de witched question and turning
Speaker 1: it into a great answer. Would said answer being a
Speaker 1: result from the internet right. Note that nothing I'm saying
Speaker 1: here is actually about generating a results. It's about processing
Speaker 1: a user's query and presenting an answer. The very foundation
Speaker 1: of computing and the thing that Google at one point
Speaker 1: was the best in the world at doing. Thanks to
Speaker 1: Propagar Ragavan, the former head of Ads that led a
Speaker 1: coup to become the head of Search, Google is pulled
Speaker 1: away from being the meaningful source of information on the Internet.
Speaker 1: It really is actually quite sad when you think about it.
Speaker 1: And I'd argue that chat GPT filled the void left
Speaker 1: by Google Search by doing the thing that people wanted
Speaker 1: Google Search to do, answer a question even if the
Speaker 1: user isn't really sure how to ask it. Google Search
Speaker 1: has become clunky and messy, putting the burden of using
Speaker 1: the service on the user rather than helping fill the
Speaker 1: gap between a query and an answer in any meaningful way.
Speaker 1: Google's AI summaries don't even try to do what chat
Speaker 1: GPT does. They just generate summaries based on search results
Speaker 1: and say, uh, mate, is this what you want? I
Speaker 1: don't fucking know? Only may I only mate latsambillion does
Speaker 1: a core give me a fucking break? But one though
Speaker 1: on Google's AI summaries, they're designed to answer a question
Speaker 1: rather than provide a right answer. There's a distinction that
Speaker 1: needs to be made here because it speaks the underlying
Speaker 1: utility of search itself. One good illustration came earlier this
Speaker 1: week when someone noticed that you could ask Google to
Speaker 1: explain the meaning of a completely made up phrase and
Speaker 1: it would dutifully obey you. Two dry frogs in the situation,
Speaker 1: Google said, refer to a group of people in an
Speaker 1: awkward or difficult social situation. Not every insect has a mortgage,
Speaker 1: Google claimed, there's a humorous way of explaining that not
Speaker 1: everything is as it seems. But my favorite is, sorry,
Speaker 1: I haven't read this bags. Big winky on the skillet
Speaker 1: bowl is apparently a slang TERWN that refers to a
Speaker 1: piece of bread with an egg in the middle.
Speaker 2: Or very funny. Sure, but is it useful?
Speaker 1: No? And it's also really cool that this company just
Speaker 1: makes billions of dollars off of this. With all its
Speaker 1: data and all its talent, Google has put out the
Speaker 1: laziest version of an LLM on top of its questionably
Speaker 1: functional search product as a means of impressing shareholders. And
Speaker 1: I'd like to say the results speak for themselves. Now,
Speaker 1: it must be clear none of this is to say
Speaker 1: that chat GPT is good like it really isn't. It's
Speaker 1: just better at understanding a user's request than Google Search. Yes,
Speaker 1: I fundamentally believe, by the way, that five hundred million
Speaker 1: people a week could be using chat GPT as some
Speaker 1: sort of search replacement. And no, no, I do not
Speaker 1: believe that's a functional business model, in part because if
Speaker 1: it was chat gpt open AIE, they'd have a functional business.
Speaker 1: And to be clear, that's a load bearing kit because
Speaker 1: I know that five hundred million people aren't using chat
Speaker 1: GPT as a search replacement.
Speaker 2: It's hypothetical.
Speaker 1: We actually don't know, and we cannot trust what comes
Speaker 1: out of them, not that they share. It's not just
Speaker 1: the open aiy as a shambles of a company.
Speaker 2: It appears that.
Speaker 1: Google's ability to turn search into such a big business
Speaker 1: was because it held a monopoly on search, search advertising,
Speaker 1: and pretty much the entire online ads industry. And if
Speaker 1: it was a truly competitive market and Google wasn't allowed
Speaker 1: to be vertically integrated with the entire digital advertising apparatus
Speaker 1: of the Web, it would likely be making much less
Speaker 1: revenue per user. And that's bad if your Google replacement
Speaker 1: costs many, many, many, many many more times more money
Speaker 1: than Google to run as an a side. By the way,
Speaker 1: if you're wondering. No, open Ai cannot just create a
Speaker 1: Google Search competitor. Search GPT will be a significantly more
Speaker 1: expensive product to run at Google scale than Chat GPT,
Speaker 1: both infrastructurally and then the cost of revenue itself, with
Speaker 1: open ai being forced to create this massive advertising arm
Speaker 1: that does not exist. And by the way, another great
Speaker 1: critique I get is, like open Air, I can just
Speaker 1: hire a bunch of ads people. Why do you think
Speaker 1: there hasn't been another competitor to Search? You realize that
Speaker 1: there are lots of other companies with lots of other
Speaker 1: money that could just do this, and indeed they've tried.
Speaker 1: Why do you think that hasn't worked. Is it because
Speaker 1: of the monopoly. It's because of the monopoly. It's because
Speaker 1: of the monopoly.
Speaker 2: Look, people love the chat GPT in todays.
Speaker 1: It's the box where you can type in one thing,
Speaker 1: get another thing out because it resembles how everybody has
Speaker 1: always wanted Google Search to work.
Speaker 2: Does it work well?
Speaker 1: Who knows, but people feel like they're getting more out.
Speaker 1: But before I go any further, I'd like to talk
Speaker 1: to you about HEGI Artificial general Intelligence art official bloody
Speaker 1: general intelligence, the conscious computer that does not exist and
Speaker 1: is entirely fictional. And this two part of by the Way,
Speaker 1: has been a break from my usual onerous, tortured, punished
Speaker 1: and analysis. And it's because I needed to have a
Speaker 1: little fun. And I think you've kind of heard that
Speaker 1: in the episode. I'm like a little flexible. I'm more
Speaker 1: all like limber and excited, and it also comes from
Speaker 1: a place of frustration. None of this AI stuff has
Speaker 1: ever felt substantive or real because the actual things that
Speaker 1: you can do with Generator IVAI never seemed to come
Speaker 1: close to the things that people are Sam Ortman and
Speaker 1: Warrio Aama Day seem to be promising, nor do they
Speaker 1: come close to the bullshit like people Casey Newton and
Speaker 1: Kevin Ruster peddling. None of this ever resembled artificial general intelligence,
Speaker 1: and if I'm honest, very little it seems to even
Speaker 1: suggest it's a functional industry. And when cynical plants like
Speaker 1: Kevin rus of the Times bumble around asking theoretical questions
Speaker 1: such as, do you think that there's a fifty percent
Speaker 1: chance or higher that AGI to find this an AI
Speaker 1: system that outperforms human experts, Eventually all cognitive tasks will
Speaker 1: be built before twenty thirty, I think when we're reading
Speaker 1: people saying that, and that was Kevin rus at like
Speaker 1: some little AI panel, things surrounded, but just like venture
Speaker 1: capitalists and the senior officials of anthropic, when you've got
Speaker 1: like the lead columnist of the time saying this, we
Speaker 1: should all be terrified. We should be terrified, but not
Speaker 1: of AGI, but that the lead technic columnist that The
Speaker 1: New York Times appears to have an undiagnosed concussion. Rus's logic,
Speaker 1: as with Kate sin Newton's, is based on the idea
Speaker 1: that he's talked to a bunch of people that say, yeah, yeah,
Speaker 1: AGI is right around the corner, rather than any kind
Speaker 1: of like tangible proof for evidence. Just line going up.
Speaker 2: Do you see it?
Speaker 1: The line's going up? Which line is it? Get out
Speaker 1: of my house. Look, I will say I've been a
Speaker 1: little mean on Kevin Ruse. I've been saying that he's
Speaker 1: written the worst shit about artificial intelligence, that he is
Speaker 1: a credulous buffoon or at worse, c cynical plant, that
Speaker 1: Kevin Ruse at The New York Times is regularly pushing
Speaker 1: things like NFTs and crypto and getting basic things wrong,
Speaker 1: like the Helium piece in which Helium lied.
Speaker 2: About their customers.
Speaker 1: I've said that Kevin Ruse regularly says things that don't
Speaker 1: make any sense, and he has indeed written the worst
Speaker 1: tech criticism out there, criticism being the wrong word, take
Speaker 1: analysis out there. And I want to just say that
Speaker 1: I've been wrong. I've been wrong the entire time. What
Speaker 1: I should have said is that he's written the worst
Speaker 1: stuff yet. And I should have said that because he's
Speaker 1: recently published one of the dumbest fucking things I've read
Speaker 1: in my life, and I can't wait to tell you
Speaker 1: about it. His most egregious example of credulousness came in
Speaker 1: late April when he published this thinly veiled puff piece
Speaker 1: about what to do if AI models become conscious in
Speaker 1: the future. Now, this piece, this piece is possibly the
Speaker 1: dumbest tech piece I've read in my life. I really
Speaker 1: mean this. I've read some dog share, I've gone on
Speaker 1: telegram groups for the smallest icos you've seen in your life.
Speaker 1: From then the rutger House speech from a blade runner
Speaker 1: right now, the things I've seen with your eyes different speech.
Speaker 1: I realize this piece from the New York Times is
Speaker 1: called if AI Systems become conscious, should they have rights?
Speaker 1: And the subhead is as artificial intelligence systems become smarter,
Speaker 1: one AI company is trying to figure out what to
Speaker 1: do if they become conscious. I'm going to give you
Speaker 1: exactly one guess what company he's talking about. And here's
Speaker 1: a clue. It's the company Casey Newton's boyfriend WORKSAM. That's right,
Speaker 1: it's Anthropic. Kevin Ruse interviewed two people, both employed by Anthropic,
Speaker 1: with one holding the genuinely hilarious job description of AI
Speaker 1: welfare researcher, who said nakedly insane things like there's only
Speaker 1: a small chance, maybe fifteen percent or so, that Claude
Speaker 1: or another AI system is conscious. And it seems that
Speaker 1: if you find yourself in a situation of bringing some
Speaker 1: new class of being into existence dot dot dart, then
Speaker 1: it seems quite prudent to at least be asking questions
Speaker 1: about whether that system might have its own kinds of experiences. Well,
Speaker 1: I'm experiencing brain damage reading this article out. And what
Speaker 1: makes this article so appalling is that Ruth acknowledges that
Speaker 1: this shit is seen by most level headed people as
Speaker 1: utterly fantastical. He describes the concept of AI consciousness as
Speaker 1: a taboo subject and that many critics will see this
Speaker 1: as crazy talk, but doesn't bother to speak to any
Speaker 1: actual critics. He does, however, speculate on the motives that
Speaker 1: said critics, saying that they might object to an AI
Speaker 1: company's studying consciousness in the first place because it might
Speaker 1: create incentives to train their systems to act more sentient
Speaker 1: than they actually are, Eh, Kevin, Wouldn't it be really
Speaker 1: bad if a generative AI company deliberately did something to
Speaker 1: convince someone that their systems were sentient. You know, someone
Speaker 1: really credulous would accept whatever narrative said AI company was pushing,
Speaker 1: such as that they created a special job just in
Speaker 1: case AI was sentient. Genuine question, Kevin, when you walk
Speaker 1: past the mirror, do you start barking at it because
Speaker 1: you see another guy? Anyway, nothing about anything that open
Speaker 1: AI or anthropic is building or shipping suggests that we
Speaker 1: are anywhere near any kind of autonomous computing. They've used
Speaker 1: the concept of AI safety and now AI welfare as
Speaker 1: a marketing term to convince people that they're expensive, wasteful
Speaker 1: software will somehow become conscious because they're having discussions about
Speaker 1: what to do if it does so, and anyone literally
Speaker 1: any report are accepting this that face Value is doing.
Speaker 1: Their readers are disservice and embarrassing themselves in the process.
Speaker 1: If AI safety advocates cared about I don't know safety
Speaker 1: or AI, they'd have cared about the environmental impact or
Speaker 1: the fact that these models train using stolen material, or
Speaker 1: the fact that these models don't really deliver on their promises.
Speaker 1: And if they did, it would shock the labor market
Speaker 1: and it would hurt millions, if not billions of people.
Speaker 1: And we don't have anywhere near the social safety network
Speaker 1: to support the ones we have right now, let alone
Speaker 1: in this completely fictional future. These companies do not care
Speaker 1: about your safety, and they don't have any way to
Speaker 1: get to AGI. They're full of shit, and it's time
Speaker 1: to stop being honest that you don't have any proof
Speaker 1: that they do anything that they say they will. Also,
Speaker 1: by the way, I think the bubble might actually be bursting. Yeah,
Speaker 1: remember in August of last year I was talking about
Speaker 1: the pale horses of the AI apocalypse. Well, one of
Speaker 1: the major warning signs that the bubble was bursting was
Speaker 1: big tech firms would be reducing their capital expenditures and
Speaker 1: This is a call I've made quite a few times,
Speaker 1: and there was one in alarming Clarity from April fourth,
Speaker 1: twenty twenty four. And I'm going to quote myself here. Well,
Speaker 1: I hope no, that's the wrong voice. Well, I hope
Speaker 1: I'm wrong. The calamity I fear is one where the
Speaker 1: massive overinvestment in data centers is met with a lack
Speaker 1: of meaningful growth or profit, leading to the markets turning
Speaker 1: on the major cloud players that state their future and
Speaker 1: unproven GENERATIVEAI. If businesses don't adopt AI at scale, not experimentally,
Speaker 1: but at the core of their operations, the revenue is
Speaker 1: simply not there to sustain the hype, and once the
Speaker 1: market turns, it will turn hard, demanding efficiency and cutbacks
Speaker 1: that will lead to tens of thousands of job carts. Well,
Speaker 1: we're about to find out if I'm right. On April
Speaker 1: twenty first year, who Finance reported that analyst Josh Beck
Speaker 1: said that Amazon's generative AI revenue for Amazon Web services
Speaker 1: would be five billion dollars five billion dollars this year,
Speaker 1: a remarkably small sum that is not profit, by the way,
Speaker 1: and also are dropping the bucket compared to Amazon's projected
Speaker 1: one hundred and five billion dollars in capital expenditures in
Speaker 1: twenty twenty five, it's seventy eight point two billion dollars
Speaker 1: in expenditures in twenty twenty four, or it's forty eight
Speaker 1: point four billion dollars in twenty twenty three.
Speaker 2: And is that really fucking Are you fucking kidding me?
Speaker 1: Are you fucking kidding me? I have had Jack Coles
Speaker 1: for years telling me this was the next big money driver.
Speaker 1: Five billion dollars, five billion.
Speaker 2: Goddamn dog?
Speaker 1: Are you fucking kid? You'd make more money auctioning dogs.
Speaker 1: This is a disgrace. And if you're wondering, yes, all
Speaker 1: of this is for AI, all of that capex from
Speaker 1: the Yahoo Finance article, the one for Laura Bratton wrote, well,
Speaker 1: this is a quote, by the way, from the article.
Speaker 1: CEO Andy Jassey said in February that the vast majority
Speaker 1: of it's this year's one hundred billion dollars in capital
Speaker 1: investments from the tech giant will go towards building out
Speaker 1: artificial intelligence capacity for its cloud segment Amazon Web Services AWS. Well, shit,
Speaker 1: I bet investors are going to love this. Better save
Speaker 1: some money, Andy, what's that?
Speaker 2: What's that? Handy?
Speaker 1: What Oh, you're saving money already? How oh shit?
Speaker 2: Oh uh oh.
Speaker 1: A report from Wells Fargo analysts published at the end
Speaker 1: of April, called Data Centers Aws goes on Pause says
Speaker 1: that Amazon has paused a portion of its leasing discussions
Speaker 1: on the co location side, and while it's not clear
Speaker 1: the magnitude of the pause, the positioning is similar to
Speaker 1: what analysts have heard recently from Microsoft that they are
Speaker 1: digesting aggressive recent lease ubdeals, pulling back from a pipeline
Speaker 1: of loys or sqq's. Now, some asshole is going to
Speaker 1: say lwys and sqqs aren't a big deal, But they are.
Speaker 1: They are. Go listen to the Power Cut episodes. Go listen,
Speaker 1: Go back and listen to them right now, Get off
Speaker 1: my how'd you get in my house?
Speaker 2: Anyway?
Speaker 1: Digesting in this case refers to when hyperscalers sit with
Speaker 1: their current capacity for a minute, and Wells Fargo adds
Speaker 1: that these periods typically last six to twelve months, that
Speaker 1: they can be much shorter. It's not obvious how much
Speaker 1: capacity Amazon is walking away from, but they're walking away
Speaker 1: from capacity. It's happening. But what if it wasn't just Amazon.
Speaker 1: Another report from a friend of the podcast read people
Speaker 1: I email, occasionally asking for a PDF, of course, referring
Speaker 1: to analyst td CO and put our report last week that,
Speaker 1: while titled in a way that suggested there wasn't a
Speaker 1: pullback at all, actually said that there was. It was
Speaker 1: called like hyperscaled demand is up.
Speaker 2: Let's take a.
Speaker 1: Look at one damning quote a relative to the hyperscalar
Speaker 1: demand backdrop at PCC, which is a conference hyperscal of
Speaker 1: demand has moderated a bit, driven by the Microsoft pullback
Speaker 1: and to a lesser extent Amazon discussed later, particularly in Europe,
Speaker 1: there has been a broader moderation in the urgency and
Speaker 1: speed with which the hyperscalers are looking to take down capacity,
Speaker 1: and the number of large deals a four hundred megwat
Speaker 1: deals in the market appears to have moderated. In plain English,
Speaker 1: this means demand has come down, there's less urgency to
Speaker 1: build stuff, and the market is also slowing down. Cohen
Speaker 1: also added that it observed a moderation in the exuberance
Speaker 1: around the outlook for hyperscale at demand, which characterized the
Speaker 1: market this time last year. Brother, my brother in Christ,
Speaker 1: isn't this meant to be the next big thing?
Speaker 2: We need?
Speaker 1: More exuberants, not less. We're still a Microsoft appears to
Speaker 1: have pulled back even further, with TD Cohen noting that
Speaker 1: there has been a slow in demand, slow down in demand,
Speaker 1: and that it saw very little third party leasing from
Speaker 1: Microsoft this quarter and most damningly in our boat and
Speaker 1: I'll be can't I really want you to take this?
Speaker 1: Let it ring through you? These deals in totality suggest
Speaker 1: that Microsoft's run rate demand has accelerated materially. For those
Speaker 1: of you wondering, it means that they're not getting any
Speaker 1: fucking revenue demand for generative AI. Well, at least Meta
Speaker 1: an Oracle aren't slowing down right well. TD Cohen also
Speaker 1: reported that it received reverse inquiries from industry participants around
Speaker 1: the potential slow down and demand from Oracle, leading to
Speaker 1: the analyst to ask around and find that there had
Speaker 1: been a near term slow down in decision making, admit
Speaker 1: organizational changes at Oracle. That it adds that this might
Speaker 1: not mean this is changing its needs of the beat
Speaker 1: it which it secures capacity. And if you're wondering what
Speaker 1: else this could mean, you were correct in doing so,
Speaker 1: because slowing down traditionally refers to a change in speed. Yeah,
Speaker 1: even the analysts are kind of like trying to dance
Speaker 1: around this. It's kind of sad. TD Cohen also adds
Speaker 1: that Meta has continued demand, which means that they're buying
Speaker 1: more stuff, albeit with less volume of megawat signings quarter
Speaker 1: over quarter, then adding that Meta's data center activity is
Speaker 1: historically being characterized by short periods of strong activity followed
Speaker 1: by digestion. In essence, Meta is signing less megawats of
Speaker 1: compute and has in the past followed these kind of
Speaker 1: aggressive buildouts with fewer buildouts. It doesn't sound good, does it.
Speaker 1: It doesn't sound like we're cooking and now we're going
Speaker 1: to get to and the whole thing's been kind of defensive.
Speaker 2: I don't care.
Speaker 1: I mean, I've yet to receive an email that meaningfully
Speaker 1: changes my opinion on any of this stuff. But a
Speaker 1: little bit of defensiveness in this. It's not because I
Speaker 1: feel self conscious. It's because I'm tired of hearing the
Speaker 1: same fucking questions. But I'll ask you, if you're a
Speaker 1: cruitter or a a hater, or one of the many
Speaker 1: people who would like to see be punished, put me
Speaker 1: on the cross, set me on fire. It's what you
Speaker 1: would love wouldn't it, But you'd love it if I
Speaker 1: was dead putting that joke aside, I will ask my
Speaker 1: haters a question if I'm wrong. How exactly am I wrong?
Speaker 1: I don't know, man, All of this seems all this
Speaker 1: stuff sure seems like the hyper scalers are reducing their
Speaker 1: capital expenditures at a time when tariffs and economic uncertainty
Speaker 1: are making investors far more critical of revenues. It sure
Speaker 1: seems that nobody outside of open AI is making any
Speaker 1: real revenue on generative AI, and they're certainly not making
Speaker 1: a profit. It also seems at this point it's pretty
Speaker 1: obvious that generative AI isn't going to do much more
Speaker 1: than it does today. If Amazon is only making five
Speaker 1: billion dollars in revenue from the literal only shiny new
Speaker 1: thing it has sold on the world's premiere cloud platform
Speaker 1: at a time when businesses are hungry and desperate to
Speaker 1: integrate AI, then there's little chance this suddenly turns into
Speaker 1: a remarkable revenue driver. Amazon made one hundred and eighty
Speaker 1: seven point seven nine billion dollars in their last quarterly earnings,
Speaker 1: and if only five billion dollars of that is coming
Speaker 1: from AI.
Speaker 2: At the height of the bubble.
Speaker 1: It heavily suggests that they may not actually be that
Speaker 1: much money to make either, because it's too expensive to
Speaker 1: run these services, because well, these services don't have the
Speaker 1: kind of addressable market that AWS generally has. Microsoft has
Speaker 1: reported that it was making a paltry thirteen billion dollars
Speaker 1: a year in annualized revenue, so the equivalent of three
Speaker 1: point twenty five billion dollars a quarter selling GENERATIVEAI services
Speaker 1: and model access. The Information reported that Salesforces Agent Force
Speaker 1: bullshit isn't even going to boast sales growth in twenty
Speaker 1: twenty five, in part because it's pitching it as a
Speaker 1: digital labor that can essentially replace humans with tasks, and
Speaker 1: it turns out that it doesn't do that very well
Speaker 1: at all, cost two dollars a conversation and requires paying
Speaker 1: Salesforce to use its data cloud product. What if anything
Speaker 1: suggests that I'm wrong here? The things have worked out
Speaker 1: in the past with things like the Internet and smartphones,
Speaker 1: and that surely that's going to happen with GENERATIVEAI and
Speaker 1: by extension, open AI. That companies like Uber lost money
Speaker 1: and eventually worked out. And I've actually written a thing
Speaker 1: I'll link to about that. You can get it in
Speaker 1: episode notes. Is it that Open Eye is growing fast
Speaker 1: and that somehow discounts the fact that it burns billions
Speaker 1: of dollars and does not appear to have any part
Speaker 1: of the profitability? Do you think that agents will suddenly
Speaker 1: start working and everything will be fine. It's a fucking joke.
Speaker 1: I'm tired of it. I'm really, I'm just I've tried
Speaker 1: to be like intellectual, I've tried to explain it nicely,
Speaker 1: and I'll probably still continue, but I'm just kind of
Speaker 1: fucking tired of it. I'm not going to stop doing this,
Speaker 1: by the way. If anything, I'm more galvanized by my rage.
Speaker 1: My aura ring is going to claim I did a
Speaker 1: workout these episodes. It's great, I'm burning calories in real time.
Speaker 1: But large language models and their associated businesses, in my opinion,
Speaker 1: are a fifty billion dollar industry masquerading as a trillion
Speaker 1: dollar solution for a tech industry.
Speaker 2: That's lost the fucking plant.
Speaker 1: Silicon Valley is dominated by management consults that no longer
Speaker 1: know what innovation looks like, and they've been tricked by
Speaker 1: Sam Worltman, who's kind of a savvy con artist that
Speaker 1: took advantage of their desperation for growth. Generative AI is
Speaker 1: the perfect nihilistic form of tech, a way for people
Speaker 1: to spend a lot of money on power on cloud
Speaker 1: compute because they don't have anything else to do. Large
Speaker 1: language models are boring, unprofitable, cloud software stretched to the limits,
Speaker 1: both ethically and technologically speaking as a means of kind
Speaker 1: of keeping text collapsing growth eer going, and open AI's
Speaker 1: nonprofit mission has been fattened up to make fois graph
Speaker 1: for SaaS companies to upsell their clients and cloud compute
Speaker 1: companies to sell GPUs at an hourly rate. The rot
Speaker 1: economy has consumed the tech industry. Every American tech firm
Speaker 1: has been corrupted by the growth of or cost mindset,
Speaker 1: and thus they no longer know how to make sustainable
Speaker 1: businesses that solve real problems, largely because the people that
Speaker 1: run them haven't experienced them for decades. As a result,
Speaker 1: none of them were ready for when Sam Moultman tricked
Speaker 1: them into believing he was their savior. Generative AI isn't
Speaker 1: about helping you or me to do things, or even
Speaker 1: about replacing workers. It's about making uskus new monthly subscription
Speaker 1: costs for consumers and enterprises new ways to convince people
Speaker 1: to pay more for the things they already have used
Speaker 1: in slightly different ways that oftentimes end up being worse.
Speaker 1: Only an industry out of options would choose this bubble,
Speaker 1: and the punishment for them doing so will be grim.
Speaker 1: I don't know if you think I'm right or not.
Speaker 1: I don't know if you think I'm insane for the
Speaker 1: way I communicate about this industry. Even if you think
Speaker 1: I am, think long and hard about why it is
Speaker 1: you disagree with me, and the consequences of me being
Speaker 1: wrong or right. There's nothing else left after generative AI.
Speaker 1: There are no hypergrowth markets left in tech SaaS Companies
Speaker 1: are out of things to upsell. Google, Microsoft, Amazon, Andmeta
Speaker 1: do not have any other ways to continue your own growth,
Speaker 1: And when the market works that out, there will be
Speaker 1: hell to pay. Hell that will reverberate through the valuations
Speaker 1: of at the very least every public software company and
Speaker 1: many of the hardware wants to I have no idea
Speaker 1: how this ends, and I can't see how any of
Speaker 1: it works out well for anyone. In any case, I'll
Speaker 1: be here to tell you whether it does or not.
Speaker 1: And I must say I love doing the show so much,
Speaker 1: and thank you for humoring me when I experience brain
Speaker 1: madness every week.
Speaker 2: I'm not gonna stop.
Speaker 1: I really enjoyed doing this, and the emails I got
Speaker 1: around the web were genuinely wonderful, the people on the reddit,
Speaker 1: people over email messages, just you're all so wonderful.
Speaker 2: I'm gonna keep doing this. I mean, I'm.
Speaker 1: Contractually agreed to as well, but I love doing this
Speaker 1: and I genuinely feel very.
Speaker 2: Lucky to be able to thank you for listening to
Speaker 2: Better Offline.
Speaker 1: The editor and composer of the Better Offline theme song
Speaker 1: is Matasowski. You can check out more of his music
Speaker 1: and audio projects at Matasowski dot com, M A T
Speaker 1: T O S O W s ki dot com. You
Speaker 1: can email me at easy at Better offline dot com,
Speaker 1: or visit Better offline dot com to find more podcast
Speaker 1: links and of course, my newsletter. I also really recommend
Speaker 1: you go to chat dot Where's youreed dot at to
Speaker 1: visit the discord, and go to our slash Better Offline
Speaker 1: to check out our reddit. Thank you so much for listening.
Speaker 2: Better Offline is a production of Cool Zone Media.
Speaker 1: For more from Cool Zone Media, visit our website coolzonemedia
Speaker 1: dot com, or check us out on the iHeartRadio app,
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