This Week In AI: OpenAI asks for Bailout / $1B Google x Apple / The Rise of TPUs

Josh: Everyone's asking, are we in a bubble? When is the bubble going to pop? Josh: How big can AI get before it all comes crumbling down? Josh: And yesterday, the OpenAI CFO may have delivered some hints as to how and why this happens. Josh: She used the word, and I'm ashamed to say it out loud, this feels like a bad Josh: word, she used the word backstop.

Josh: And if you're familiar with the word backstop, it's what a lot of banks were Josh: experiencing in 2008, where the government kind of sits there to fund any sort Josh: of negative repercussions that happen as a result of this build out.

Josh: And then after seeing this interview, it kind of begs the question, are these circular Josh: economics we've been seeing among NVIDIA, Microsoft, AMD, Josh: is it really a capitalist efficient thing or Josh: is this is are we really starting to see early signs of a Josh: bubble starting to burst so we're going to get into all that we are also talking Josh: about a deal that was just confirmed with apple where

Josh: they are paying google a tremendous amount of money to actually offload their Josh: ai compute to build a new model so we have an official deal there we have a Josh: new hardware device in the world of ai and we have just a bunch of cool space Josh: related stuff so you just let's get into the big news of the day which is open Josh: ai asking for a backstop that sounds scary walking That's exactly what happened. Josh: Because I feel like some things get lost in translation here.

Josh: What exactly did they say and what does it mean for us? Ejaaz: Yeah. So let me set some context. Sarah Fryer is the current CFO at OpenAI. Ejaaz: And she did this interview with the Wall Street Journal, where obviously they Ejaaz: get into the economics of OpenAI's revenue model and how they're going to pay Ejaaz: for all these trillions of dollars worth of compute. And she had a few choice words.

Ejaaz: The most choicest was around this backstop that you're talking about, Ejaaz: josh um let me let me kind of paint it out for you so Ejaaz: open ai has currently signed 1.4 trillion Ejaaz: dollars worth of compute deals this is open ai agreeing to pay compute providers Ejaaz: or chip providers or gpu providers like nvidia amd hundreds of billions of dollars Ejaaz: in order to buy their gpu so that they can train the next best ai model agi Ejaaz: there's one massive problem,

Ejaaz: they don't have enough cash. They don't have enough money. In fact, Ejaaz: they are currently running at a loss. Ejaaz: There's no plan or near-term kind of goal that they can achieve to pay for this stuff. Ejaaz: So then the question becomes, what happens if they can't pay for this stuff? Ejaaz: What happens if Chachupiti stops becoming profitable in the future as they're Ejaaz: projected? What happens then?

Ejaaz: And Sarah had one simple answer to that, which was the government can bail us out. Ejaaz: And so specifically what she described was an ecosystem where the government Ejaaz: basically pays OpenAI and gives them the money that they need to buy these GPUs Ejaaz: if they happen to default, Ejaaz: if they happen to not have enough money to pay for these things.

Ejaaz: This, in turn, will give the private equity firms and the banks that are agreeing Ejaaz: to loan OpenAI money in the first place to buy these GPUs, the sanctity and peace of mind that Ejaaz: ah, I'm going to be okay. I'm going to get my money back if OpenAI doesn't deliver through. Ejaaz: The craziest part about this, Josh, is I feel like I've just been ricocheted Ejaaz: across the room for two weeks straight.

Ejaaz: Because Sam Altman went from operating a non-profit to operating a non-profit Ejaaz: that is kind of a private company, where they kind of turned a part of their Ejaaz: company into a for-profit, so they're kind of like lying about it. Ejaaz: Then kind of breaking rumors around doing a $1 trillion IPO. Ejaaz: What is your immediate gut reaction to this? Is it lies? Is it real? What's happening?

Josh: I just like, I keep repeating the words too big to fail in my head, Josh: too big to fail, too big to fail. Josh: It seems like that's what I want to get to. And I'm like, I'm of two minds of Josh: this. One is that, well, AI is a matter of national security. Josh: It is very important to get this right and to move as fast as possible. Josh: If that requires some government help, that probably make sense to an extent.

Josh: And then the second thing is, well, if you are asking for government help, Josh: that's probably not a good thing in this instance. Josh: And government help really means taxpayer help. Like we fund this stuff. Josh: And to pay a backstop for Sam Waltman when we don't even get public stock exposure Josh: because it's still privately held. Josh: And another thing is she admitted here that they actually have little to no Josh: interest in IPO-ing anytime soon.

Josh: So now there's no real trajectory for the public being able to own any upside Josh: and only participate in the downside. Josh: After they've been signaling that they are not for profit since inception, Josh: it's just like these really horrifically mixed signals with no clear intention. Ejaaz: It's exhausting. Josh: Um, it's a lot. Yeah. I guess the, the way that you described it being like Josh: ricocheted across a room, it like, it kind of feels that way.

Josh: And it's a little disturbing, but I wonder if this is kind of at the core of Josh: what we've been seeing with this circular economic thing happening where opening, Josh: I sent to deal with Google with Microsoft. Josh: It's all very, it feels very incestual, but maybe it's because it really is Josh: a matter of national security and the government's just kind of allowing them Josh: to do a lot of things that wouldn't traditionally have been acceptable.

Josh: But it looks like we have some qualifications, right? Yeah, I mean, Josh: maybe we should take this as a grain of salt. Ejaaz: Yeah, so a grain of salt being that Sarah Fry, the same CFO that kind of made Ejaaz: these claims, walked back her claims in the interview, specifying that OpenAI Ejaaz: is not seeking a government backstop for our infrastructure commitments.

Ejaaz: And she goes on to give this official statement about, you know, Ejaaz: OpenAI, you know, being profitable and going to be able to pay their way through Ejaaz: this all. The issue that I have with this, Josh, is I don't think it's an honest statement. Ejaaz: Why don't I think it's an honest statement? Because her boss.

Ejaaz: CEO Sam Altman, has claimed so many times in interviews and his own blog posts Ejaaz: that he's written that he has no issue asking the government for a bailout, for a backstop, Ejaaz: to help him kind of like cover his deficits and his debts if he's not able to pay for it.

Ejaaz: I have an excerpt from an interview pulled up here where he goes, Ejaaz: at some level, when something gets sufficiently huge, whether or not they are Ejaaz: on paper, the federal government is kind of an insurer of last resort. Ejaaz: As we've seen in various financial crises and insurance companies screwing things Ejaaz: up, they basically cover us.

Ejaaz: And so this is again, and this is the second time we've spoken about this this Ejaaz: week, about Sam Altman's character inconsistencies, where he says one thing and means another. Ejaaz: We did an episode earlier this week where we covered a 52-page deposition, Ejaaz: where his co-founder and former chief science officer, Ilya Sutskeva, Ejaaz: basically says that Sam was like incessantly lying and that's what led to his Ejaaz: ousting, his firing in November, 2023.

Ejaaz: Fast forward to present day, it seems like Sam's still at it, Josh. Josh: There's a lot of character inconsistency. And what's certainly not helping the Josh: case is all of his co-founders from day one to up until a few years ago, Josh: they're all testifying against him. Elon strongly disagrees with Sam.

Josh: Ilya and Mira, they strongly distrust Sam. So this is not, this is poor signal Josh: coming from the public perception, but also from people who know him personally, Josh: which is not really making a good case. Josh: So we'll see. We'll continue to monitor the situation. That's kind of where Josh: we're at with OpenAI News. Ejaaz: I just want to... Sorry, I think we need to just... Ejaaz: Look at the other side very quickly, Josh, and I'm curious of your take here

Ejaaz: specifically. Yeah, let's get into the bubble. Ejaaz: So the take from this is, oh my God, we're doing circular investing.

Ejaaz: This is a massive bubble. It's so obviously going to pop. Ejaaz: They're asking for a literal government bailout before the crash actually happens. Ejaaz: We've seen this with COVID. We've seen this in 2008. What are we doing here? Ejaaz: And the counter argument to that is, if you look at every other hyperscaler, Ejaaz: maybe not put open AI side for a second.

Ejaaz: If you look at Meta, if you look at Google, if you look at Microsoft, Ejaaz: although they're spending hundreds of billions of dollars and committing to Ejaaz: do that over the next couple of years, they still haven't made a crazy enough Ejaaz: dent where you should be getting worried on their profit and loss sheet. Ejaaz: Remember, these companies all have other businesses that are massively profitable Ejaaz: and they're making tons and tons of money.

Ejaaz: The money that they're investing in compute right now, technically, Ejaaz: if you weigh it up against that, isn't too crazy. Ejaaz: It is crazy. It is a bigger dent that we've seen them spend on anything else Ejaaz: over the last decade, but it's still not overcompensating for what they're earning right now. Ejaaz: And that's the only argument against it, which is like, hey, Ejaaz: we're seeing demand with our enterprise customers.

Ejaaz: We're seeing demand with our retail customers. And so it makes sense for us Ejaaz: to invest in this compute. I don't know what you think about this.

Josh: Yeah. Like in the case that AI scaling laws stop tomorrow, Josh: where suddenly we figure out oh oh no like this this isn't actually Josh: going to work spending more money the market gets harmed very Josh: badly but it's not catastrophic it is not a recession level bubble um in the Josh: case that this continues to prolong companies like open ai that don't have a Josh: cap table like companies like microsoft and google who exist outside of ai and

Josh: are now using their balance sheet to pay this off i think that's probably when Josh: you start to see problems so Josh: I kind of agree with you in the sense that we're still good. Josh: Like things are still good. I'm not particularly concerned of a short-term bubble happening here. Ejaaz: I want to emphasize that like OpenAI isn't just kind of sitting on their hands Ejaaz: and not coming up with other ways to turn on revenue.

Ejaaz: One other thing that she revealed in this interview, Josh, was I think it's Ejaaz: number six on the screen here. Ejaaz: Additionally, they will do creative commercial deals.

Ejaaz: What they mean by that is if there's a company, say a pharmaceutical company Ejaaz: that uses ChatGPT and finds a cure for cancer using ChatGPT, Ejaaz: they're signing a deal with that pharmaceutical company such that they get a Ejaaz: percentage of profits from that drug that they create using their AI intelligence Ejaaz: that will occur for God knows how long after that.

Ejaaz: And so taking a percentage of profit or revenue share from people who are using Ejaaz: it as a product to create other products, or if you're a company that sells products via ChatGPT, Ejaaz: Etsy is a common example that is live on chat gpt right now um they get a percentage Ejaaz: of profits um and then there's the obvious one which is chat gpt is going to Ejaaz: open air is just going to turn on ads and when they turn on ads who knows how

Ejaaz: much money that's going to bring in so they are making efforts towards i don't Ejaaz: want this to be like a hey like Ejaaz: bad open ai thing but it's just unlikely given the amount that they've committed to spend.

Josh: That first point you mentioned around like health breakthroughs Josh: through chat gpt getting a percentage that sounds like a train wreck waiting Josh: to happen that's a very messy monetization structure so a lot still to be evaluated Josh: but you just i want to talk about apple now we had an episode yesterday with Josh: apple um and google and how they kind of relate to each other particularly around

Josh: a deal in which apple kind of sucks at ai they're really just not good at it and they need help. Josh: And here is Gemini coming to the rescue. We officially have a deal that is unofficially Josh: official, and it looks like they're going to be paying $1 billion a year, Josh: Apple, to Google in order to get a 1.2 trillion parameter Google Gemini model custom for Apple. Josh: This is a really big deal. Apple is struggling.

Josh: Apple has not done anything in the world of AI. And suddenly they have this really powerful model. Josh: So this seems like it's going to be very important for the case of the bull case for apple at Ejaaz: Least so i'm happy about this uh for a few reasons normally i'd be laughing Ejaaz: right i'd be like haha this obviously apple's failed they're. Ejaaz: In Apple's sense, it's kind of a smart move. Think about it, right?

Ejaaz: They haven't spent hundreds of billions of dollars trying to invest in GPUs Ejaaz: and train a complex AI model. Ejaaz: They haven't taken on any of that risk. They just tap Google on the shoulder, Ejaaz: who's done all the hard work and say, Ejaaz: yo, are you down if I pay you a billion dollars per year and you make our own Ejaaz: custom version of an Apple AI model that I can plug into Siri and will run on Ejaaz: our private cloud instance?

Ejaaz: So, you know, Google won't necessarily get access to all of it, Ejaaz: but they just get the payment every year. Ejaaz: That sounds like a pretty sweet deal. The other thing I like about this is this Ejaaz: isn't just any kind of like model. Ejaaz: It's a 1.2 trillion parameter model. Ejaaz: That is like up there with like one of the biggest models that would be out there.

Ejaaz: And to combine that with the kind of personalization that I'm presuming Apple Ejaaz: is going to integrate into Siri and in the consumer experience with using text Ejaaz: and other apps on the phone, that's pretty attractive to me.

Ejaaz: The other thing that I thought was super cool on the Google side here, Josh, Ejaaz: is to be able to run a 1.2 trillion parameter model at an economically viable Ejaaz: cost, aka they're making money from that, just goes to show that there's some Ejaaz: pretty crazy engineering that Google has achieved. Ejaaz: This indirectly tells me that they have absolutely nailed their chip design Ejaaz: and their TPU architecture to be able to pull this off. Just super cool.

Josh: There's a lot more info if you Josh: want to find out about Apple on our episode that we released yesterday. Josh: And also I am publishing an essay in the newsletter today when you're watching Josh: this all about the economics and why this makes sense for Apple to do. Josh: So if you're interested in hearing more of these takes, like more thoughtful Josh: takes, check it out on the newsletter. Josh: I'm like very proud of this article. I think it'll do really well.

Josh: It's just really fascinating to see the Apple strategy kind of accidentally step into this Josh: amazing situation for them um where it was Josh: certainly not by design but they somehow managed to put themselves in a Josh: really good place but on the topic of google i also want to talk about the new Josh: hardware that they just announced which is their new ironwood tpus now again Josh: in yesterday's episode this is a good one we talked about what a tpu was and

Josh: how it relates to a gpu and today in some new news we got new tpus ej so can Josh: you walk us through what these ironwoods are what they do why they're impressive so Ejaaz: Ironwood is google's latest tpu tpu stands for tensor processing unit. Ejaaz: All you need to know is that the TPU of Google is the equivalent of the GPU Ejaaz: from NVIDIA, but with some additional perks. Ejaaz: It is more specialized and custom fit towards Google software and AppSuite, right?

Ejaaz: It's the thing that has powered and trained all their models. Ejaaz: They've never actually relied on NVIDIA at all to kind of train and inference Ejaaz: a bunch of their models. They've been kind of like this lone entity.

Ejaaz: And why this is so cool, and we explained this on yesterday's episode, Ejaaz: which you should check out, Ejaaz: is Google's been super independent and they've been able to make several breakthroughs, Ejaaz: which have allowed them to train the same type of models that OpenAI and Microsoft produce, Ejaaz: but much cheaper or cost efficient and can scale massively with a greater number Ejaaz: of models that they build.

Ejaaz: And now they've released this new model called Ironwood, which is basically Ejaaz: the next generation of their TPU. Ejaaz: It is four times faster than the prior version, and it can basically clamp together Ejaaz: as one singular stack in a much more feasible way, which means that training Ejaaz: larger models at scale is going to be much easier.

Ejaaz: But the biggest news about this for me, Josh, is they're going to start selling Ejaaz: these TPUs and making it more accessible for anyone else to buy their TPUs and Ejaaz: train or influence their own AI models. Ejaaz: Why this is such big news is this means they're formally stepping into the ring to compete with NVIDIA. Ejaaz: Now, don't get me wrong. They're not doing this at the scale that NVIDIA is currently doing it.

Ejaaz: But currently, there has been no feasible challenger to NVIDIA. Ejaaz: And now you have Google entering the ring, which has a lot of distribution and technical expertise. Ejaaz: It's notable and probably a hint that the Google market cap should be much, much higher. Josh: Yeah, I wouldn't say no one is competing with NVIDIA. There are AMD chips.

Josh: China's creating their own alternatives. So I'd say it's at that level where Josh: it's trying to compete, but there is going to be a very steep mountain in order Josh: to get there, to become a real NVIDIA competitor.

Josh: In other news, we got a new AI hardware device this week, and it goes by the Josh: name of Sandbar. And it comes in the form factor of a ring. Josh: Now, I have an Oura ring on it. I love my Oura ring. It's a great non-intrusive sleep tracker. Josh: This is a totally new take on a ring because it gets into these things that we call edge nodes.

Josh: And when you deal with ai systems there there are Josh: sensors that can then send requests back to the Josh: actual ai system and this is a new sensor so what Josh: we're seeing on screen is a promo video of this person who has a ring you press Josh: a button on the ring and you can speak into a microphone now this microphone Josh: acts as an interface between yourself and the ai system and you could ask it

Josh: to do things like remind you to query questions against it to record conversations and it's this really Josh: unique and I guess somewhat novel form factor in the world of AI hardware devices. Josh: This was interesting to me, Ejaz, at least because Josh: I'm so fascinated about what OpenAI is going to make next year with Johnny Ive in terms of AI hardware. Josh: And this is an interesting experiment to kind of see how the ring form factor would work.

Josh: So the way this kind of exists is it's a microphone that has passive audio back Josh: to your earbuds, or I assume back to your phone. Josh: And it's this really fun and somewhat intuitive way of using AI without AI getting in the way.

Josh: So I think a lot of the things that we're going to start to see in this Josh: removal of the smartphone is this the suite of Josh: ambient devices where you can just kind of engage with ai wherever you Josh: are at any time and a ring is a really neat form factor for Josh: this because it's it doesn't really get in the way it's just kind of Josh: always there if you want to engage with it you summon it if you don't you don't

Josh: even think about it and i think this is this is an interesting experiment and Josh: it's something i'd kind of want to try this not that i think it's a successful Josh: product but i think it's an it's Josh: an interesting take on what the future ai devices could look like yeah Ejaaz: Well where my mind immediately leaps when i Ejaaz: i look at this is um her holding up Ejaaz: her hand to speak into the ring it either looks like

Ejaaz: she's about to cough or like you know in the movies where Ejaaz: the the bodyguards are like touching their ear when they need to speak Ejaaz: into the secret service it kind Ejaaz: of seems like something like that so habitually i'm kind of curious as to how Ejaaz: this kind of integrates into society but i agree with you i think like the ring Ejaaz: is super subtle and kind of non-obtrusive and it makes it super convenient to

Ejaaz: kind of engage with this technology without needing to stare at another screen Ejaaz: and whilst maintaining the ability to kind of interact with real life. Josh: Yeah, this led me down a rabbit hole because we were on the topic of Apple and Josh: it really, I'd love for Apple to start doing things like this. Josh: Like for example, Apple has a hundred billion dollars in cash. They go acquire Aura.

Josh: Now they get the custom Gemini model from Google. Suddenly they have AI. They ship this Josh: this ai ring that is compatible with these new gemini models they ship a new Josh: set of airpods that have visual sensors on them so you could collect data from Josh: the outside world and you start to get this suite of devices that isn't an iphone Josh: but is increasingly capable and more powerful and approaching what we can do

Josh: with an iphone so i hope this is a trend that we see where the next Josh: iphone level device isn't a device it's a suite of devices maybe the ring is Josh: one of them maybe it's not but it's an interesting experiment to see what it Josh: could look like if that became the case I Ejaaz: Want to talk about the dark horse of the AI race, which is Anthropic.

Ejaaz: Now, I'm going to hold my hands up here, Josh. I have given Anthropic a lot Ejaaz: of flack, and I've kind of called them the narc AI model. Ejaaz: They follow the rules, they go to the government, they run to the government Ejaaz: and say, hey, can you give us this deal or whatever? Ejaaz: And I've kind of looked down on Claude since they kind of maintained their parity Ejaaz: at the coding agent level. So I was kind of like, whatever, Why would I use Claude?

Ejaaz: Turns out I was very wrong. So the information leaked a report on projected Ejaaz: revenue for Anthropic, and it basically puts them at the same level as OpenAI, Ejaaz: in some cases, better, Josh. Ejaaz: So the major takeaway from this is they're projecting $70 billion worth of revenue Ejaaz: by 2028 and a $400 billion valuation. Ejaaz: Bear in mind that OpenAI is currently valued at, I think, $500 billion.

Ejaaz: So to make that leap from where they are currently, which I think is $200 billion, is a crazy jump. Ejaaz: But number two, this would assume they then become profitable way earlier than OpenAI. Ejaaz: OpenAI at the same time, 2028, will be making technically more money than Anthropic, Ejaaz: but won't be profitable. Ejaaz: And so the immediate question that I asked myself was, well, Ejaaz: how are they planning to do this?

Ejaaz: So far, they're losing on the retail sales. So Like, do they have a Hail Mary? Ejaaz: And the answer I connected to the dots, Josh, comes right here. Ejaaz: In the enterprise AI market share, where Anthropic has sneakily surpassed OpenAI. Ejaaz: They currently command, I think this chart is a little outdated, Ejaaz: but they currently command around 25% of the enterprise API share.

Ejaaz: And why this is super important is, although there may be fewer enterprise customers Ejaaz: in terms of numbers, like so, you know, OpenAI has 800 million weekly active users. Ejaaz: Anthropic might have, I don't know, a couple hundred thousand enterprise users. Ejaaz: Each enterprise user pays way, way, way more than the average retail user. Ejaaz: And so it's just something that I didn't see, Josh. Ejaaz: They're like engaging with a lot of enterprises behind the scenes.

Ejaaz: They're signing these multi-billion dollar contracts and they're actually like Ejaaz: translating these contracts into useful products that these businesses are using Ejaaz: behind the scenes. How we prove that, I don't know. Ejaaz: Maybe it's like the economic GDP over time from a bunch of these different companies Ejaaz: that they've signed deals, but I thought this was cool to point out. Josh: Yeah, this to me intuitively makes sense. It's like when you think of coding,

Josh: you think of Claude. And I think that's kind of the universal truth amongst corporations. Josh: And when you want a bot to write code for you, you are using Claude. Josh: And if you're pinging an API that is writing code for you, odds are you're using Claude.

Josh: So while the retail general public facing sentiment isn't that optimistic around Claude and Anthropic, Josh: because it's just not as useful as ChatShapute or Gemini, The reality is that Josh: if you're writing code and if you are a company that wants a model that writes Josh: fantastic code, you are using Claude and Anthropic. Josh: And Anthropic is just collecting a lot of the upside without a lot of the public

Josh: facing noise because those are just private entities. They're just swiping their Josh: credit cards and they're getting all their tokens and they're just happy and they're on their way. Josh: So, yeah, I mean, I'm happy for Anthropic. Josh: I hope this is durable. I like the fact that we're starting to see each of these Josh: companies kind of slot themselves into a portion of the market. Josh: So I like that Anthropic is just working on code. I think that's great.

Josh: Don't try to be the best at everything. Try to make the best coding model and Josh: look how much money you could print from it. This is a positive sum game. Josh: The pie is continuing to grow so quickly. Josh: So if you could just own a small corner of it, like Anthropic is doing, Josh: all the power to them. Keep it going.

Josh: Someone who's not faring as well as Anthropic is our good friends over at Meta and Mr. Zuckerberg. Josh: They got absolutely crushed this week after earnings for a series of reasons. Josh: This doesn't really come as a shock. I think we've been pretty bearish on Meta as a whole. Josh: After that whole glasses debacle, I became increasingly bearish on Meta as a Josh: company and their ability to execute in this world of AI.

Josh: But Ejaz, do you have any takes on what happened after the Meta earnings report? Ejaaz: I do. So we put out an episode, I think two weeks ago, on the Meta bull case. Ejaaz: And so the question a lot of you might have is like, you know, Ejaaz: do you still maintain some of that? Ejaaz: The short answer is yes, but over a longer time period. Ejaaz: Like here's the facts. So earnings came out for Meta last week and it wasn't Ejaaz: as great as they'd hoped for one particular reason.

Ejaaz: Their spend on AI was ludicrous for the quarter. Josh: The company spending tens of billions on employees is overspending. Josh: I would have never guessed. Ejaaz: Exactly. So they had spent billions and billions of dollars, Ejaaz: in some cases, in crazy ways, just to hire a couple of people, Ejaaz: but also to pay for CapEx investments for their Hyperion data center, Ejaaz: to invest in different apps being built, to fire a bunch of people,

Ejaaz: just ludicrous amounts being spent. And I think that... Ejaaz: Meta shareholders had a bit of PTSD from the Metaverse days in 2022, Ejaaz: where they renamed their entire company from Facebook to Meta based on this Ejaaz: Metaverse theory and ended up not panning out, right? Ejaaz: NFTs weren't a thing. And so they have a bit of PTSD where they're seeing Zuck Ejaaz: spending all this money, but no real ROI.

Ejaaz: One clear example is they launched an AI assistant and no one really uses it. Ejaaz: No one's really on Facebook and it's not really integrated well into their existing Ejaaz: products. People just use ChatGPT. Ejaaz: They then launched a Sora competitor called the MetaVibes app. Ejaaz: No one uses that either. Do you remember that, right? Ejaaz: And then they launched, they pioneered, they said, listen, we're going to stop

Ejaaz: copying people. We're going to do our own thing. And they launched their own Ejaaz: hardware device, which is the AI glasses. Ejaaz: The reception and feedback from their diehard fans was the worst they've ever Ejaaz: heard it. They hated the entire experience. Ejaaz: They think it is a lesser product than anything else on the market. Ejaaz: So for all of these reasons and much more. Ejaaz: People just don't have faith in Zuck's ability to spend and deliver on this.

Ejaaz: And it's reflecting in the share price. Ejaaz: They lost $250 billion in 24 hours, Josh, on market over. Ejaaz: Just completely insane, down 15%. So now going on to the bull case, Ejaaz: I do think they picked themselves out. Ejaaz: I actually think Meta is probably like a really good buy at this point. Ejaaz: And for one solid reason, which is I don't think Zuck wants to lose this race. Ejaaz: And he's willing to figure any and all out to get himself to a point.

Ejaaz: Is he able to produce like a bunch of really cool apps that leverage kind of Ejaaz: like the distribution that he has using AI, like Google has, Ejaaz: like OpenAI has? I don't know. TBD. Ejaaz: But yeah, Josh, do you have any thoughts? Josh: There's this interesting phenomenon happening where Josh: I feel absolutely zero inclination to use any of Meta's products. Josh: And that doesn't exist with any other company. Josh: Like I've experimented with pretty much everything.

Josh: There is not a single part of any of Meta's AI product stack that I'm remotely interested in. Josh: In fact, the only touch point I have with Meta is Instagram because Facebook Josh: is such a disaster and it's cluttered and it just doesn't, I haven't used it in years.

Josh: So the Meta ecosystem as a whole is not interesting. the meta hardware delivery Josh: is horrific at best like ijaz you you wanted the glasses you ordered the glasses Josh: you still don't have the glass dude Ejaaz: I couldn't order the glasses i couldn't walk into the.

Josh: Store yeah so so that's my point is to have Josh: a flagship product like that um be that Josh: despicable it's it's really it's it's high signal that there is Josh: some sort of lack of care in terms of what's being delivered and Josh: perhaps move fast and break things worked early on in the days of Josh: facebook but in a fully formed meta that is Josh: a huge behemoth now that doesn't work as Josh: well because the costs are so high i don't like

Josh: anything about it the hardware even if Josh: it was exceptional even if meta released true augmented reality glasses today Josh: and they locked me into the facebook meta ecosystem i'm not a user so they could Josh: have the best product in the world the product that they hope to release five Josh: years from now even if they released it today i'm not a user because i don't Josh: care for that ecosystem and they don't care to unlock the ecosystem.

Josh: So I think they have a lot of hard problems to solve. Josh: One is actually building a product people like in the hardware world. Josh: One is building a software stack that people like, and one is shifting these Josh: billions of users that they have over to something more meaningful than a social Josh: media feed. And maybe they don't do it.

Josh: I don't know how they monetize in the case that they don't, but there's a lot Josh: of questions that need to be solved from Zuck and the Facebook team that remain to be Josh: unknown. Ejaaz: Josh, are you, is it hot where you are? You look to be, you're sweating a little bit.

Ejaaz: Like, very, very interesting, because Ejaaz: in this next and final topic of the episode, I am pleased to announce, Ejaaz: Google is launching GPUs into space. Josh: I feel like I need boxing gloves every time I bring this up, Ejaaz: My God. To create an AI data center in space, which Josh hates so viscerally. Ejaaz: But one of the richest mans in the world is going to give you his argument as Ejaaz: to why it's an important thing to explore.

Ejaaz: So termed Project Suncatcher, a moonshot attempt to launch GPUs into space by Ejaaz: Google to harness the power of the sun, Ejaaz: solar energy, which equates to 100 trillion times humanity's total electricity production. Ejaaz: These are Sundar Pichai's words, the CEO of Google, not mine, right? Ejaaz: He then goes on to explain how he would attempt to do that. Ejaaz: You know, he says like, listen, I know that there are problems in space.

Ejaaz: There's radiation, but we're working on that. Ejaaz: We're running trials and tests right now, which actually proves that our TPUs Ejaaz: can survive in that radiation. Ejaaz: Okay, checkpoint number one. But of course, the question remains, Ejaaz: how on earth are you going to harness the energy that comes from the sun in Ejaaz: an efficient manner? Maybe that's easy to solve. Ejaaz: And then the obvious one is, it's so expensive to send stuff into space.

Ejaaz: How are you going to pay for that? And actually, if you dig into his report and his announcement, Ejaaz: he argues and he makes the point that like, you know, if you extrapolate the Ejaaz: cost of space going forwards, it should end up being equivalently pretty cheap Ejaaz: for us to send GPUs where it makes sense to create a data center in space. Ejaaz: I'm going to pause there before I start gloating. But Josh, any feedback on this?

Josh: OK, one thing that I do like is they're readjusting these timelines here. Josh: These timelines are starting to feel a little more realistic. Josh: Launch two prototypes by 2027. Josh: So we're pre-prototype now. This makes me happier. Josh: We are going to launch prototypes in two years. We are hopeful that SpaceX and Josh: Starship will be able to get the cost per kilogram to orbit down low enough where it makes sense.

Josh: Fine. Okay. If you want to experiment with these moonshots and you want to take your time with it, Josh: all right i guess i give up like i'm i i got nothing else Josh: to say this seems like do it like you Josh: got the billions of dollars you put it into r&d you do it Josh: um i think it's like go go to Josh: space i don't care i'm just done i'm done fighting about this i got nothing Josh: else and also i'm running out of out of arguments because he is

Josh: like methodically um removing the constraints by Josh: um i guess just just taking more time and assuming Josh: the unit economics makes sense the problem with doing it right now Josh: is the cost per kilogram to orbit is so unnecessarily high um Josh: and the technology is so difficult to prove as prototypes Josh: that it doesn't seem worthwhile i hope that Josh: they can figure it out i guess is what i have to say but anyway that that's

Josh: all we got for this week there was a lot of craziness a Josh: lot of chaos all across the board all of our favorites open ai meta Josh: google apple they all got some screen time Josh: this week because they're all up to no good well Josh: i guess some some are up to some good it's a it's a mixed bag this week uh Josh: there was a good a circular good there was one last Josh: bit of news um on the topic of space and uh

Josh: that is that jared isaacman has been nominated for head of nasa which Josh: is exciting because nasa i'm not sure if you realize this nasa at one point Josh: they sent people to outer space like they actually had rockets that went up Josh: into outer space and it functioned it was a functioning part of society uh which Josh: has unfortunately degraded over the years and the space program has kind of

Josh: faltered to nothing which is i think where a lot of the enthusiasm around SpaceX come from. Josh: Thankfully, Jared is someone who is really passionate about space. Josh: In fact, he has been there twice. Josh: So he has a lot of experience. He understands how this works. Josh: And I'm hoping we'll provide a jolt into NASA to just make the space program more exciting again. Josh: They have the Artemis II program, I believe, which is supposed to be taking the

Josh: a rocket to the moon fairly soon. So I'm just excited to see this new ambition happening with space. Josh: Congrats to Jared on a nice, a nice win.

Josh: And that's pretty much it. That's everything for this week. If you enjoyed, Josh: as always, please do not forget to share with your friends, like, Josh: subscribe, drop a comment about what you want to hear about next. Josh: We are doing slightly better on Spotify. Thank you for subscribing.

Josh: If you have not gone to Spotify and watch there and followed us there and consume Josh: content there please we do Ejaaz: Not have a government bailout so we need you we need you to bail us out when Ejaaz: you are the back stars you are the backstop turn on your notifications subscribe Ejaaz: to us wherever you are tell your friends to do it even if they don't listen Ejaaz: it would help us out so much.

Josh: So with that i think we're done for the week um we're gonna go take a nice show Josh: weekend we'll be back bright and early next week for whatever hot news happens Josh: to come over the weekend so stay tuned and as always we will see you guys in Josh: the next one until next time peace Ejaaz: See you guys.