Welcome to the Techmeme Ride Home for Friday, February 16, 2024. I'm Brian McCullough. Today, huge watershed reveal of open AI's Sora. It's first text to video model which can create up to a minute of 1080p video. We used to have a today and Elon segment we're close to needing a today in Sam Altman segment. Increasing signs, the crypto winter is ending and of course, the weekend long read suggestions. Here's what you missed today in the world of tech.
I mean, these things are going to keep coming every week at this point, but this one seems epoch making. Open AI has unveiled Sora. It's first text to video model which can create up to a minute of 1080p video from text prompts. Quoting the verge. Sora is capable of creating complex scenes with multiple characters, specific types of motion and accurate details of
the subject and background according to open AI's introductory blog post. The company also notes that the model can understand how objects quote, exist in the real world as well as accurately interpret prompts and generate compelling characters that express vibrant emotions. The model can also generate a video based on a still image as well as fill
in missing frames on an existing video or extended. The Sora generated demos included in open AI's blog posts include an aerial scene of California during the gold rush, a video that looks as if it were shot from the inside of a Tokyo train and others. Many have some telltale signs of AI like a suspiciously moving floor in a video of a museum and open AI says the model quote may struggle with accurately simulating the physics of a complex scene, but
the results are overall pretty impressive. Quoting Stephen Levy and wired. Other companies from giants like Google to startups like Runway have already revealed text to video AI projects, but open AI says that Sora is distinguished by its striking photo realism, something I haven't seen in its competitors and its ability to produce longer clips than the brief
snippets other models typically do up to one minute. The researchers I spoke to won't say how long it takes to render all that video, but when pressed they described it as more in the going out for a burrito ballpark than taking a few days off. If the hand picked examples I saw are to be believed the effort is worth it. Open AI didn't let me enter my own prompts, but it shared four instances of Sora's power, none approach the purported one minute limit,
the longest was 17 seconds. The first came from a detailed prompt that sounded like an obsessive screenwriter's setup. Beautiful snowy Tokyo city is bustling. The camera moves through the bustling city street following several people enjoying the beautiful snowy weather and shopping at nearby stalls. Gorgeous Sakura pedals are flying through the wind along with snowflakes. The result is a convincing view of what is unmistakably Tokyo in that magic moment when snowflakes
and cherry blossoms coexist. The virtual camera as if a fix to a drone follows a couple as they slowly stroll through a street scape. One of the passers-by is wearing a mask. Cars rumble by on a riverside roadway to their left and to the right. Shoppers flip in and out of a row of tiny shops. It's not perfect. Only when you watch the clip a few times do you realize that the main character is a couple strolling down the snow covered sidewalk would have faced a dilemma. Had the
virtual camera kept running, the sidewalk they occupy seems to dead end. They would have had to step over a small guardrail to a weird parallel walkway on their right. Despite this mild glitch, the Tokyo example is a mind-blowing exercise in world building. Down the road production designers will debate whether it's a powerful collaborator or a job killer. Also the people in this video who are entirely generated by digital neural networks aren't shown in close-up
and they don't do any emoting. But the Sora team says that in other instances they've had fake actors showing real emotions. And quoting TechCrunch, OpenAI's very much positioning Sora as a research preview revealing little about what data was used to train the model short of around 10,000 hours of high quality video and refraining from making Sora generally available. Its rationale is the potential for abuse. OpenAI correctly points out that bad actors could misuse a model like Sora
in myriad ways. OpenAI says it's working with experts to probe the model for exploits and building tools to detect whether a video was generated by Sora. The company also says that should it choose to build the model into a public-facing product, it'll ensure that provenance metadata is included in the generated outputs.
From the ambitions of Sam Altman file, which is pretty much full-dabrst thing at this point, Bloomberg says Altman is working to get US approval for his chip project as the involvement of the United Arab Emirates and other countries' risks raising national security and antitrust concerns. Quote, Altman has indicated he believes it's essential to work collaboratively with the US government on approvals, timing and structure for the venture, according to one person familiar
with the matter who asked not to be named discussing private conversations. The CEO has met with Commerce Secretary Gina Riemando and is working to arrange meetings with other officials the people said and Commerce officials have held internal discussions on OpenAI's Middle East ambitions.
The Wall Street Journal previously reported the two had met. Altman's ambitious fund raising pushed risk triggering a national security review of foreign investment by a committee chaired by the Treasury Department and could run up against the Commerce Department's controls on chip shipments to the Middle East. Altman is also considering whether to create an issue new equity in a new company separate from OpenAI, some of the people said, and a move that might raise
antitrust concerns. That's part of why the plan needs US government approval before moving forward. US law forbids the same person from serving as a board director or officer at two companies that directly compete and the Biden administration has amped up scrutiny of those so-called
interlocking directorists. It is not known whether OpenAI would contribute funds or have a formal relationship with the new startup, but antitrust enforcers at the Federal Trade Commission or Department of Justice may have concerns about Altman's involvement should the new companies seek
to make chips exclusively for use by OpenAI. A couple things on that. First, Altman has clarified to people that the $7 trillion investment figure we were abandoning about for this chip project last week represents the total sum of investments needed over the life of this chip project,
including real estate over many years. So he's not asking for $7 trillion that like a $40 trillion valuation, but also filings indicate he can make moves like this because Sam Altman is the sole owner of the OpenAI startup fund, which reported $175 million in total commitments back in May of 2023. Microsoft is an outside limited partner in the fund. Still a little odd quoting Axios. OpenAI's structural strangeness permeates all aspects of the business. OpenAI startup fund was
launched in late 2021 to invest in other AI startups and projects. By last May it reported $175 million in total commitments and a portfolio that included video editor, descript, and legal tool Harvey. What set OpenAI startup fund apart, however, was that it wasn't and isn't owned by OpenAI, nor even by its affiliated nonprofit foundation. Instead, it's legally owned by Altman. We wanted to get started quickly and the easiest way to do that due to our structure was to put
it in Sam's name. And OpenAI spokesperson, Tels Axios, we have always intended for this to be temporary. Well, temporary has been well over a year and it's a significant risk. For example, what might have happened had Altman remained fired by OpenAI? Could he have kept the fund? Was there anything contractual to prevent it? No answer to that last question, but the company does add we now know that we may need to re-examine our governance structure, which should precede
any changes to the fund, but our priority is to establish a new board first. So on threads, I posted
a joke question mark theory for why Sam Altman is taking such big swings. It's because he has already achieved AGI and has it locked in a basement somewhere and is having it give him the playbook for taking over the world to which Simon Owens replied, let's take it one step further and assume he's been killed and replaced by an AI that figured out how to generate a synthetic body that it can inhabit or that the AI is using some sort of blackmail to control him.
Quick check in on the state of crypto. According to pitch book, Q4 2023 saw only 12 crypto exits, the lowest number since Q4 of 2020, and consistent with the, quote, low level activity scenes throughout 2023, quoting tech crunch, the lack of crypto startup exit volume and value can be linked to a related decline in total venture investment into upstart web three companies when liquidity is
light investment return prospects can darken. The good news for crypto founders is that despite slim chances at selling their company venture capital investment ticked two and a half percent higher in Q4 2023 compared to the third quarter, though deal volume fell a similar percentage. The fourth quarter was consistent with the low level activity seen throughout 2023, the report stated and with only 12 exits during that time frame, it was the lowest number since Q4 2020.
More deal value despite limited exits does imply a level of optimism among crypto investors that we might consider to be surprising, but with crypto prices rising, key regulatory hurdles cleared and other positive signals casting a bit of a warm light on web three more generally,
more investment doesn't shock us. The exit question however remains recent investment totals be damned, looking at yearly data crypto focus venture capital generated exits worth $1.2 billion in 2012, just $500 million between 2019 and 2020, in 2022 and 2023, the numbers came to 1.4 and $1 billion. The outlier was 2021 with $88 billion worth of crypto exit value and quote, yeah, that's because Coinbase went public in 2021, but let me reiterate something we just said there.
Pitchbrook also says VC investment in crypto related companies rose to 1.5% quarter over quarter in Q4 2023 to $1.9 billion. The first time that crypto startup funding rose since Q1 of 2022, quoting CNBC. It's a welcome stat for crypto entrepreneurs who've been brews by the last couple of years of the so-called crypto winter, which made it much harder for founders to raise money.
Venture funding for crypto firms slumped significantly in 2022 after a rise in interest rates from major central banks led to a flight of investors from risk-eared assets like tech stocks and cryptocurrencies. Problems for crypto ventures were compounded that year by major collapses of crypto companies like Duke Kwan's controversial algorithmic stablecoin Terra and Sam Bankman freeds FTX. Major venture funds like Andrii St. Horowitz, Sequoia Capital and Tiger Global were
brews by the downturn in crypto deals. In some cases like the fall of FTX funds had to right off their entire stake. It's no secret investors have been writing more checks. Lee said in a CNBC interview, now we're starting to see it in the data. Lee said that crypto venture funding has bottomed with a rise in crypto asset prices and public market valuations of crypto related companies such as Coinbase, Marathon Digital and MicroStrategy.
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but instead of passengers and luggage it's end users and their devices. These days most companies are pretty good at the first part of the equation where they check user identity. But user devices can roll right through authentication without getting inspected at all. In fact 47% of companies allow unmanaged untrusted devices to access their data. That means an employee can log in from a laptop that has its firewall turned off and
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demo and see how it works. That's k-o-l-i-d-e.com slash ride. Time for the weekend long-range suggestions. Just two again this week. First up, David Pierce has a handy explainer. For a term you've heard us say a lot recently, what is the Fediverse exactly? Read this explainer from the verge quote. So what is the Fediverse? It's an interconnected social platform ecosystem based on an open protocol called activity pub which allows you to port your content data and
follower graph between networks. What? I know. Let me try again. The Fediverse is as if you took X TikTok, Snapchat, Instagram and Facebook and made them all interoperable so you could post anything from anywhere and all your followers would be guaranteed to see it. And if you wanted to leave one platform for another you could bring all your content, all your followers, all your everything with you. Oh, so it's a new social network. Why didn't you just say that? It's actually
lots of new social networks. A bunch in the Fediverse already exists and lots more are coming. But the interconnection is the thing. Instead of having all your Facebook stuff on Facebook and all your X stuff on X, the Fediverse allows them to interoperate. That's the really big shift here end quote. And then let me turn you on to a player in the streaming wars you probably haven't heard of. Show Max is well not a combination between Showtime and Max. It's a South African streaming
company that has accumulated 2.1 million subscribers in Africa. That puts it ahead of Netflix is 1.8 million in Africa and Amazon Prime videos 300k subscriptions on the continent. Quoting rest of world. Show Max, which was spun out of Africa's largest entertainment company multi choice in 2015 has seen its market
share rise to nearly 39% compared to Netflix's dropping to 33.5%. Show Max has overtaken Netflix amid intense competition brewing in Africa's video streaming industry where global firms major telecoms and several country specific apps are fighting for consumers bucks. In January, Prime video announced it was downsizing its Africa and Middle East operations and halting the commissioning of original content. The company stood out among competitors due to its deep understanding of local preferences
and a careful curated mix of content suited to African interests. Show Max has partnered with HBO and Comcast to bring high quality international English language content to its viewers and develops strong relations with local creators and African countries. The platform also has streaming rights to the English Premier League for which it offers a dedicated subscription plan. In 2020, Show Max acquired exclusive licensing rights to stream HBO's content in Africa which has become one of the
biggest advantages for the company. Although we now watch a few local shows on Show Max, my favorite shows were Billions and Curb Your Enthusiasm, Johannesburg based designer Bello Cindy told Rest of World. In March 2023, Comcast, the parent company of Universal Pictures, NBC P-Cock, Sky, Dreamworks Animation, and Tel Amundo, bought a 30% stake in Show Max through NBC Universal.
This gave the African company access to the advanced technology, the funds to survive in a competitive market and blockbuster English language content, including titles from the BBC Lionsgate, ITV Paramount, Sony, and Warner Brothers. Comcast's presence will help further strengthen Show Max's position CEO Mark Jury told Rest of World. It allows us to invest in far greater numbers of
local productions. And so when you take those local productions coupled with the international content from around the world and the best of live sport, we know that we've got a winner. End quote. Show Max users in Nigeria and South Africa told Rest of World they prefer the platform over others because of its vast mix of local and international content. Show Max feels like watching Nigerian TV without having a TV. Dice Amy Nassine, a log-of-space human resources
manager, told Rest of World. I like the reality TV shows you find on Show Max, the real housewives shows, and Big Brother Nijja. I also enjoyed the HBO series on the platform. Show Max's original series include multiple award-winning shows like Ties, Joe Berg, Diary, and Donker Boss. Show Max's biggest advantage is parent company MultiChoices Vass Network. It runs a cable TV
business and has been building TV channels across Africa since 1995. Marie-Laura Mungai, founder of Consulting Firm Restless Global, told Rest of World MultiChoices Revenue in the 2023 fiscal year was $59.1 billion, or $3.1 billion, most of which came from its direct broadcast satellite service, DSTV End quote. I know it feels like I'm telling you about new language models every day. There are actually like four other new AI models I could have told you about this week, but I'm trying to balance
real groundbreaking news with just new headlines. Sora seems like a bigger deal than most because it's crossing the threshold of a new modality in a convincing way for the first time. No live show on Monday as it is a bank holiday here in the US, but I will post that interview Chris and I did with Blue Sky CEO Jake Graber on Monday. Enjoy that and I'll talk to you again on Tuesday.