Better Offline - Part Two: NVIDIA Isn't Enron - So What Is It?

Episode Date: December 18, 2025

In part two of this week's three-part NVIDIA series, Ed Zitron walks you through the history of Enron, why it differs from NVIDIA, and why growth-desperation led big tech to waste hundreds of billions of dollars on GPUs. This series took a lot of work, so if you want to support me, why not subscribe to my premium newsletter? Get $10 off a year’s subscription today: https://edzitronswheresyouredatghostio.outpost.pub/public/promo-subscription/p94my1c5ya YOU CAN NOW BUY BETTER OFFLINE MERCH! Go to https://cottonbureau.com/people/better-offline and use code FREE99 for free shipping on orders of $99 or more. --- LINKS: https://www.tinyurl.com/betterofflinelinks Newsletter: https://www.wheresyoured.at/ Reddit: https://www.reddit.com/r/BetterOffline/  Discord: chat.wheresyoured.at Ed's Socials: https://twitter.com/edzitron https://www.instagram.com/edzitron https://bsky.app/profile/edzitron.com https://www.threads.net/@edzitron Email Me: [e-mail] omnystudio.com/listener for privacy information.

This is an IHeart podcast. Guaranteed Human. Run a business and not thinking about podcasting. Think again. More Americans listen to podcasts than ads supported streaming music from Spotify and Pandora. And as the number one podcaster, IHearts twice as large as the next two combined. Learn how podcasting can help your business. Call 844-844-I-Hart.

Another podcast from some SNL late-night comedy guy, not quite. Unhumor me with Robert Smygel and friends. Me and hilarious guests from Bob Odenkirk to David Letterman helped make you. you funnier. This week, my guest, S&L's Mikey Day and headwriter, Streeter Seidel, help an a cappella band with their between songs banter. Where does your group perform? We do some retirement homes. Those people are starving for banter. Listen to humor me with Robert Smigel and friends on the I-Heart Radio app, Apple Podcasts, or wherever you get your podcasts. Life is full of hurdles. So how do you keep going? On Hurtle with Emily Abadi, we're talking with

the most inspiring women in sports and wellness from professional athletes, coaches, and Olympic champions about the challenges that shape them and the mindset that keeps them moving forward. At our level, at this scale, being able to fail in front of the entire world. Like, I can do anything. I can do anything. Listen to Hurtle with Emily Abadi

on the Iheart Radio app, Apple Podcasts, or wherever you get your podcasts. Presented by Capital One, founding partner of IHeart Women's Sports. A win is a win. A win is a win. I don't care what I'm saying. Yep, that's me. Clifford Taylor the 4th.

You might have seen the skits. my basketball and college football journey, or my career in sports media. Well, now I'm bringing all of that excitement to my brand new podcast, The Clifford Show. This is a place for raw, unfills of conversations with athletes, creators, and voices that not only deserve to be heard, but celebrated. So let's get to it. Listen to The Clifford Show on the IHeart Radio app, Apple Podcast, or wherever you get your podcast. And for more behind the scenes, follow at Clifford and at TikTok podcast network on TikTok.

Quarzone Media Hello and welcome to Better Offline I'm Ed Zittron and I'm nothing like Enron Now this is the second episode in the Nvidia Enron series And to give you a recap a few weeks ago A document from Nvidia leaked Where the company denied that it was anything like Enron at all

But what was Enron? Now, some of you might know this Some of you might not But I think it's time to remind everyone What Enron was and what Enron did And why Enron was so I don't know if we should say special, but it sure was Enron. Now, the collapse of Enron wasn't just in retrospect a large business that ultimately failed.

If that's all it was, it wouldn't come on the same space in our heads as other failures, like WorldCom, or Nortel, which I'll actually get to later. I talked about WorldCom last episode, both of whom were similarly considered giants in their fields, by the way. It's also not just about the fact that Enron failed because of proven business and accounting fraud. WorldCom entered bankruptcy due to similar circumstances, though, rather than being liquidated. And this is kind of a mindfuck, so forgive me. It was acquired as part of Verizon's acquisition of MCI, the name of a company that had previously merged with WorldCom, that WorldCom renamed itself to after bankruptcy. This era sucked. And unlike Enron, Worldcom isn't the subject of multiple films and even a Broadway production.

And my editor saw the UK tour of that, and apparently it was pretty good. You ask Matt Hughes if you want to know more. And it's also not the size of Enron that made its downfall so intriguing, nor for that matter, is it the fact that Enron did a lot of legally and ethically dubious stuff to bring about its downfall. No, what makes Enron special is the sheer gravity of its fuckery, the rotten culture at the heart of the company that encouraged said malfeasance and the creative ways Enron's leaders crafted an image of success around what was, at its heart, a big fat dog of a company. Enron was born in 1985 out on the foundations of two older, much less interesting businesses. The first, Houston Natural Gas, HNG, started life as a utility provider, pumping natural

gas from the oil fields of Texas to customers throughout the region, before later exiting the industry to focus on other opportunities. The other, Internorth, was based in Omaha, Nebraska, and was in the same business, pipelines. In the mid-1980s, HNG was the subject of a hostile takeover from Coastal Corporation, until 2001, operated a chain of refineries and gas stations throughout much of the U.S. mainland. Unable to fend it off by itself, HNG merged with InterNorth, with the combined corporation renamed Enron. The CEO of this new entity was called Ken Lay, an economist by trade who spent most of his career in the energy sector, who also enjoyed deep political connections with the Bush family. He co-chaired George H.W. Bush's failed 1992 re-election campaign

and allowed Enron's corporate jet to very Bush senior in Barbara Bush back and forth to Washington. Centre for Public Integrity Director Charles Lewis said that there was, and I quote, no company in America closer to George W. Bush than Enron. George W. Bush, and I mean the second one, even had a nickname for Lay. Kenny Boy. Anyway, in 1987, Enron hired McKinsey, the world's most evil management consultancy firm, to help the company create a futures market for natural gas. What that means isn't particularly important to the story, but essentially a futures contract is where a company agrees to buy or sell an asset in the future at a fixed price. It's a way of hedging against risk, whether that be from something like price or currency fluctuations or from default.

If you're buying oil in dollars, for example, buying a futures contract for oil to be delivered in six months' time at a predetermined price means that if your currency weakens against the dollar, your costs won't spiral. That bit isn't terribly important. What does matter is while working with McKinsey, They met someone named Jeff Skilling, a young engineer turned consultant who impressed the company's CEO deeply, so much so that Lay decided to poach him from McKinsey in 1990 and give him the role of chairman and CEO of Enron Finance Group. Oh, by the way, Enron had a bunch of subsidiaries, and some had their own CEOs and boards. I mentioned this because you may be a bit confused, as Lay was CEO of Enron and Skilling was CEO of Enron Finance Group. In essence, it's a bit like how Sam Altman is CEO of OpenAI and Fiji-Simo is the CEO of Application. That bit isn't important, but I just want to be as explicit as possible. I don't think open AI

as Enron either. At least I hope. Anyway, Skilling continued to impress Lay, who gave him greater and greater responsibility, eventually crowning him chief operating officer of Enron itself. With Skilling in a key leadership position, he was able to shape the organization's culture. He appreciated those who took risks, even if those risks, when viewed with impartialized, were deemed reckless or even criminal. He introduced the practice of stack rankings. also known as Rankin-Yank to Enron, which had previously been pioneered by Jack Welch, General Electric, and you should listen to the shareholder supremacy from last year if you want to hear what I think about that redacted guy. Here, employees were graded on a scale, and those at the bottom of the scale were terminated.

Managers had to place at least 10%, other reports say closer to 15% of employees in the lowest bracket, which created an almost Darwinian culture and a drive to succeed that matched him. Staffers worked brutal hours. They cut corners. they did some really, really dodgy sheer. None of this bothered skilling in the slightest. Now, you might be asking, how dodgy, Ed? Well, in 2001, California suffered a series of electricity blackouts. This shouldn't have happened. California's total energy demand at the time was 28 gigawatts, and its production capacity was 45 gigawatts. California also shares a transmission

grid with other states, and for what it's worth, the Canadian provinces of Alberta and British Columbia, as well as part of Baja, California in Mexico, meaning that in the event of a shortage, it could simply draw capacity from elsewhere. There's plenty to go around. So how did that happen? Well, remember, Enron traded electricity like a commodity, and as a result, it was incentivized to get the highest possible price for that commodity. So it took power plants offline during peak hours and exported power to other states where there was real domestic demand. But how does a company like Enron shut down a power station? Simple, it just asked. In one taped phone conversation released after the company's collapse, an Enron employee called Bill called an official at a Las Vegas power company, California shares the same grid with Nevada, and asked him to, and I quote, get a little creative and come up with a reason to go down. Anything you want to do over there? Any cleaning? Anything like that? Very cool. The power crisis had dramatic consequences for the people of California who faced power outages and price hikes, for Governor Gray Davis, who was recalled by voters and later replaced by Arnold Schwarzenegger, for PG&E, which entered chapter.

11 bankruptcy that year, and for Southern California, Edison, which was pushed to the brink of bankruptcy as a result. This kind of stuff could only happen in an organization whose culture actively rewarded being a fucking asshole. In fact, skilling was seemingly determined to elevate the dodgiest of characters to the highest positions within the company, and few more more ethically dubious than Andy Fastow, who Skilling mentored like a protege, and who would later become Enron's chief financial officer, and you've got to wonder, how did the CFO hired by Jeff Skilling do? Well, even before vaulting to the top of Enron's nasty little empire, Fuster was able to shape its accounting practices, with the company adopting mark-to-market accounting practices in 1991.

Now, mark-to-market sounds complicated, but it's actually real simple. When listing assets on a balance sheet, you don't use the acquisition cost, like how you paid for it, but rather the fair market value of an asset. So if I buy a baseball card for a dollar and I see that it's currently selling for 10 bucks on eBay, I'd say that asset is worth 10 bucks, not the dollar I paid for it, even though I haven't actually sold it yet. Nor do I know if anyone's interested. Now, this sounds simple, maybe even reasonable, but the problem is that the way you determine the value of an asset matters, and market accounting allows companies and individuals to exercise some, what's the word, creativity. Sure, for publicly traded companies where the price of a share is very,

and open knowledge, it's not too bad. But for assets with limited liquidity, limited buyers, or whether price has to be engineered, somehow, you have a lot of latitude for fraud. Now, let's go back to that baseball card example. How do you know it's actually worth 10 bucks and not $1? What is the fair value of something you can't check on eBay, but what somebody told me in person it's worth? What's to stop me from lying and saying that the card is worth $100 or $1,000? Well, other than the fact that I'd be committing fraud. Now, what if I have 10, $1 baseball cards, and I give my friend $10, and I tell him, buy one of my baseball cards using that $10 bill that I just handed him?

And this allows me to say that I've now realized a $9 profit on one of my $1 baseball cards, and my other cards are now, because I just did that, worth $90 and not $9. Now, what if I use that valuation, that phony valuation of my remaining cards, to get a $50 loan using those cards as collateral, even though the collateral itself isn't worth even one-fifth of the value of the loan. You get the idea. Another podcast from some SNL, late-night comedy guide, not quite. Unhumor me with Robert Smygel and friends, me and hilarious guests from Jim Gaffigan to Bob Odenkirk, to David Letterman, help make you funnier. This week, my guest, SNL's Mikey Day and headwriters, Streeter Seidel,

help an Acapella band with their between-songs banter. Who's the worst singer in the group? The worst? Yeah. Me. Is there anything to the idea that because you're from Harvard, you only got in because your parents made a huge donation. The group.

The yard birds, right? That's the name. The Harvard Yard. They're open. Do you have a name suggestion? We're open. Since you guys are middle aged. One erection.

Listen to humor me with Robert Smigel and Friends on the I-Heart Radio app, Apple Podcasts, or wherever you. you get your podcast. Human me. I need some jokes to make me seem funny. Run a business and not thinking about podcasting, think again. More Americans listen to podcasts than ad-supported streaming music from Spotify and Pandora. And as the number one podcaster, IHearts twice as large as the next two combined.

So whatever your customers listen to, they'll hear your message. Plus, only I-Hart can extend your message to audiences across broadcast radio. Think podcasting can help your business. Think I-Hart. streaming, radio, and podcasting. Call 844-8-4-4-I-heart to get started. That's 844-8-4-Ey-heart. Life throws hurdles big and small.

The question is, how do you conquer them? On Hurtle with Emily Abadi, we sit down with the most inspiring women in sports and wellness, professional athletes, coaches, and Olympic champions to talk about the challenges that shaped them and the mindset that keeps them going. From the WMBA standout, Kate Martin and rising hockey star Layla Edwards. If a boy can do it, I don't see what. girl can't. Like, I've never understood that. Like, it didn't make sense in my brain. It's hard to be in spaces that no one looks like you, but don't ever feel like you don't feel

on. Don't let that be the reason you don't do it. An Olympic champs Gabby Thomas and Katie Ladeke. The ability to show a gold medal to someone and have their face light up and smile, that means the world to me. And that's what motivates me to win more gold medals. At our level, at this scale, like, being able to fail in front of the entire world. Like, I can do anything. I can, like, I can do anything. Because resilience isn't just about winning. It's about showing up, even when it's hard. Listen to Hurtle with Emily Abadi on the Iheart Radio app, Apple Podcasts, or wherever you get your podcasts.

Presented by Capital One, founding partner of IHeart Women's Sports. Imagine an Olympics where doping is not only legal, but encouraged. It's the enhanced games. Some call it grotesque. Others say it's unleashing human potential. Either way, the podcast's superhuman documented it all. embedded in the games and with the athletes for a full year. Within probably 10 days, I'd put on 10 pounds.

I was having trouble stopping the muscle growth. Listen to Superhuman on the IHard Radio app, Apple Podcasts, or wherever you get your podcasts. While a lot of things people can do to alter the mark to market value of an asset are illegal and would be covered under generic fraud laws, it doesn't change the fact that mark to market accounting allows for some shenanigans to take place. Another trait of mark-to-market accounting as employed by Enron is that it would count all the long-term potential revenue from a deal as quarterly revenue, even if that revenue would be delivered over the course of a decades-long contract, or if the contract would be terminated before its intended expiration day. It would also realise potential revenue as actual revenue, even before money changed hands and when the conclusion of the deal wasn't a certainty. For example, in 1999, Enron sold a stake in four different electricity-generating barges in the,

Nigeria. They're basically floating power stations and sold it to Merrill Lynch, which allowed the company to register $12 million in profit. One little problem. That sale didn't actually happen, though that didn't stop Enron from selling pieces to Merrill Lynch, which I'm not kidding. Merrill Lynch then sold to a special purpose vehicle called LJM2. You'll never guess who owned that. That's it was controlled by Andrew Fastow. Yep, remember that guy? You're going to hear that name again. Although the Merrill Lynch bankers who participated in the deal were eventually convicted of fraud and conspiracy charges, long after the collapse of Enron, of course, their convictions were later quashed on appeal. Thank you, government. But still for a moment, it gave a jolt to Enron's quarterly earnings. Anyway, Enron was incredibly creative when it came to how it valued assets. Take, for example, fiber optic cables.

As the dot-com bubble swelled, Enron saw an opportunity and wanted to be able to trade and control the supply of bandwidth, just like it did. with other more conventional commodities like oil and gas. It built, bought and leased fiber-optic cables throughout the country, and then, using exaggerated estimates of their value and potential long-term revenue, released glowing financial reports that made the company look a lot more healthy and successful than it actually was or ever would be. Quick digression here. One of the funniest ironies of Enron is that it was in many ways ahead of its time. When most people were still connecting to the internet through screeching 56K dial-up modems, it saw a future in edge and cloud computing, even if said terms didn't exist at the time, and streaming video.

Here's a funny one. In 2000, it entered into a 20-year deal with Blockbuster video to allow customers to stream films and TV shows through Enron's fiber network, something that would take Netflix another decade to realize as a product. Now, there wasn't really much of a market for at the time, because broadband was pretty rare back then, nor was it necessarily technologically possible, but it was such a fun idea. People really liked it. It was a good idea. it to happen. Not really, though. Anyway, the deal collapsed after a year, but that didn't stop Enron's

creative accountants from booking the deal based on its projected future revenue as a profitable venture. Mark-to-market accounting, baby, you gotta love it. We love it, don't we folks? All right, I'll stop doing the impression. Still, it's hilarious to think about a future world in which Blockbuster and Enron stuck it out, and the former didn't collapse around the time of the global financial crisis. Enron also loved making special purpose vehicles that existed either to generate revenue that didn't exist or to hold toxic assets that would otherwise need to be disclosed with Enron, then using its holdings in said entities to boost its balance sheet. One, White Wing, was created and capitalised by Enron and an outside investor, and pretty much exclusively bought assets from Enron, which allowed the

company to recognise sales and profits on its balance sheets, even when they were fundamentally contrived. Another set of entities, known as LJM, named after the first initial of Andy Fastow's wife and two children, which I mentioned earlier, did the same thing, allowing the company to hide risky or failing investments, to limit its perceived debt, and to generate artificial profits and revenues. LJM, too, was creatively the second version of this idea. Even though the assets that LJM held were ultimately dogged, the distance that LJM provided, combined with Enron's use of mark-to-market accounting, allowed the company to turn a multi-billion collective failure into a resounding and on-paper profitable triumph.

So how did this happen? How did it go on for so long? Well, first, Enron was that it is piece. week worth $70 billion. Its fail would be a failure for its investors and shareholders, and nobody, besides the press, that is, wanted to ask tough questions. Remember when they did that? Anyway, it had auditors, but they were paid handsomely, turning a blind eye to the criminal malfeasance of the heart of Enron. Auditor Arthur Anderson surrendered its license in 2002, bringing an end to the company and resulting in 85,000 employees losing their jobs. Well, look, it's not so much it only turned a blind

as much as it turned on a big paper shredder. Shredding tons, and I'm actually being literal. That's a measure of weight and not figuratively of documents as Enron started to implode, a crime for which it was later convicted of obstruction of justice. But I've already talked about Enron's culture, but I'd be remiss if I didn't mention that Enron's highest performers in its leadership received hefty bonuses in company equity, motivating them to keep the charade going. Enron's pension scheme I had was basically entirely Enron's stock. And employees were regularly encouraged to buy more, with Kenneth Lay telling employees weeks before the company's collapse that, and I quote, The company is fundamentally sound and that they should hang on to their stock. Nvidia did use the word fundamentally. They used that. But it's not, Enviya is not Enron. It's not.

It's really different. They're not doing this. I swear to God, I just don't love the language. which, anyway, additionally, per the terms of the Enron pension plan, employees were prevented from shifting their holdings into other pension funds or other investments until they turned 50. When the company collapsed, those people lost everything, even those who didn't know about Enron's criminality. George Maddox, a retired former Enron employee, had his entire retirement tied up in 14,000 Enron shares worth at the time more than $1.3 million. He was forced to spend his golden

years making ends meet by mowing pastures and living in a run-down East Texas farmhouse. The US government brought criminal charges against Enron's top leadership. Ken Lay was convicted of four counts of fraud and making false statements, but died on a skiing vacation to Aspen before sentencing. May he burn in hell? Maybe Ronald Reagan and him could get in the hot tub together. The hot tub's got lava in him. Not feeling particularly creative on that one. Anyway, Jeff Skilling was convicted of 24 counts of fraud and conspiracy and sentenced to 24 years in jail. This was, of course, reduced in 2013 on appeal to 14 years, and he was released to a half-wifference. wayhouse in 2018 and then freed in 2019. He since then tried to re-enter the energy sector,

with one venture combining energy trading and I kid you not, blockchain technology, although nothing really came of him. I want to take this moment to give a big shout out to Quartz, which when covering Skilling's attempted comeback had this opening line, and I quote, Jeffrey Skilling knows a thing or two about blocks and chains. Woo! Get his ass! Andy Farsdale pled guilty to two counts, one of manipulation of financial statements and one of self-dealing, and received 10 years in prison. This was, as ever, later reduced to six years, including two years of probation, in part because he cooperated with the investigations against other Enron executives. He's now a public speaker and a tech investor in a company, an AI company called Keen Corp.

His wife, Leah, who also worked at Enron, received 12 months for conspiracy to commit wire fraud and money laundering and for submitting false tax returns. She was released from custody and two 2005. Enron's implosion was entirely self-inflicted and horrifyingly, painfully criminal. Yet, it had plenty of collateral damage. To the US economy, to those companies that lend it money, to its employees who lost their jobs and their life savings and their retirements, and to those employees that the company's most intact with Enron, like those are auditing firm Arthur Anderson. This isn't unique among corporate failures. Worldcom had some dodgy accounting practices, Nortel too. Both companies failed, both companies wrecked the lives of their employees,

and these failures had systemic economic consequences, especially in Canada, where Nortel at its peak accounted for one-third of the market cap of all companies on the Toronto Stock Exchange. The reason why Enron remains captured in our imagination, and why NVIDIA is so viscerously opposed to being compared to it, is the extent to which Enron manipulated reality to appear stronger and more successful than it was, and how long it was able to get away with it. What we may have forgotten the memory of Enron, it happened over two decades ago after all, we haven't forgotten the instincts that it gave. us. It's why our nose is Twitch when we see special purpose vehicles being used to buy GPUs, and while we gag when we see mark-to-market accounting. It's entirely possible. I genuinely believe this, that everything in video is doing is above board. Really? It's great. That doesn't do anything to help the deep pit of dread in my stomach, though. Another podcast from some

SNL late-night comedy guide, not quite. Unhumor me with Robert Smygle and friends, me and hilarious guests from Jim Gaffigan to Bob Odenkirk to David Letterman help make you funnier. This week, my guest, SNL's Mikey Day and head writer Streeter Seidel, help an acapella band with their between songs banter. The worst singer in the group? The worst? Yeah. Me. Is there anything to the idea that because you're from Harvard, uh, you only got in because your parents made a huge donation. The group, the yard birds, right? That's the name. The Harvard yard with the They're open. Do you have a name suggestion?

We're open. Since you guys are middle-aged, one erection. Listen to humor me with Robert Smigel and Friends on the I-Heart Radio app, Apple Podcasts, or wherever you get your podcast. Humor me. I need some jokes to make me seem funny. Run a business and not thinking about podcasting, think again. More Americans listen to podcasts than ad-supported streaming music from Spotify and Pandora. And as the number one podcaster, IHearts twice as large as the next two combined.

So whatever your customers listen to, they'll hear your message. Plus, only IHeart can extend your message to audiences across broadcast radio. Think podcasting can help your business. Think IHart. Streaming, radio, and podcasting. Call 844-844-I-Hart to get started. That's 844-8-4-I-Hart. Life throws hurdles big and small.

The question is, how do you conquer them? On Hurtle with Emily Abadi, we sit down with the most inspirational. women in sports and wellness, professional athletes, coaches, and Olympic champions to talk about the challenges that shaped them and the mindset that keeps them going. From the WNBA standout Kate Martin and rising hockey star Layla Edwards. If a boy can do it, I don't see why a girl can't. Like, I've never understood that. Like, it didn't make sense in my brain.

It's hard to be in spaces that no one looks like you, but don't ever feel like you don't feel like. Don't let that be the reason you don't do it. An Olympic champs Gabby Thomas and Katie Ladeke. The ability to show a gold medal to someone and have their face light up and smile, that means the world to me. And that's what motivates me to win more gold medals. At our level, at this scale, like being able to fail in front of the entire world. Like, I can do anything.

I can do anything. Because resilience isn't just about winning. It's about showing up, even when it's hard. Listen to Hurtle with Emily Abadi on the IHeartRadio app, Apple Podcasts, or wherever you get your podcasts. Presented by Capital One, founding partner of IHeart Women's Sports. Imagine an Olympics where doping is not only legal but encouraged. It's the enhanced games. Some call it grotesque.

Others say it's unleashing human potential. Either way, the podcast's Superhuman documented it all, embedded in the games and with the athletes for a full year. Within probably 10 days, I'd put on 10 pounds. I was having trouble stopping the muscle growth. Listen to Superhuman on the IHeart radio app. Apple Podcasts, or wherever you get your podcasts. Now, let's remind ourselves of what Nvidia is.

It's a company that previously focused on gaming-oriented GPUs, graphics processing units, but thanks to a stroke of fourth or managed to be the company that sells the shovels for the current AI bubble. Its data sent at GPUs are expensive. They all rely on a technology that Nvidia created two decades ago called Kuda, which no other competitor has an alternative to, or at least one with the maturity and depth and functionality. and no other company shares its focus on this arena, at least not one with its history. These GPUs are expensive, and thanks to Nvidia's near monopoly status, it's seen its share price growth by over 1,350% at the time of writing in the past five years.

It's now the most valuable company in the world by market capitalization, and it's insanely, insanely profitable. If you're looking at this through the cold unthinking lens of late-stage capitalism, this all sounds really good. I've basically described a company that has an essential monopoly, and the one thing required for a high growth, if we're talking exclusively about capex spending, industry to ever exist. Moreover, that monopoly is all but assured, thanks to Nvidia's Cuda Mote, its first move for advantage and its actual capacities and capabilities of the products itself, on top of the

massive shipping and hardware operation it built, thereby allowing the company to charge a pretty penny to its customers. And those customers? Well, if we've temporarily forget about the likes of Nebius and Corweave and how I wish I could forget about Corweave permanently, We're talking about the biggest companies on the planet, ones that surely will have no problems paying their bills. But my worry is a little simpler and more direct, because I'm worried about the certainty that these purchases are being made for the right or most prudent of reasons. Back in February, 2023, I put out the rot economy and how everything in tech has become oriented around growth at all cost, even if it meant making products harder to use as a means of increasing user engagement or funneling them towards more profitable parts of an app. Back in June 2024, I wrote and did an episode about the rockcom bubble and my greater theory that the tech industry has run out of hypergrowth ideas.

In simple terms, big tech, Amazon, Google, Microsoft and Meta, but also a number of other companies, no longer have a next big thing and jumped on AI out of an abundance of desperation. shit, look at Oracle. This company started off by selling databases and ERP systems to big companies and then trapping said companies by making it really, really difficult to migrate to cheaper and better solutions, and then bleeding said companies with onerous licensing terms, including some where you're paid by the number of CPU course that you use the application, fucking Oracle. It doesn't do anything new or exciting or impressive, even when presented with the opportunity to do things that are useful or innovative, like when it bought some microsystems, it turns away. I imagine that deep down, Oracle recognizes that its current model just isn't viable long term, and so it needed something else. When you haven't thought about innovation ever, it's kind of hard to start, and thus, generative AI probably seemed like a godsend to Larry Ellison, who founded Oracle, and despite not being CEO, still creeps around the building like the Grinch. I'll get to Oracle in a bit, but we also live in an era where nobody knows what big tech CEOs actually do, other than make nearly $100 million a year, meaning that somebody like Satchinadella can get called a thoughtful leader

with striking humility for pushing co-pilot AI up every asshole in Microsoft's product experience, even Notepad, a place that no human being would want it, an accelerating capital expenditures and $28 billion across the entirety of fiscal year 2023 to $34.9 billion in its last quarter. In simpler terms, spending money makes a CEO look busy, and at a time when there were no other potential growth avenues left, AI was a convenient way to make everybody look busy. Every department can have an AI strategy and every useless fucking manager and executive can yell, a service now CEO Bill McDermott did back in 2022. Let me make it clear to everybody here, everything you do. AI, AI, AI, AI, AI, that's a real goddamn quote. I should also add that

chat GPT was the first real meaningful hit that the American tech industry has produced in a long, long time. The last being, if I'm honest, Uber, and that's if we allow successful yet not particularly good businesses into the pile. I guess you could say Instagram stories, but that was ripped off from TikTok. No, sorry, Snapchat. Christ, they, they nicked reels from TikTok. I hate this fucking industry. Now, look, if we're assholes about it and we insist on things like profitability and sustainability, US tech hasn't done so great. Snowflake runs at a loss, Snap runs at a loss. Uber has turned things around somewhat. It hardly created the next cloud computing or smartphone industry. Putting aside finances, the last major hit was probably Venmo or Zell. And maybe, if I'm feeling

generous, smart speakers like Amazon Echo or Apple HomePod, but those, I think Echo and Alexa has lost Amazon billions. Much like Uber, none of these were the next big thing, which would be fine, except big tech needs more growth forever right now, you pig. To be clear, I'm not saying there's been no innovation, just nothing at the scale of smartphones and cloud computing. This is why Google, Amazon and meta all do 20 different things, although rarely for any length of time, with these things often having a shelf life shorter than its strawberries left on your counter, because the rot economy's growth at all-cost mindset exists only to please the markets, and the markets demand growth. Chat GPT was different. Not only did it do something new, it also did it in a way that was

relatively easy to get people to try and see the potential of. It was also really easy to convince people that it would become something bigger and better, because that's what tech does. To quote Bender and Hannah, AI is a marketing term, a squishy way of evoking futuristic visions of autonomous computers that could do anything and everything for us. And because both customers and analysts have been primed to believe in trust the tech industry, everybody believed that whatever chat GPT was would be the next big thing. And said next big thing was powered by large language models which required GPU sold by one goddamn company, Invidia. AI became a very useful thing to do.

If a company wanted to seem futuristic and attract investors, it could now integrate AI. If a hyperscaler wanted to seem enterprising and like it was building the future, it could buy a bunch of GPUs or invest in its own silicon, as Google, Microsoft, Amazon, and Meta have done, though meta to only some extent, and, of course, shove AI in every imaginable crevice of an app. Investors could invest in AI companies,

retail investors, regular people, can invest in AI stocks, tech reporters could write about something new and do access journalism even harder. LinkedIn perverts could write long screens about AI, the markets could become obsessed with AI, and yeah, you can kind of see how things got out of control. Everybody now had something to do, an excuse to do an AI thing, regardless of whether it made sense, because everybody else was doing it. You didn't need to justify it anymore. Everybody was doing AI. chat GPT quickly became one of the most popular websites on the internet all while open AI burned billions of dollars and because the media effectively published every single thought that Sam Altman had such as that GPT4 would automate away some jobs and create others and that he was a little bit scared of it AI as a technology and an idea and a symbolic stock trope and a marketing tool and a myth became so powerful that it could do anything replace anyone be worth anything even the future of your company amongst the hype there was in the summer related to scaling laws, summarized well by Charlie Meyer, who was on the podcast a few months ago,

you should go listen to his episode. In 2020, one of the most important papers in the development of AI was published, scaling laws for neural language models, which came from a group at OpenAI. The paper showed, with just a few charts, incredibly compelling evidence that increasing the size of large language models would increase their performance. This paper was a large driver in the creation of GPT3 and today's LLM revolution and caused the movements of trillions of dollars in the stock market. In simple terms, the paper suggested that shoving more training data and using more compute power would exponentially increase the ability of a model to do stuff. And to make a model that did more stuff, you needed more GPUs and more data centers. Did it matter that there was compelling

evidence in 2022? And got to say, Gary Marcus was right, that there were limits to scaling laws and that they would hit the point of diminishing returns? Nah. Amidst all of this, and Vivida has sold over $200 billion of GPUs since the beginning of 2023, becoming the largest company on the stock market and trading at over $170 as of writing this sentence, only a few years after being worth less than $20 a share. You see, Meta, Google, Amazon, Microsoft all wanted to be part of the future, so they sunk a lot of money into Nvidia, making up 42% of its revenue in its fiscal year 2025. Though there are some arguments about how much exactly big tech's billowing capital expenditures are spent on GPUs, some estimate somewhere between 41% to more than 50%

of a data that's Centres, CAPEX is spent on GPUs. If you're wondering what the payoff is, well, you're in good company. I estimate that there's only around $61 billion in total generative AI revenue, and that includes every hyperscaler in Neo-Cloud. Large language models are limited, AI agents are a pipe dream and simply do not work. AI-powered products are unreliable, and coding LLMs make developers slower, and the cost of inference, the way in which a model produces its output, keeps going up. The thing is, what comes up tends to have a habit of coming down, and I'm increasingly of the opinion that a return to a terra firmer is coming sooner rather than later. But that's for the next episode. Join me then.

Thank you for listening to Better Offline. The editor and composer of the Better Offline theme song is Mattersowski. You can check out more of his music and audio projects at Mattersowski.com. You can email me at E-Z at Better Offline.com or visit Better Offline.com to find more podcast links and of course my news. letter. I also really recommend you go to chat. Where's YourEd.com to visit the Discord and go to our slash Better Offline to check out our Reddit. Thank you so much for listening. Better Offline is a production of Cool Zone Media. For more from Cool Zone Media, visit our website, coolzonemedia.com or check us out on the IHeartRadio app, Apple Podcasts, or wherever you get your

podcast. Another podcast from some SNL, late night comedy guy, not quite. Unhumor me with Robert Smygel and friends. Me and hilarious. from Bob Odenkirk to David Letterman help make you funnier. This week, my guest, S&L's Mikey Day and head writer, Streeter Seidel, help an a cappella band with their between songs banter. Where does your group

perform? We do some retirement homes. Those people are starving for banter. Listen to humor me with Robert Smigel and friends on the I-Heart Radio app, Apple Podcasts, or wherever you get your podcasts. Life is full of hurdles, so how do you keep going? On Hurtle with Emily Abadi,

we're talking with the most inspiring women in sports and wellness from professional athletes, coaches, and Olympic champions about the challenges that shape them and the mindset that keeps them moving forward. At our level, at this scale, being able to fail in front of the entire world. Like, I can do anything. I can do anything. Listen to Hurtle with Emily Abadi on the Iheart Radio app, Apple Podcasts, or wherever you get your podcasts. Presented by Capital One, founding partner of I heart women's sports.

A win is a win. A win is a win. I don't care what I'm saying. Yep, that's me. Clivert Taylor the 4th. You might have seen the skits, my basketball and college football journey, or my career in sports media.

Well, now I'm bringing all of that excitement to my brand new podcast, The Clifford Show. This is a place for raw, unfilled conversations with athletes, creators, and voices that not only deserve to be heard, but celebrated. So let's get to it. Listen to The Clifford show on the IHeard Radio app,

Apple Podcast, or wherever you get your podcast. And for more behind the scenes, follow at Clifford and at TikTok podcast network on TikTok. I'm Michelle McPhee, and I've been unraveling the strangest criminal alliance I've ever reported on. A Mormon polygamist and an Armenian businessman. Multi-million dollar house, Ferraris and Lamborghinis, private jets, a billion dollar fraud. But how long can this alliance last? Tell me what you know. Is somebody coming after me?

Listen to Kingdom of Fraud on the I-Heart Radio app, Apple Podcasts, or wherever you get your podcasts. is an IHeart podcast. Guaranteed human.