Better Offline - Radio Better Offline: Edward Ongweso Jr. & Allison Morrow
Episode Date: September 17, 2025Welcome to Radio Better Offline, a tech talk radio show recorded out of iHeartRadio's studio in New York City. Ed Zitron is joined in studio by Allison Morrow of CNN, Ed Ongweso Jr. of the Tech B...ubble newsletter to talk about the AI vibe shift, OpenAI’s burn rate, what will finally burst the bubble, and something called “Critterz.”Allison Morrowhttps://www.cnn.com/profiles/allison-morrowhttps://bsky.app/profile/amorrow.bsky.socialEd Ongweso Jr.https://thetechbubble.substack.com/https://bsky.app/profile/edwardongwesojr.com OpenAI Hopes Animated 'Critterz' Will Prove AI Is Ready for the Big Screen - https://www.cnet.com/tech/services-and-software/openai-hopes-animated-critterz-will-prove-ai-is-ready-for-the-big-screen/The AI vibe shift is upon us - https://www.cnn.com/2025/08/22/business/ai-vibe-shift-nightcapThe Silicon Valley Consensus & the "AI Economy" - https://thetechbubble.substack.com/p/the-silicon-valley-consensus-and-614 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. BUY A LIMITED EDITION BETTER OFFLINE CHALLENGE COIN! https://cottonbureau.com/p/XSH74N/challenge-coin/better-offline-challenge-coin#/29269226/gold-metal-1.75in --- 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/edzitronSee omnystudio.com/listener for privacy information.
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Hello and welcome to Better Offline.
I'm your host, Ed Zichron.
What's up?
And we are recording here in beautiful New York City, and I have a wonderful pair of guests today.
I've had, of course, Alison Morrow from CNN Nightcap Newsletter, and Edward Onguoso Jr., the hater himself, from the Tech Bubble newsletter.
Thank you so much for joining me today.
Great to be here as always.
So I think we should start with exactly what we were just talking about.
The Open AI claims that they have worked out what causes hallucinations.
Alison, do you want to go over this?
I should have read the paper a bit more carefully, but I can, you know, the highlights,
We're getting digested yesterday on X and Blue Sky.
And it seems like it's kind of the test-taking problem of when you encourage students, when they're taking standardized tests, and you don't know the answer, you guess.
And that's exactly how these models are trained.
And you don't get a point if you say, I don't know.
Right.
So you come up with something.
And the models are meant to keep guessing until they get something close to right.
Right.
So that's why you get a lot of nonsense and hallucinations.
And Open AI, at least in their reading of it, says,
oh, this is a simple solution.
We'll just encourage the models to understand better when it's like a binary question.
And when you can say, I don't know the answer to that.
So we'll see.
I read the paper, albeit not today, because my brain just immediately read it as marketing copy.
Just put that, replaced it with another anime theme song.
I went through it.
I was like, okay, so it's going to encourage them to say, I don't know.
This feels like a very flat view of what hallucinations are, though,
because hallucinations, as people know, them authoritatively stating something that isn't true.
But hallucinations in like a coding model are it will just say, yeah, I did that when it didn't.
This is very common you go into the cursor and the Claude Code forums.
You can see this, or subreddits at least.
And it's not that they say something that's true.
They don't know that something's not true.
Also, so they might say they don't know.
And it's just very silly because they claim that they're going to fix this problem with this solution.
But they've done years and hundreds of millions of dollars of reinforcement learning.
Do they unreinfor, do they reinforce it more so that I don't know.
I'm fucking tired of these companies.
I'm going to be completely honest.
I realize this is kind of cliche for the show.
But it's the fact that these things get written up as very serious things versus saying,
you guys still haven't worked this out.
It's kind of frustrating to me.
And they don't seem to be the models aren't getting better.
diminishing returns and all that, but this is the best they've got.
I mean, does this kind of thrust feet, like, you know, do you guys feel like it's downstream of the
attempts by some of these firms to say, oh, actually, like if we dial back, uh, the sick of fancy,
you know, then we'll be able to have a much more engaging consumer product. We'll be able to
have it hallucinate less, you know, and do psychosis less, you know, do they feel linked in that way?
Does it just feel like a, you know, another, maybe,
another dead end. I feel like it's just them trying to work shit out and trying to like it this also
feels like a very rudimentary answer that they probably already had. It doesn't anytime someone comes up
with an idea that I can that's technical. I'm like, okay, mate, you cannot be cooking with gas. This is,
this cannot be that good an idea. And the thing is the sycivancy problem I don't think is solvable
through solving hallucinations. The problem is it should stop. It needs to just, it should not say I don't
understand. It should say, no, actually, you sound like you think I'm God King and that you are
God King and that as God Kings together, we will destroy the world. Yeah, I mean, which in my case is true.
Do you think like the emphasis or the attempt to overcorrect on that is leading them to go down
solutions where they think, oh, like if we just go back this and that, then well. Yes. Yes. Actually, I think
that that's right because they have the, I don't know if you saw the attorney general, attorneys general from
Delaware and California sent a letter to Open A. last week saying, hey, look, if you, you need to fix these
safety protocols. You need to actually have them because what you have right now doesn't work and
we will block your non-profit. Otherwise, I was really happy to read that right up until the bit they say,
we wish you well with your quest for AI dominance. I'm just like, these are the fucking people
protecting us from the, they're like, no, it's great. You want to dominate everyone with AI. It's just
you drove some people to a murder-suicide situation. And wasn't that part of the problem with
GPT-5 is they tried to dial back the sycophancy and then it took away the character and like the
humanness that people have gotten attached to in GPT4 and earlier models.
And like, it all seems to come back to OpenAI doesn't realize that what it's selling often
is like a companion and a therapist.
And it doesn't, it reminds me of like Q-tips.
You're not supposed to put them in your ear, right?
But that's all anyone uses Q-tips.
I was going to say, you're not meant to do you.
Of course not.
But like, that's the consumer.
That's how the consumer has chosen to use this product.
and they're saying like, well, we don't condone that.
We don't think it's like the best use of our product.
And, you know, we know better than the consumer, of course.
I think it's one abstraction higher, which is I don't think they know what chat GPT is.
I don't, I did AI booster piece came out last week.
But it was, I had this whole thing where it was it's so, they don't describe what chat GPT does.
If you go on the website, like, it's like, yeah, it analyzes data and it's, it's brainstorming and charts and stuff.
The agent does things too.
Please buy it.
And then you try and actually look for any use cases and there's nothing.
I think that they're just guessing.
But my favorite thing I'm seeing, my favorite thing is that now people are like,
GPT40 isn't the same because they brought it back.
And now people are just freaking out.
People are like, no, it's not the same.
It's different somehow.
I honestly don't know if it's true.
I just think that they've entered gamer mode.
This is just what gay.
This is how gamers react.
It's like the gun isn't the same.
It's literally the same code.
No, you've changed something.
I think you've checked. I know. And it's what happens when you release an imprecise glazing bot
onto the world. It's also really funny how literally any of these companies could have been
Open AI. There doesn't seem to be anything special about this company at all anymore or ever.
Well, you know, I mean, not everybody can lose as much money as Open AI. You know, that feels
a very special. Or have the connections to Masayoshi Sun, you know. Oh, my God. I haven't heard from
Masayoshi Son in the minute. We haven't had an announcement of him claiming tomorrow or
Tomorrow he's going to be...
I like that he bought a Foxcoun lab, an old Foxcon lab, to turn into an AI server building place in like Ohio, I think it is.
It's like, mate, what are you doing, man?
Are you okay?
Someone needs to check in on Massey.
We need to hold space for Massey-Osi-San.
Yeah, bring him on.
I have asked him.
I have genuinely emailed SoftBanks PR, and I've emailed Anthropics PR for Dario.
Haven't heard back from either.
I assume there's an email issue.
because there's no other reason they wouldn't come on this show.
It's just,
now what's fun to watch, though,
is considering how many times we've had like AI bubble conversations on here,
everyone seems to be kind of waking up to it.
It's kind of fun.
Must be clear.
Everyone here was early on this.
Alison, you were actually very early.
You've been early on everybody.
Not as early as you, Ed.
No, I give you credit.
You're one of, like, the three people who, when the Metaverse was happening,
was actually calling it out.
So it's good to see in here,
but also insane that it's still going.
That's what I don't.
Like this open AI, 115 billion's burn within by 2028, I think it is.
I don't understand how people keep publishing this and being like, and that will happen.
I will say to my relief, the metaverse went away quickly because when it first was announced and I wrote a piece just being like, what?
Yeah.
What is that?
What?
And then like everything about it seemed really dumb in every iteration coming after.
And so I was like, who, okay, I wasn't crazy.
But with AI, and I know you can relate to this, I feel crazy because the lack of utility is still there and like the absurdity of the investment is still there.
And it does seem like that's why I wrote about the vibe shift.
Like it has been like going in Ed Zittron's favor in the last few weeks.
Fucking vindication finally.
But it's funny as well because even with that, this open AI story comes out and people are still like, yeah, they're going to burn $150 billion.
people reported about a month ago that they're going to spend $30 billion a year on Oracle starting 2028.
How?
How?
How?
I just, that's what I don't understand, how these articles keep coming out.
And I understand that reporters have to report the news and things they have discovered.
I get it.
But can no one just be like, and no one has any idea where this money is coming from?
No one.
$30 billion a fucking year from Oracle for servers that are yet to be built and all of this.
Like, don't need to worry about the fact that the servers,
aren't actually built and Abilene, Texas is not finished and the money doesn't exist.
And it isn't obvious how Oracle affords it.
They will have to take on debt to build this and Crusoe and primary digital infrastructure
have already done that.
And I mean, other than that, it could happen any day.
I just wonder if the media is actually not prepared for this.
And I don't mean in a conspirator way.
I mean, just in a, is the media actually set up for companies just lying or just projecting?
I mean, I feel like it reminds me of kind of the relationship.
that maybe our critics or, you know,
our coverage might have for the medium
where there's not an inherent antagonism or skepticism
of claims that are being offered
and an assumption of good faith
that continually gets betrayed or, you know, punished,
but gets carried on with over and over and over again.
I feel like the AI bubble discussions that we're seeing,
part of me also feels like they are going to disappear.
The second we start to see some of the firms,
maybe announce some favorable metrics,
even though, as we've been talking about for a long time,
revenues are not there, profits are not there.
The burn is only increasing, right?
And there's no way forward in the short term.
Or, you know, that I can think of
where these companies start to actually do the things
that they're claiming they're going to be doing
with transforming the world.
But I can see a scenario where, you know,
someone has a favorable quarter for adoption,
even though, you know, I just saw yesterday,
Apollo Global Management was talking about.
large firms are actually scaling back AI adoption, which already wasn't even providing returns
and was hurting productivity in the first place, right?
And it's really weird as well because there was that MIT study where it's like they said
95% of generative AI integrations don't have any return on investment.
There are some people critiquing that number, but something that comes out of that study
that I really like was it was saying that enterprise adoption is high, but the actual transformation
is low because this shit doesn't work.
Yeah.
And it's so strange.
And I think that the only reason that things won't immediately unravel with a good quarter is because the media has chosen to follow a direction now.
When you've got the Atlantic, the goddamn Atlantic publishing a story saying, yeah, it turns out that AI isn't really doing much, but it's holding up our economy.
It's like, holy shit, the Atlantic's willing to admit something that happened happened?
I didn't even know this was in there.
I thought that they just wrote up whatever was emailed to them by.
And don't hold your breath.
They just published Mike Solana.
Yeah, actually, I retract all my statements to, but it's, I think.
I think with the media, I see it in political reporting, in business reporting, in tech.
There's a deference to authority that I think American media, but all media have an issue with.
And I think that sort of speaks to the underlying economics of being in media.
right now where there's a general chill both economically and politically, reporters are worried
about their bylines being out there and getting stuff wrong. And I'm not saying that that's an
excuse, but I do think that is an institutional mindset that has taken root, especially in the last
10 years. That's just become like really hard to be a journalist and to do it right. But you are
starting to see that MIT report was so important because it caused people on Wall Street,
authority figures to say, hmm, I don't know about this. And then that got a lot of mainstream
financial media to kind of like do that questioning headline about AI that they maybe wouldn't
have done six months ago. I do like that there's a rumor about the next deep seek model doing agents.
They're not going to, but even just like if that comes out and they even claim they can,
I think that might have a market panic just because they'll be like, ah, China. I mean, yeah, I mean,
that's, I actually think there's something to that, right? Because, you know,
We did agents here.
Didn't do shit for sales force.
Really the market, did the market even really take a hit?
No, there's actually a wonderful story from this information.
Open AI in their whole projections through 2029.
They've reduced the amount of money they'll make from agents by $26 billion.
Why?
I want, anyway.
But yeah, it's like this deep seek thing could inspire people to get scared horribly because no one actually believes that agents exist.
Because they don't.
Yeah.
But they think they do, but they will, but they won't.
It's this, I don't think I've ever actually seen anything like this in tech.
I'm going to be honest.
It's worse than crypto.
Even worse than just the general generative AI thing is this concept of agents, though.
Because I saw some fucking thing about some one political blog saying that Donald Trump would do some sort of act.
He would do the, I forget the exact thing, but it would be an act that would make AI copyright holders just hand shit over to AI due to us needing to beat China.
And it mentioned.
within it. Yeah, the growing agenetic capabilities of AI. It's just, what the fuck is that? I've never
seen a tech thing in my life that has not existed like this. And people talk about it like it's real.
And I think also it's interesting to see the more it doesn't manifest, the more some of the
recommendations to make them happen just sound more and more like, these are also things that
might somehow bend the cost curve in our direction. Maybe we should make the internet unusable
to anything other than some of these programs. Right? And,
You know, I'm curious which one is going to give out first, like the really savvy ability a lot of these firms have had in spinning, sputtering, or, you know, spinning, you know, a crisis that might drain the markets or deter investors into, oh, actually, we just need even more capital, similar to what they did with Deep Seek.
The solution is even more compute-intensive models, you know, whether they're going to be able to do that faster than people whising up and.
say, you know, maybe we shouldn't misallocate trillions of dollars of capital over the next few
years towards this.
But this is the thing, though, I don't think there's anything stopping this because the
suggested thing was the, okay, so all of these model companies can steal from everyone, which is
what happened already, even with this anthropic settlement.
It's not, it's great people are getting $3,000.
I love that.
That's also what the companies were offering.
That's similar to what your payout would have been if you said, yeah, right?
Yeah, I didn't know that.
I think like some publishers were offering or, you know, trying to ask authors,
hey, if we pay you this, would you be, would you allow your book to be trained on?
Would you allow, you know, be put into a dataset?
The payment that you're getting from the settlement feels or reminds me of the amount of money
that people are being offered in those sorts of deals.
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I think the thing is, okay, they already steal everything.
Well, okay, we need to give them as much money as possible.
We've already done that.
Are we just going to do this forever?
Because even if we do this forever, nothing's going to change.
Even if I'm completely wrong, an open AI keeps going another five years.
Okay, so we're just going to annihilate $150 billion.
dollars, there are no more things here.
Like, their projections, Open AI's projections from the information, their chart, I don't
even need to show you this because this is just fan fiction at this point.
There is, in 2026 starting, there is this growth of this orange thing that is other revenue.
Who knows what it is?
I don't know.
Open AI doesn't seem to, and that's really important because they're going to make what looks
like several billion dollars from this next year.
What the fuck is going?
Every time I look at this company, I feel a little more insane because they've now lowered their expectations of selling their access to their models by $5 billion over the next few years.
What even is Open AI at this point?
Is it just a rap?
Have they become a rapper company of their own models?
They're no better than Cursor.
It's just, it's so weird.
And I realize I'm kind of going in circles at this point.
But it's, I, even the metaverse, even crypto, even crypto functioned.
It was bad.
It's still bad.
It is bad cloud software, but it still did the thing.
AI doesn't even seem to be doing it, and they need more money to prove that it can't do it,
and actually they don't have enough right now, but they're going to need even more.
I don't even know how people are still taking this seriously, because on top of that,
did you hear about the Microsoft negotiations over the nonprofit?
I've been hearing reports.
Well, they're delaying it to next year.
They need to convert by the end of the year, otherwise soft bank comes their round in half,
And everyone's just like, yeah, it'll be fine, mate.
We'll work it out.
What the fuck?
Have you, have either of you ever?
I know, Ed, you covered Uber a lot.
I don't even think the economics match with that either.
No.
I mean, you know, it's interesting because I think Uber's strategy,
central strategy from the beginning was, you know,
we have a few existing playbooks that we need to reference,
you know, the Coke deregulation of the taxi industry in the 90s,
as well as deregulatory campaigns that they led,
you know, in Seattle and historic campaigns in San Francisco.
There's a lot that we can reference.
And if we can figure out a way to bootstrap ourselves onto the model
and onto those previous histories of deregulation,
while delaying scrutiny long enough for economics to actually,
you know, get to a profitable place, we'll get there,
which is what they did, right?
But even then, I mean, I feel like from the beginning, as much as I hated a lot of the coverage of Uber for years, the people who were always correct about it were like the labor reporters who had actually, you know, if you spend time talking to the drivers, that will lead you to be a little bit more interested in the, you know, what can justify the suffering behind this.
And then you almost always will see that there's no, at that point, there were no way the unit economics worked unless you subsidize everything.
Yeah.
I feel like similarly, there's something going.
on with artificial intelligence firms in the global AI value chain where if you start with a labor
analysis and you look at, you know, invisible workers or ghost workers that are integral.
The Kenyan people training the models.
Yeah, or labeling or, you know, any, any laborer that's out of sight, out of mind.
You know, then, you know, starting there and going up, it becomes hard to ask, okay, how are we
supposed to allocate all this capital towards a model that as is,
is right now is cutting all these corners for costs and it's still burning tens and tens
and tens of billions of dollars and is asking for trillions of dollars more.
But I don't know.
I mean, part of my fears that they are successful in the way that Uber was where if you get
enough buy-in from military industrial comp, well, you know, for, in the AI's case, if you
get enough buy-in from military industrial complex, if you get enough buy-in from, you know,
social programs and interfacing them and helping cut, cutting them or redirect traffic
through them. If you get enough buy-in from other tech firms, if you get rents from other startups
they need to use and get access to your product. And also if you graft yourself onto everybody's
daily interactions, daily lives, the way they interface with the internet, can you actually make it
work? Which is also another way to say, like, what if you just become a massive parasite?
The funny and grim thing is, is AI is a terrible parasite. It's not good at it. It doesn't, like,
because Uber's success came from being able to graft itself on through utility.
And subsidized pricing that meant that everyone used it.
And also cabs kind of fucking sucked.
Yeah, I mean, yeah, they sucked.
And also transit in most city sucks.
And I mean.
And it's only gone worse.
The inherent colonialism of most technology applies very good from Karen Howe, of course, Empire of AI.
Empires of AI did an episode, great book.
But in this one, it's kind of shit colonialism as well because they don't even, they haven't
found a way to actually exploit in a way that's profitable.
They haven't found a way to use human beings because the fundamental thing they want to do
It's kind of like if Uber, sometimes you got in the car and you got out at the wrong place.
And I don't mean like in a different country.
Or you got into the car and it just exploded sometimes.
And I sound like I'm joking, but it really is that bad.
And on top of it, it's not replacing labor.
And it's also not the kind of tech that can replace labor.
So it's my grand theory that they're just playing the hits.
They're trying in the same way that you just eloquently put, Uber played the hits of,
here's how we did deregulation, here's how we did growth.
and this is how software grew in the past,
I think the AI is trying to do the same thing,
and it's bad at it.
It's like watching a new class of dipshit
try and do the more evil dipshits of the past did
and fail.
In fact, these lobbying groups, lobbying for AI,
I hear a lot of people saying,
oh, they're lobbying, they're lobbying, they're lobbying.
It's like, what for?
Oh, no, they're going to build data centers everywhere.
They already do.
They're going to steal from it.
They already do.
They're trying to replace.
They're already trying.
Everything that everyone's scared of,
they already can do other than the,
doing part. They can't do any of that. I'm sorry, I just, I just remembered as well yesterday,
trying to read that, because I went on the chat GPT pro subreddit because I hate myself.
And I was trying to find someone who'd use the agent. And every post was someone saying,
anyone ever used the agent, you got any tips? And everyone just, it doesn't fucking work.
It's, it's broken. Actually, here's a good question. As an Ed, have you, can you think of a
company that's ever released something just completely broken before? Because the metaverse kind of
worked. It wasn't what they were promising, but it worked. It was a virtual world-ish.
I mean, the pharmaceutical industry has a nice long history putting out quasi-effective
drugs that have all kinds of consequences. And I can't remember who skeeted about this a few
weeks ago. It's after one of the, you know, it's become such a genre of the journalism right now
about AI about like, this man became delusional and had a psychotic episode because of his
chat GPT relationship.
And it was one of those going around and someone skated about how if there was, if this
was coming from a pharmaceutical company, it would be recalled immediately.
There are real regulations in place that could actually claw that back and help save
people's lives.
But there are no regulations around AI.
So we get chat GPT gods and spiritual awakenings and all these psychotic episodes.
I do think that that stuff is going to genuinely be its downfall, though, because right now
it's burning more money than anyone's ever burnt before.
And the most common use case people can talk about is, yeah, it drove that guy insane.
That guy went crazy.
There are children who's horrifying, killing themselves because of this thing.
That's what it's getting known for.
And otherwise, it's like, yeah, your most annoying friend loves this.
Because that really, it's the, you love them, but they're like, I learned about all this and chat JBT.
It's like, you didn't.
Well, you know, on that, part of also, part of my, a fear I have is I think similar to
you how when firms were rolling out facial recognition surveillance and insisting that we need
biometric surveillance to help keep city safe, community safe, products safe, one angle that people
used to attack it was well you know like the racial bias of these things will allow them to
you know misidentify black or brown people more often than not and they might get arrested
they might get targeted by the police in one way or another.
And that is why we should get rid of the technology
versus we should get rid of the technology.
And I think, like, I'm curious, you know,
how it's going to go, the concern about it inducing psychosis
or inducing suicides because I could see a scenario
easily where they patched together something
that looks like a fix.
And it's not until later, a year or two or three
after people are much more dependent,
that other harms come to the foreground, whereas we lose something out, I think, not to say,
you know, not to say or marginalize the fact that it has immense social costs or harm here,
but it does in some ways remind me of the way in which that debate over facial recognition went.
And then they, you know, they solved, you know, with quotation marks the racial bias problem.
And now people have more or less accepted that facial recognition is okay, actually.
And you're right. As long as it's not racist. And that's the thing. It's people, I didn't say this as a white bloke, but it's like people really underplay how endemic that racism is within all algorithms. You know, Compass, which is like this very, very old algorithm for being like, it's basically minority report. Yeah. Both in the reference to the thing and it reports on minorities in that it says, yeah, this person will likely offend again and that should be, and it isn't a unilateral the judge has to take it. But what a surprise.
It's often used to them black people to the jail systems because it's heavily biased against them.
And yeah, I somewhat fear LLM's doing similar.
They're probably already doing it.
And I think that every algorithmic system is inherently racist.
There's not enough people running them who actually fucking try.
It's inherently biased against women.
I think there's also, I wish I had this in front of me,
but there's also something about how like more,
there are more fans of generative AI who are male than female.
out on it's just but do you think it's possible that you know they'll try to say oh we can solve for
the psychosis problem and then that will undermine a large the problem is how do you solve it because
it is probably a small it is probably a small scale problem we actually don't know and it's not
that these companies know or will tell us but nevertheless each one is so horrifying it's this is
like the story in the Wall Street Journal,
Julie Jargon, another person there who wrote that,
where it was like a murder-suicide,
an actual son of Sam Orkman situation,
which is fucking terrifying that this is happening.
I don't know if you can completely solve that.
Because all it takes is one popping up again for them to go, fuck.
And it's also not just a chat GPT problem.
There's this woman on TikTok who,
she has been saying what Claude has been telling her.
And it's like,
oh, this is giving me psychic video.
I think it is. It's also the ultimate grifter tool. It's just it's that's why I think it's
taken off so much on social media as well. It's a tool that naturally fits into the grifter's toolbox.
I think that I actually have similar fears that they will try and find ways to hand wave away from this
if it was the only problem. But they have so many problems. There's so many problems at this point.
But I do also think that people need to remember how racism in algorithms is fairly, it's in all of them.
I mean, the, you remember Microsoft Connection.
which literally couldn't see black people,
which was a joke in the show Better Off Ted,
if anyone watched this great show.
It's just, it's insane that.
I mean, sadly, it's very obvious why this keeps happening.
It's because the people are predominantly white and male,
and it's just they can't really.
And also, you can't really fix this stuff
without intentionally building the data,
which would require them to spend money on something they don't care about.
Right.
And they don't really understand what they're doing
when they go in to tweak these models.
Yeah.
They don't know how overcorrecting or undercorrecting their being.
So they kind of have to just try and then put it out in the world and then wait for something bad to happen.
It's funny.
It's not funny.
It's extremely sad in that journal story that you referenced, which I read twice because I was like horrified.
And also the reporting was incredible.
It was really, and they said it as this appears to be the first instance of a murder resulting.
We've seen suicides, but like this is a murder suicide.
And when OpenAI responded to the question about, did the bot ever respond to this guy who was clearly having a delusional episode, hey, you need to talk to a real-life therapist.
You need to go to the hospital.
You need to seek help.
And I think they declined to comment.
It was like a very evasive maneuver.
But like ultimately the journal had seen the one time where the bot said, please go to the emergency room was.
when the guy, the guy who was having paranoid delusioned said, I think my mom is trying to poison me.
And the bot said, if you think you've been poisoned, you should go to the hospital and get your stomach pumped.
I agree they don't know how to tweak these things. But I must be clear, worked in tech for a long 16, 17 years now.
And that's not even including my games journalism work. It is not hard for them to just have a, just a unilateral thing of, oh, you're talking like this. I'm going to stop.
I mean, Anthropic just announced that they have a thing that will cut a conversation, which is good.
All of them should do this.
But it's they could if someone, and the whole thing people, I've seen where it should be if you start talking like, I'm going to do this.
I am becoming this.
It should say, hey, you sound like you're having a paranoid, like I'm worried about you.
You should go and speak with it and just stop working with them.
people will say, well, the way they get around that is by telling the chat GPT window,
oh, yeah, I'm writing a story.
I don't know.
Do we need them to write a story about that?
Do we need, what is the answer?
And the answer is they don't give a rat fuck and no one's make.
I genuinely think, because it's really, same thing with like,
and same thing with social networks as well.
It's, you don't ban every slur the moment someone says it,
but I don't know.
You have a thing that says, hey, someone said a slur.
Maybe take a quick look at the slur.
And you could probably just ban that person because I'm guessing the most uses of the N word on social media are not used as in culturally sensitive ways.
They're probably insanely racist.
You just cut them down.
It's like, well, we can't.
It's an issue of free speech.
Fuck you.
No, it's not.
It's an issue of free speech when a person can't exist online without racism happening to them.
Right.
And these models, they could stop them.
But I do think there is a compelling argument of they really don't know what to do that they're every,
time they touch it, something else breaks.
Honestly, it's kind of the most egregious version of the most common software problem,
which is coding is really fucking annoying, and we don't know how these work also.
And gender to AI is not going to fix your coding problems, no matter how many times you tell
us, Sam Altman, that AGI is just going to fix everything for us.
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That's actually being
my favorite thing to do right now is go on the R slash cursor, R slash chat GPD Pro, R slash
Claude AI, and just looking at people complaining. And what they're complaining about is,
hey, I keep hitting rate limits. Hey, it keeps breaking things. Hey, it's, you get one guy every
so often who says, this has changed my life. And then you see what the response is being like,
yeah, but they fucked up all my stuff really badly. Doesn't really work. And we have an upcoming
episode with a cult Voji about this, where it's like, the average software engineer is not just
writing code anyway.
And so you, this is also, I think, this is actually, this is funny.
This is a good, this is a good one to laugh about.
So their only real growth market right now is writing code.
The problem is writing code requires you to use reasoning models.
Reasoning models inherently burn more tokens.
And the way they burn tokens is because they're thinking, they don't really think.
They look over what a prompt asks for and goes, okay, what would be the steps to solve this?
With code, that becomes so, so complex.
and the more models reason, the more they hallucinate.
So the very product that they are building that is going to save them is also the one that is going to burn more compute.
And this is a rumor.
I've heard from a source that it can take like four to 12 GPUs for one person's particular, particularly rough coding, like a refactory.
That's sustainable.
And that's for one of the smaller models as well.
That's for like 04 many, which is a reasoning model.
It's like, what do you think the big ones are like?
In the information, they talk about Open AI having a new $80 billion in cost that they expend over the next three, four years.
And it's 115 by 2029 as well.
There's a good chunk of this come out of, oh, it turns out like computers incredibly expensive and we want to center our business model around it.
I think it's that.
And I think it's just they don't know what else to do.
It's kind of like we're saying with the Uber model.
They're playing the hits.
It's like, fuck, what did we do in the past?
We spent a lot of money.
Shit, what do we buy?
GPUs, I guess.
We train more.
They're going to spend so much money on training.
And it's like, to what end?
Your last model was a joke.
This is why it was really interesting to see that op-ed that came from Eric Schmidt and his research assistant.
Oh, yeah.
where he was, you know, Eric Smith is someone who was an architect of the idea that of-
Formercy of Google.
Former CEO of Google, you know, chairman of national security, a group that was trying to figure
out how to merge artificial intelligence into defense contractors and how to create, you know,
foreign policy that would allow America to dominate, you know, really to win an arms race and
AI arms race with China.
And he comes away saying the strategy I basically helped craft, which was that we need to prioritize AGI so that we can get,
prioritize AGI so that we can get like a permanent lead to deter any potential rivals is, is scaring everyone.
And it doesn't work.
It's a waste of capital.
It's misallocating capital.
It's imposing all these harms.
And if we look at the competitor that we're going up against, against China, by abandoning the AGI pursued, it instead,
prioritizing ways to figure out how to experiment with it, integrate with it, build up,
you know, build up practical use applications.
You know, there's a much more general public acceptance of it, willingness to try it out,
adopt it.
And we're not seeing because we're not trying to scale out these massive either monopolies
or one size fits all models, you see a wider, you know, adoption and something that looks
like it's a more sustainable model.
Are we going to follow it?
Probably not.
Of course not.
What I love about chasing China as well is China has had stories for like a year where it's like, yeah, we have a bunch of unused GPU compute.
Yes.
We're massively overbuilt.
Joseph Sy, I think it was.
The Chinese billionaire said, yeah, it's a bubble.
We have a GPU bubble.
And America's just like, we're going to need to fucking copy it.
We need to beat them.
We're going to run our economy into the ground.
We can destroy China.
It's like we're saying we're going to copy them.
And what is it that we're actually doing?
We're prioritizing, developing artificial intelligence that has like a question mark,
consumer use that's going to be used in, you know, killing machines and drones maybe and for
surveillance purposes. But that isn't even generative AI as well. Yeah, that's not even generative
AI, but that's where the actual excitement for any sort of artificial intelligence future is.
And this is, you know, the generative AI stuff is talked about as if it is the future,
the transformative future of artificial intelligence. In reality, it's just the actual, you know,
the actual interest, excitement, capital is going to, I think, go back to the center of gravity,
which is like, how do we just figure out the shiniest, the most fearsome weaponry?
But I think that what's weird about this is I don't think we've had a bubble that spread so far into consumers' hearts.
I'm not saying it's as bad as the housing bubble.
But consumer software, if we go back to the dot-com boom, I think it was like 45% of Americans had access to the internet.
It was relatively small in comparison, though the massive overinvestment in fiber happened.
But I don't think people realize what they see to the chat GPT may not exist in a year.
or two, at least not in the same way.
It's going to be so...
You're already seeing week-long rate limits on Anthropics Claude.
Like, do people not realize that this could...
I guess they don't realize.
And I don't...
I think that there's going to be a big dunce mask off.
There are so many people who have fallen behind this.
I mean, not to bridge too aggressively into this, but there was a story in the Wall Street
Journal that I shared with you, of course, about this movie called Critters.
It's with a Z or Z for my Canadian, UK listeners.
where OpenAI will be providing the compute and the tech to do a movie called Creators,
with a budget of less than $30 million, though it's not obvious whether Open AI and their computer is part of that.
But it's the weirdest shit in the world.
Alison, you would bring this up that they're still using a bunch of humans?
Yeah, so I was reading the same story, and I haven't done any, this came out this morning,
so I haven't done my own reporting on it, but I will say from the story I read,
it seems like they're hiring two different animation studios with artists,
and writers working on the script.
They're hiring human actors to voice the characters.
And then some mystery X amount of the movie
will be put together with AI.
And I honestly don't know how different that is
from a regular Pixar or DreamWorks animation process.
But it seems like there's, when I first saw the,
you know, the teaser image is very cute.
And I was like, oh, God, they're like,
this is going to be some AI propaganda.
And it's going to be very cute
and hard for me to refute.
But actually, it's just a human-made movie, it seems, with an extra computer help.
And this picture I'm holding up, of course, we're listening to a podcast that you can all see this.
It's just this generic blue furry creature.
It looks like an extra from Monsters' Inc.
It really does.
But it's not due to copyright law.
It's not the same thing.
It's different.
But what's funny with that as well is, I was mentioned this as a lead-in.
It's that $30 million thing.
If that doesn't include OpenAI's compute, it probably costs.
the same as a Pixar movie.
Because you're still like, actually
3D animation is one of the few
other GPU use cases. So really
it's just a different thing running. It'll be
funny also if they save money because they don't do any
marketing and they're like, see how cheap it is if you
don't advertise a movie at all?
I think they might be getting
around some Hollywood unions
by going overseas.
Oh really? They're going completely overseas too?
I'd have to check. Don't
quote me on it, but I think, I know they were using
at least one overseas animations
studio so they're probably saving a lot on the animation process by not paying animators i would guess it's
so cool and also another fact from the story is we don't know how long the piece will be and it's
if it's like five minutes long i'm so sorry come on feature length feature link feature link they should
make it as long as uh that silent napolean film just which one six hours oh six out yeah actually
love that i they should be forced to it i don't know how they're going to do a feature long movie
Because I don't know if you've cursed yourself by looking at the AI generated movies that people, every so often one pops up on Twitter where it's, it'll be, yeah, I made this entire thing in AI.
And you look at the friend and it's like a different fucking thing each time.
That balloon boy one, different size balloon, different color balloon.
You read the stories about the balloon boy one.
It's like, yeah, they kept putting a face on the balloon.
We don't know why.
I just, and I know I have a good amount of film and TV people who listen who are quite anxious about this.
This doesn't scare me because they're very vague about the details.
Every other big tech innovation, I even, other than the Metaverse, I guess,
they usually like to show you behind the curtain a little bit and like talk up.
There'd be a big splashy story in like MIT technology review or something like that,
being like all New York Times, be like, oh, look at this, look at that, look at all the things.
And they're like, yeah, we're just using some people somewhere in the inner place.
And they will make it.
And in the Wall Street Journal story as well, they showed sketches that would then be turned into AI.
I just, this feels like a death rattle far more than something terribly scary.
And I understand film TV, people are likely a bit scared.
But it's like they're using out of the country studios.
They're, of course, I just assume they're skipping union stuff because this is all they do.
It's like, this is the best they can squeak out years in.
Fucking how is this?
And it's like a boring looking children's thing, I guess, with a name from 2001.
Oh, it does have the producers or writers.
who worked on Paddington and Peru, apparently.
What a movie about a criminal.
It's a sequel to a movie about a criminal who unfairly attacked.
No, sorry, I'm not aware of.
Then this is the question of, you know, where in the Uber analogy is this?
Is this, you know, Uber's failed expansions where they tried different models overseas
or is this Uber returning home where they take the lessons from overseas
or they use those overseas thing to buy them a bit more time?
to then subsidize operations.
Here is my comparison.
This is the drone deliveries.
This is the drone deliveries.
It's the Amazon drone deliveries.
Great job Casey and Kevin several years ago.
Talked about the Amazon drone deliveries.
Never fucking happened, mate.
It's hilarious as well because it is the same thing.
It's like, we cobbled together this.
It sucked.
It took so much money.
It's horribly inefficient.
It sucks.
We hate it.
You hate it.
The customers hate it.
We hate doing this.
But we did it.
Tada.
And it's, okay, well, you sure prove that.
At your point, Alison, it's like, yeah, we use the power of AI to hire a bunch of people to do all the real work.
Because you can't trust this to work.
It does not work.
When I saw a headline for an AI movie, I was like, it's going to be awful.
Yeah.
It's going to, like, writing a movie is hard.
But wait a minute.
Also, there's the other thing of, oh my God, how are they going to lip sync this shit?
How do you lip sync this?
You can't generate the same frame.
How are they going to, are they going to go in and post-edit it with humans, I assume?
At this point, how much you actually relying on AI for?
It's very unclear.
It all feels like being at a party where everyone's pissed themselves.
It does feel like some next level, like, young propaganda.
Yeah.
Like, if they can get kids to enjoy whatever this monstrous movie is going to be,
then maybe there's, like, a longer term brand play for open AI as a warm and cuddly,
safe for children. The thing is, French and Korean companies have already been doing slot-based
3D shows. I don't mean the famous one from the K-pop Demon Hunters, which is apparently
very good. I've not watched it. I haven't seen it yet. Please don't kill me. I'm not attacking that.
I'm talking about there is a gluttony of like very cheap kids, 3D kids shows and they've been around for
decades because you can do the shit on the cheap now. You've already, another thing where the Uber
model made sense as long as you didn't count the costs, which is, yeah, this is, you know, this
is a way of getting people around that they become dependent on because it's useful. This is like,
we have found an extremely expensive and annoying way to do something that we already have a cheap
alternative to do. It's not like there was a cheap, a cheap, reliable cab service that Uber replaced.
There was a slow shit cab service that Uber replaced everywhere. And it's like, is it a good
company? Is it horrible to workers? Yes. But does it work? Yes. This is, we're going to automate
everything with the power of AI other than labor.
other than stuff.
That's where the AI story starts to overlap again with crypto, where at least with Uber,
you understand what you're getting as a consumer.
And then with AI, you're kind of like, I don't really know what this is.
I don't know what problem it's solving.
It's like a solution in search of a problem.
And that was crypto's same bag.
It's just like, oh, we invented this cool new alternative money system.
Why?
The thing is with crypto is they always had a plan which sucks.
I really should have seen it coming.
I was not smart enough at the time.
It was they always wanted to just get embedded in the financial system
and then just turn the funny money into real money.
AI doesn't have that.
There is no way to turn this into new.
You can't just generate new money.
That's what crypto did and it fucking sucks.
And by the way, the next crypto crash is going to wash out some real.
It's going to really fuck people up.
I don't think people realize that SBF2, who at this point might just be SBF.
F. Like if he just gets pardon and comes back.
Listen.
Honestly, if he comes back and does it again, no one can complain.
I'm going to a law school. I've got to go on the hyperbolic time chamber.
I'm going to join the fight just so I can put him in cups.
You're going to put Sam Backman Fried back in cuffs.
Yes.
Oh, Sam Maltmanfried would be good.
It's just I don't see an endpoint for this.
I don't see everyone's, even the boosters at this point, they're like, and then it will be powerful.
When, how, what are you seeing that even tells you?
this. I don't even want to fight. Just tell me.
I do think there's so, there's just so much money behind it. And there's so many people
who've invested. I was listening to a VC guy get interviewed on the Oddlots podcast. And I
can't remember his name, so I apologize. But he was talking about how all these founders,
like all these smaller startups that are getting in on the AI game, all these founders have kind
of been raised with this idea of Silicon Valley and what it will bring you. And it's life-changing
amounts of wealth. And when you have enough people, and like the VCs are part of that, the actual
tech startups are part of that, Stanford and like kind of the whole ethos of the valley is like,
if you just keep going and work hard enough, you can have generational wealth. And that is a very
powerful force. And I feel like I think we're going to be seeing AI kind of hype last longer than
we have in other previous bubbles and tech cycles, in part because the potential for the wealth
is outstanding. And it's like nothing we've ever seen. But that's the thing. You're completely
right, except AI has one problem, which is all the companies lose a shit ton of money. And no one's
selling, no one is buying. There's been like three acquisitions. There's one to AMD, one to
on video, one to a public company called Nice, which sold a customer, it was an AI, a Cognavi,
I think they were called. It was like an AI customer service thing either. Never really seemed
that good anyway. But that whole thing is true. And I think that that's what people are, and I think
that the myth of you can just use AI to spin up a startup quickly as well has kind of gone into,
has kind of fueled that mythos as well. But the problem is, this is so different because the whole
point of Silicon Valley, the whole thing where you can just move there and
start a startup is because it didn't cost ruinous amounts of money to start one. You didn't get
$3 million from a VC and expect to spend $2.5 million of that on compute. You were like, okay, we're
going to have to bootstrap a little bit further. We've just got a little bit of venture capital.
We're going to go this far. This is like every step of the way this cost increases massively.
It used to be it was sales and marketing and just people. AI is people plus compute, plus marketing,
plus this plus that.
I think, you know, perplexity, the AI search engine,
spent 164% of their revenue in 2024 just on compute in AWS.
It's like this is not, this whole generational wealth thing,
I fully agree it's what they're using to sell it.
I just don't think it's going to work.
And it's scary because this could have the wide thing,
and I really haven't talked about this enough,
the wider problem is as well,
is all of these people who went to Silicon Valley,
raised all this money or have pretty much raised to sell companies that will never sell,
that they can never take public because they burn too much money.
They don't really have great user bases because they don't really have those.
And so they're just going to sit there and then you've got a bunch of VC money tied up in that that will never exit and a bunch of limited partner money that will never exit.
I think that there is an entirely separate bubble building that when that burst is going to,
the depression within Silicon Valley is going to be insane.
It's already pretty gnarly.
but I think it's like 33% of venture capital went into AI last year.
It's like eventually people are going to realize there's no exit for anyone.
And I don't know what that does.
I mean, it will piss off limited partners.
The money that comes to VCs is just not going to be there.
Well, so then that's the question, right?
Because venture capital encourages on one level overvaluing because you need to figure out a way to make more money than what you put in on the exit within
an acquisition or submerge.
Yeah.
But on another level, you're also working within a network trying to enrich yourself and your
friends or trying to build the infrastructure for future startups, portfolio options that
you and your friends make to come in and make money.
Yeah, building a platform that other people can invest in bits of.
And so, you know, on one level, I really, I really do, I agree that there's not really much
of an exit ramp if there's actually no revenue and no profits.
But then also I would, I'd be curious, like, do you think they're going to try to ram these things through similar to like what we saw with Corey Weave, right?
Where, you know, like you talked, I think extensively about ways in which the financials there do not actually make sense if you're interested in a company that actually has the capital to do what is going to say to do, which is provide GPU compute to everybody.
And even though it has such a central role in this ecosystem, it can't make profits that are, you know, that justify the capital that's getting.
It has odious and burdensome debt that should be a massive red flag.
And it might be, you know, round tripping, right?
Yeah.
But this is supposed to be like the darling of the sector.
And it got pushed through.
Part of me feels like because of, I mean, the desperation.
Nvidia and Magnetar capital, of course, famous for the CDOs.
Yeah, right.
They're back.
But with Corweave, they pushed it through onto the markets, but that doesn't mean it can't die.
Right.
Well, so that's the thing. Do you think that it's possible that they'd be successful in pushing it onto markets, but it dies? Because I do. I feel like there will definitely be a lot of investment incineration. But I also do think we're going to have bags dumped on everybody. I think you could do it with something like CoreWave and Lambda, which is another situation where Nvidia is the customer invested and also sells them the GPUs, which they then use as collateral to buy more GPUs using debt, which is so good. You'll notice that there are no software companies going public. There's no software AI.
companies going public. Everyone thinks that Open AI goes public here and, oh, they'll go, the market's
going to, if they can even convert, the market's going to eat them for dinner. Oh yeah, we're going to
burn bazillions of dollars forever. No, the markets didn't like Corweave either. Corweave wouldn't
have gone public had Nvidia not put more money in. Lambda is probably going to be exactly the
same if they even make it. You won't see software companies because that's the other thing.
Corewe've had, albeit bunches of debt, assets.
They have data centers kind of through core scientific.
God, I hate these fucking companies.
But they don't, they have things that they can point to and relationships.
Even Open AI, that's the thing with them.
They don't, they barely have assets.
Oracle is building their data center in Abilene with Crusoe.
They don't own any of the GPU.
They have a few GPUs, I think, for research I've heard, but Microsoft owns most of their infrastructure.
They don't own their R&D.
Well, they do, but Microsoft also has access to that.
their intellectual property, same deal. So it's like, what actual value does an AI startup have?
People always say, oh, they're getting the data. They get the data so that the data will tell them.
It's like, what? It's all these horrible stories about like, oh, Doja's got an LLM, they're doing this with.
What's the end point? It's scary. Don't get me wrong. But it's, and then what? And there never is one.
And I hope someone, I hope an AI software company goes public. I want to see this so bad. I want to see.
You have any. If you give me the open AI books, the anthropic books, you become.
become the official homie of better offline. I'll mention you on every episode. Get me,
get me these books. Because I think all of them are going to be like a dog's dinner.
I've actually looked at the market. It's an Uber. Uber by comparison, they did burn a shit
ton of money. It's like $25 billion between 2019 and 2022. A lot of that was on sales and R&D.
It's pretty much Groupon. I think also their R&D with autonomous cars, but separate problem.
Right. But it's like there wasn't a, I can't find an example of someone that just annihilated fuel,
unless it's like planes.
And I think we've established the use case for planes by now.
Clear.
Sold.
It's just, it's all very frustrating.
But you know what?
I think I'm going to call it there.
I think we've had a good conversation.
Alison, where can people find you?
You can find me on blue sky at Amaro or on CNN.com slash nightcap.
Ed?
You can find me on Twitter at Big Black Jacobin.
You can find me on Blue Sky.
on Edward Ongoosso Jr.
and on Substack at the Tech Bubble.
And you can find me, of course, at Google.com.
Just type in Prabagar Ragavan.
You'll find me.
I pop right up.
That's all me.
Thank you so much for listening, everyone.
My episodes are coming out in a weird order
because I'm recording this,
knowing there's a three-part of this week,
but this will come out with a monologue of some sort.
Thank you so much for listening, everyone.
Of course, Baheed, thank you for producing here out in New York City.
And yeah, thanks, everyone.
Thank you for listening to Better Offline.
The editor and composer of the Better Offline
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