Zone Media. Hello, and welcome to this week's Better Offline Monologue. I'm your host ed Ze Trunk, and I am going a little insane. You've likely seen the news that open ai is buying and that's in air quotes. By the way, famed Apple designer Jony I've startup io. You may think that I'm about to explain to you what this company does other than build devices, or why it was acquired,
and I cannot tell you. Oh and by the way, the air quotes of are buying it because they bought the entire company in six point five billion dollars of open Ai stock stock in a company that is unprofitable. These aren't even real stock units. I'll get to that later. By the way, Joni, I've he worked Apple. He worked on designing products at the iPod, the iMac and iPhone, worked closely with Steve Jobs, dined out on that for
many years. He left Apple in twenty nineteen. Now, this announcement came in the form of a nine minute long video that does not explain anything about the company. And there's been some reporting, if you could call it them. Now, let's quote the Wall Street Journal's Burberjean, who I generally really like, but there is a piss take happening here. Ortmand and I have offered a few hints at the
secret project they've been working on. The product will be capable of being aware of the user's surroundings in life, will be unobtrusive, able to rest in one's pocket and on one's desk, and will be a third core device a person would put on a desk after a MacBook Pro and an iPhone. Now that wood and will those are load bearing, by the way, I continue, though the journal earlier reported that the device won't be a phone and the ivan Aortmand's intent is to help ween users
from screens. Aortmand said that the device isn't a pair of glasses and that I've have been skeptical about building something to wear on the body. Ortmand and I have offered details about how the collaboration grew over the past few years. Eighteen months ago, open AIE vice president of product Peter Wellender began working with ives team. The two sides became excited about a specific device last four What
device is that? Who the fuck knows? Printed baby. There's also a thing in this art about this effectively tripling or caadrupling the value of open Ai. It's complete bullshit. In fact, all of this sounds like complete bollocks to me. Why are you announcing this now? What is it you're buying?
Who knows? The journal also claims that Aortmand believes that they will ship one hundred million of these theoretical devices by late twenty twenty six, the magical year when everything from Agi to powerful agents are meant to work, the
bullshit year. I can't wait anyway. Jony I've also gets to keep his independent design studio love From, which has already been working with open Ai, and will, according to Bloomberg, takeover design for all of open Ai, including its software, and apparently Joni and Sammy initially met up to improve the interface of chat GPT. When did that fucking happen?
Bloomberg also reports that Altman and I have yet to work out a user interface for the new hardware product, which is a big deal considering it's meant to be out in like a year and a half. What are we doing here? Why? I understand the objective reporting requires you to just say to things that, but I feel like I feel like at some point you have to just say all of this is theoretical. It's complete wank, and all signs point to this venture being a load
of bollocks. It's a smoke screen, a desperate moved by open Ai, a desperate company. All stock deals are quite common in large public corporations that are quite liquid, but they have stock that has value that they can then be solved right, But open Ai is neither public nor a corporation. It's the for profit arm of a nonprofit desperate to convert it's for profit arm into a public benefit corporation. They don't have stock, they don't have stock.
They have these goddamn profit participation units. It's it's so silly. It's all very silly. And Jony Ivan is team of fifty five people. They're working on a very real thing, and they were required with six point five billion dollars of very real paper profit participation units and a company that burns billions of dollars and has never turned any profit. To be clear, the company i Owe is somehow different
to Love from his design firm. Fifty five people work at IO I think like that many work at Love from really not clear what they work on Io, though no one seems to know. No one seems to have a single detail other than the fact that they can't tell you what they're working on, which sounds a lot like they have no idea. Now. You may also wonder what Joni I has been up to since he left
Apple in twenty nineteen. The answer is extremely vague. In twenty twenty, he founded love From in twenty nineteen, the design firm, and in twenty twenty they signed a non specific multi year partnership to design the future of Airbnb. Apple has apparently kept working with love From in some way that I can really not find any information about.
Love From also worked on some sort of seal for King Charles of England to give away to and I quote recognize private sector companies that are leading the way and creating sustainable markets. They also designed an entirely new font for it, which does not matter in the slightest to anyone, but led to some reporters writing entire stories
about it because John fucking Ive was involved. In twenty twenty three, I've in his team redesigned Linn Sondeck's LP twelve turntable in and I quote a respectful and gentle way, and in twenty twenty four, he teamed up with fashion brand Montclair to make an out to wear a lion, and his work appears to involve some kind of magnetic button that can click together different pieces, which is kind of cool. I'd have loved to actually read about that, but that you can't. It's just people just put what
he says in the thing. They don't go and find the clothes I'd have actually been interested in, and that can't find shit about it because no one actually holds any of these people accountable. They just go, oh, it's Jony. I've all listened to whatever shit he's anyway. I'm very sorry. Okay, I'm very sorry, but reading about this really frustrated me. And ives also working with Ferrari apparently on a new electric vehicle. Can we see it? Do we know when
it will be released? What? Kid? What's the range? What will look like? No? Done for you? None for you? You silly little you, silly little freak. How dare you ask Jonny I've to tell you what he's doing? So in summery Since twenty nineteen, Jony I've has redesigned Airbnb in some way, made a new font, made a new
system for putting on clothing. Made a medal for the King of England to give companies that recycle, and made some nonspecific contribution to creating an electric Ferrari while also designing a non specific device that open Ai intends to ship hundreds of millions of people. And to be clear, like they are designing a product that another company run
by Jony i've Io will manufacture. I've has not, from what I can tell, worked on the consumer electronics product since he left Apple, And let's be really clear, Apple has not really been cooking since Steve Jobs died, and their coolest shit in recent history came after I've left, specifically the new generation of M series laptops, Imax and the like, but in the middle of twenty twenty four all of his designers left the company, And really, I like the Imax and MacBook Air is way more now and
I know whatever like Hindsight's twenty twenty Like I'm sure like the original MacBook Air was kind of cool, but it's like, how much did j Only I've actually work on them, And it's actually really difficult to find out what it is that Jony I've did it app or other than be associated with things what you can see, however, is how good Jony ive is deals getting people to pay to be associated with Jony. I've the guy who worked with Steve Jobs on big produgs that people like.
Has he built anything people like recently? Who knows? But because people are lacking an object permanence, they believe i'ves still got it, even if it doesn't really mean anything.
In any case, this deal is ridiculous. A mere week ago, Sam Mortman announced that Instacart's CEO Fijisimo, who was already on the open Ai board, would become the CEO of Applications open Ai and is and I quote the Wall Street Journal, charged with helping that the chat GPT maker become a profitable global business while remaking an internal culture that has been mired and executive in fighting in high
profile departures. Yet as part of the acquisition, Jony if will take over all design and open Ai, along with his team of fifty five people from io. I think love from will be as well. It's just this whole deal is such a fucking mess. And see when she joins in the summer, will now oversee a company that has fundamentally changed since she took the position, and be left to deal with the fallout because her whole fucking job will be to take responsibility for the mess that
Sam Altman's made, and ma'am, what a mess. Open Ai burned five billion dollars in twenty twenty four and is on course to burn over ten billion dollars this year. Acquiring another company in an all stock deal at this stage isn't a victory. It's a sign that something is
financially rotten at America's dampest ai startup. As I've discussed on previous episodes, open Ai is maybe fifteen billion dollars of liquidity at any given time, and has promised nineteen billion dollars to complete the Stargate data centers, as well as allegedly offering three billion dollars, though it's not obvious if this will be in cash or stock to by
the coding startup windsurf. And when I say, by the way, they have fifteen billion dollars of liquidity, I mean that at max It's it could be way less, because that is just the combination that they're funding and in and out revenue, and also putting aside the fact that neither I own nor open Ai have actually settled on a product.
Hardware is hard, research and development is expensive. Apple spends tens of billions of dollars a year on it, and so it's manufacturing, especially if this device is meant to be smaller than the smartphone, and especially in the era of tariffs, unless they assume that those will be gone
by them, which they won't. Worse still, the margins on hardware are much lower, about ten to twenty percent, and there isn't a chance in hell that using this device won't require you to subscribe to chat GPT, which means users will have to pay the subscription fee on top of this theoretical device and also be pinging chat GPT servers, which are expensive and unsustainable and up unprofitable to run. Even I swear I should be able to say unprofitable
by now I say it enough fucking times. I should also add that if there's one thing that Sam Mortman has proven, it's that he's fundamentally bad at product Well. Chat GPT might be popular, it's hard to say what it really does, which you can get away with when your free software is hoped by every media out there in the world, but can't with a device that will
likely cost hundreds of dollars. Open Eye has also proven that it's not very good at making the kind of seamless and effortless product that companies like Apple are known for. And let's be real, with what money are they building this crap? You can't pay factories in stock In any case, this is a desperate move made by open Ai to try and bolster the valuation of a company that's lost
the plot if they ever found it. If anything, this device suggests a fundamental lack in chat GPT as a product, and while boosters may frame this as the next generation of open Ai, it feels more like a smokescreen to convince people that this company isn't washed. Members of the media treat this company with suspicion and demand that they actually show you something before claiming this is the biggest, most hugest move in Silicon Valley history. Don't embarrass yourself by humoring these twerps.