Better Offline - The Case Against Generative AI (Part 1)

Episode Date: September 30, 2025

In part one of this week’s four-part case against generative AI, Ed Zitron walks you through how generative AI is sold through a complete misunderstanding of the concept of labor - and myth-building by companies like NVIDIA and OpenAI.Latest Premium Newsletter: OpenAI Needs A Trillion Dollars In The Next Four Years: https://www.wheresyoured.at/openai-onetrillion/ YOU CAN NOW BUY BETTER OFFLINE MERCH! go to https://cottonbureau.com/people/better-offline use free99 for free shipping on orders of $99 or more.Newsletter: wheresyoured.at Reddit: http://www.reddit.com/r/betteroffline Discord chat.wheresyoured.at Ed's Socials - http://www.twitter.com/edzitron instagram.com/edzitron https://bsky.app/profile/edzitron.com https://www.threads.net/@edzitron email me [e-mail] LINKS: http://www.tinyurl.com/betterofflinelinks See omnystudio.com/listener for privacy information.

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Also Media Hello and welcome to BetRofline. I am, of course, your host, Ed Zittron. And after a few three-part episodes, I had an idea, what if I did a four-parter? In all seriousness, I know that this is a little bit long, but the topic we're about to explore demands quite a bit of depth, and it isn't something I could really do justice to in a one-parter or two-part or, I guess, even three-parter. But let's get into it.

Over the last few months, we've felt the vibes shift downward in an aggressive way, with both Mark Zuckerberg and Clammy Sam Altman saying that we're in a bubble. In the latter case, said warnings of a bubble are always couched in rank hypocrisy, as it's always implied that whoever it is and the companies they represent aren't part of that bubble, but rather it's other people and other companies making unfortunate decisions. The thing is, there's really no escape for either of these guys, not for Zuck and definitely not for Sam Ormman. And over the next four episodes, I'm going to make a comprehensive case for the fact that we're in a bubble and condense everything I've been talking about into one series. And I know I've been

all over the place and I get a lot of people saying, oh, well, where did you talk about this? And where did you talk about that? And that's kind of fair when you put out as much as I do. But I'm going to break this down in four episodes. I'm going to give you a comprehensive argument against the bubble. Well, I mean that for a bubble, I guess, but against generative AI in general. But in this episode, I think it's good to start from the beginning and work our way forward. To track the thread from the origins of chat GPT to the billions burn building data centers all over the world and the weak business justifications for burning a nearly a trillion dollars to keep this hollow industry alive. Now, in 2022, a kind of company called OpenAI surprised the world with a website

called ChatGPT that could generate text that sort of sounded like a person using a technology called Large Language Models, LLMs, which could also be used to generate images, video and computer code, or at least would eventually. Large language models require entire clusters of servers connected with high-speed networking or containing this thing called a GPU. graphics processing units. These are different to the GPUs in your Xbox or laptop or gaming PC. They cost much, much more, and they're good at doing the processes of inference, the creation of an output of any LLM, and training,

feeding masses of training data to the models, or feeding them information about what a good output might look like so they can later identify a thing or replicate it. These models showed some immediate promise in their ability to articulate concepts or generate video, visuals, audio, text and code. They also immediately had one glaring, obvious problem. Because they're probabilistic, meaning that they're just guessing whatever the right output might be, these models can't actually be relied upon to do exactly the same thing every single time.

So if you generated a picture of a person that you wanted to, for example, using the storybook, every time you created a new page, using the same prompt to describe the protagonist, the person would look different. And that difference could be minor, something that I really could shrug off, or it could make the character look like a completely different person. Now, none of this, by the way, is me validating or saying that any of this stuff is good. I'm just describing it. Moreover, the probabilistic nature of generative AI meant that whenever you asked it a question,

it would guess us to the answer, not because it knew the answer, but rather because it was guessing on the right word to add in a sentence based on previous training data. As a result, these models would frequently make mistakes, something which we later refer to as hallucinations. And that's not even mentioning the cost of training these models, the cost of running them, the vast amounts of computational power they required, the fact that the legality of using material scrape from books in the web without the owner's permission was, and remains legally dubious, or the fact that nobody seemed to know how to use these models that actually create profitable businesses. These problems were overshadowed by something flashy and new,

and something that investors and the tech media believed would eventually automate jobs that have proven most resistance towards automation, knowledge work and the creative economy. The newness and hype and these expectations sent the market into a frenzy, with every hyperscaler immediately creating the most aggressive market for one supplier I've ever seen. Nvidia has sold over $200 billion of GPUs since the beginning of 2023, becoming the largest company on the American stock market, and trading at over $170 as of writing this sentence, only a few years after being worth $19.52 a share.

Now there's a stock split that happened there, but it works out that way. Now, while I've talked about some of the propelling factors behind the AI wave, automation and novelty, really the complete picture. A huge reason why everybody decided to do AI was because the software industry's growth was slowing, and SaaS, Software as a service company, valuations were stalling or dropping, resulting in the terrifying prospect of companies having to under-promise and over-deliver and be efficient, you know, gross things like running sustainable businesses. Things that normal companies, those whose valuations aren't contingent on ever-increasing ever-constant

growth, don't have to worry about because they're normal companies. Suddenly there was a new promise of new technology, large language models that were getting exponentially more powerful, which was mostly a lie, but hard to disprove, because powerful can mean basically anything. And the definition of powerful depended entirely on whoever you asked at any given time and what that person's motivations were. The media also immediately started tripping over its own feet, mistakenly claiming OpenAI's GPT4 model tricked a task rabbit into solving a capture. It didn't, this never happened, or saying that, and I quote, people who don't know how to code already used bots to produced full-fledged games. And if you weren't wondering what the New York Times was referring to when

they said full-fledged there, it meant Pong and a cobbled together rolling demo of Skyroads, a game from 1993, likely because a bunch of that training data was fed into the models. Now, the media and investors helped peddle the narrative that AI was always getting better, could basically do anything, and that any problems you saw today would inevitably be solved in a few short months or years, or at some point, I guess. Not really sure when that point is, but but damn do they think it's coming. And LLMs were touted as a kind of digital panacea, and the companies building them off at traditional software companies

the chance to plug these models into their software using an API, thus allowing them to write the same generative AI wave that every other company was riding. The model companies similarly started going after individual and business customers, offering software and subscriptions that promised the world, though this mostly boiled down to chatbots that could generate stuff and then doubled down with the promise of agents, It's a marketing term that's meant to make you think autonomous digital worker, but really means broken digital chap or of some sort, or just broken digital product. It really depends how you're feeling that day.

Throughout this era, investors in the media spoke with a sense of inevitability that they never really backed up with data. It was an era based on confidently asserted vibes. Everything was always getting better and more powerful, even though there was never much proof that this was truly disruptive technology, other than in its ability to disrupt. apps you were using with AI, making them worse, for example, suggesting questions on every Facebook post that you could ask MetaI, but which MetaI couldn't answer. And I mean on memes, on just random posts. It's really not useful in any way, shape or form. AI became omnipresent, and it eventually grew to mean everything and nothing. OpenAI would see its every move lauded over like a gifted child. Its CEO Sam Allman called the Oppenheimer of our age, even if it wasn't really obvious why everybody was impressed. GPT4,

felt like something a bit different, but was it actually meaningful? The thing is, artificial intelligence is built and sold, or not just faith, but a series of myths that AI boosters expect us to believe with the same certainty that we treat things like gravity or the boiling point of water. Can large language models actually replace coders? Not really, no, and I'll get into why later in this series. Another podcast from some SNL late-night comedy guy, 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 head writer Streeter Seidel, help an acapella band with their between songs banter. There'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 yard birds, right? That's the name. The Harvard Yard, but 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 ads supported streaming music from Spotify and Pandora.

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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 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 you don't feel like. Don't let that be the reason you don't do it. An Olympic champs Gabby Thomas and Katie Ladeki. 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 for wherever you get your podcasts. Presented by Capital One, founding partner of IHeart Women's Sports.

There are times when the mind becomes a difficult place to live. This is David Eagleman with the Inner Cosmos podcast, and for Mental Health Awareness Month, we're dedicating a series to understanding the mind when it struggles. I'm joined by doctors, researchers, and those with lived experience. We'll talk with singer-songwriter Jewel about anxiety. I started living in my car and then my car got stolen. I was shoplifting.

I was having panic attacks. I was agoraphobic. And making it through hardship. To be present is a learned skill. And it's hard to be present. We'll talk with John Nelson about clinical depression and the brain implant that saved his life. What I learned is that procedure made me happy because I'm disease-free. And we'll talk with leading experts like Judd Brewer about anxiety and John Hirschfield

about obsessive-compulsive disorder and the science of how the brain can change. This is a month of deeply personal and honest conversations about what happens when the brain goes off course and what we can do about it. Listen to Inner Cosmos on the IHeart Radio app, Apple Podcasts, or wherever you get your podcasts. Can SORA OpenAI's video creation tool replace actors or animators? No, not at all, but it still fills the air full of tension because you can immediately see who is pre-registered to replace everyone that works for them. AI is apparently replacing workers, but nobody seems able to prove it at scale. But every few weeks, a story runs where everybody tries to pretend that AI is replacing workers

with some sort of poorly sourced and incomprehensible study, never actually saying somebody's job got replaced by AI because it isn't happening at scale, and because if you provide real-world examples, people can actually check if they're true. Now, I want to be clear. Some people have lost jobs to AI, not just not really white-collar workers, software engineers, or really any of the career paths that the mainstream media and AI investors would have you believe. Brian Merchant has done excellent work covering how LLMs have devoured the work of translators, using cheap, almost good automation to lower already stagnant wages in a field that has already been hurting before the advent of generative AI, with some having to abandon the field and others pushed into bankruptcy.

I've heard the same for art directors, SEO experts and copy editors, and Christopher Mims of the Wall Street Journal covered these last year. These fields all have something in common. Shitty bosses with little regard for their customers who have been eagerly waiting for the opportunity to slash labor. To quote Merchant, the drumbeat, marketing and pop culture of powerful AI encourages and permits management to replace

or degrade jobs they might not otherwise have. Across the board, the people being replaced by AI are the victims of lazy, incompetent cost cutters who don't care if they ship poorly translated text. To quote Merchant again, AI hype has created the cover necessary to justify slashing rates and accepting just good enough automation output for video games and media products. Yet the jobs crisis-facing translators speaks to the larger flaws of the large language model era

and why other careers aren't seeing this kind of disruption. Generative AI creates outputs, and by extension defines all labor as some kind of output created from a request. In the case of translation, it's possible for a company to get by with a shitty version, because many customers see translation as, what do these words say, even though, as one worker told Brian Merchant, translation is about conveying meaning. Nevertheless, translation work has already started to condense to a world where humans would at times clean up machine-generated text, and the same worker warn that the same might come for other industries. Yet the problem is that translation is a heavily output-driven

industry, one where idiot bosses can say, oh yeah, that's fine, because they ran an output back through Google Translate, and it seemed fine in their native tongue. The problems of a poor translation are obvious, but customers of translation are, it seems, often capable of getting by with a shitty product. The problem is that most jobs are not output driven at all, and what we're buying from a human being is a person's ability to think and do. Every CEO talking about replacing workers with AI is an example of the real problem, that most companies are run by people who don't understand or experience the problems they're solving. Don't do any real work, don't face any real problems, and thus can never be trusted to solve them. In the era of the business

idiot, which is a piece I wrote a while ago, I talked about how this was the result of letting management consultants and neoliberal free market sociopaths take over everything, leaving us with companies run by people who don't know other companies make money, just that they must always make more without fail. And when you're a big, stupid asshole, every job that you see is condensed to its outputs and not the stuff that leads up to the output, or the small nuances and conscious decisions that make an output good as opposed to simply acceptable or even bad. What does a software engineer do? They write code, right? What does a writer do? They write words, right? What does a hairdresser do? they can't hair. Yeah, that's of course not actually the case. As I'll get into later in the series,

the software engineer does far more than just code. And when they write code, they're not just saying, what would solve this problem with a big smile on their face? They're taking into account their years of experience, what code does, what code could do, and all the things that my break is a result, and all of the things that you can't really tell from just looking at the code, like whether there's a reason things are made in a particular way. And a good code doesn't just hammer at the keyboard with the aim of doing a particular task. They factor in questions like, how does this functionality fit into the code that's already there?

Or if someone has to update this code in the future, how do I make it easy for them to understand what I've written and make changes without breaking a bunch of other stuff? A writer doesn't just write words. They justle ideas and ideas and emotions and thoughts and facts and feelings into a condensed piece of text. They sit up late at night typing thousands and thousands of words and it drives them insane.

It's often quite a motive, or at the very least driven or were inspired by a given a moment, motion, which is something that an AI simply can't replicate in a way that's authentic or believable. And a hairdresser doesn't just cut hair. They cut your hair, which may be wiry, dry, oily, long, short, healthy, unhealthy on a scalp with particular issues at a time of you and perhaps you want to change length, at a time that fits you and the way you like it, which may be impossible to actually write down, but they get it just right. And they make conversation, making you feel at ease while they snip and clip away your tresses with your never having to think

for a second, fuck, does this person know what they're doing? Are they going to listen to me? This is the true nature of labor that executives fail to comprehend at scale, that the things we do are not units of work but extrapolations of experience, emotion, and context that cannot be condensed in written meaning or bunches of trading material. Business idiots see our labor as the results of a smart manager saying, do this, rather than human ingenuity interpreting both a request and the shit the manager didn't say. Now, what does a CEO do? Um, well, uh, I did look. And a Harvard study said that they spent 25% of their time on people and relationships, 25% on functional and business unit reviews, 16% on organization and culture,

and 21% on just strategy, with a few percent here and there for things like professional development. Hmm. That's who runs the vast majority of companies, people that describe their work predominantly as looking at stuff, talking to people, thinking what we do next, and going to lunch. The most highly paid jobs in the world are impossible,

to describe. Their labor described in a mishmash of linked inspiration, yet everybody else's labor is an output that can be automated. As a result, large language models must seem like magic to these dickheads. When you see everything as an outcome, an outcome you may or may not understand and definitely don't understand the process behind, let alone care about, you've kind of already seen your workers as LLMs. You create a stratification of the workforce that goes beyond the normal organizational chart, with senior executives, those closer to the class level of CEO, acting as those who are who have risen above the doldrums of doing things to the level of decision-making, a fuzzy term that can mean everything from making nuanced decisions with input from multiple

different subject matter experts, too, as ServiceNow Bill McDermott did in 2022, and I quote, make it clear to everybody in a boardroom of other executives that everything they do must be AI, AI, AI, AI, AI, AI, AI, and that's five of those. The same extent there's some members of the business and tech media that have, for the most part, gotten by without having to think too hard about the actual things the companies are saying. saying, look, I realize this sounds a little mean and it's not a unilateral statement. And I must be clear, it doesn't mean that these people know nothing, just that it's been possible to scoot through the world without thinking too hard about whether or not something is true, just because an

executive said it. When Salesforce said back in 2024 that its Einstein trust layer and AI would be transformational for jobs, the media dutifully wrote it down and published it without a second thought. It fully trusted Mark Benioff when he said that agent force agents would replace human workers. And then again, when he said that AI agents were doing 30 to 50% of all the work in Salesforce itself, even though that's an unproven and nakedly ridiculous statement. Salesforce's CFO, by the way, said earlier in this year that AI wouldn't boost sales growth in 2025. One would think this would change how Salesforce was covered or how seriously one takes Mark Benny off, but it hasn't because nobody's really paying attention. In fact, nobody seems to

want to do their job in this case. Another podcast from some SNL, late-night comedy guy, 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 head writer Streeter Seidel, help an a cappella band with their between songs banter. There's 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 you're, Terrence made a huge donation. The group.

The yard birds, right? That's the name. The Harvard Yardt Yardt. 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 podcasts. 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 IHart. Podcasting can help your business. Think IHart. Streaming, radio, and podcasting. Let us show you at iHeartadvertising.com. That's iHeartadvertising.com. Life throws hurdles big and small.

The question is, how do you conquer them? On hurdle 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 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. 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 belong. Don't let that be the reason you don't do it. An Olympic champs Gabby Thomas and Katie Ladecki. 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. There are times when the mind becomes a difficult place to live. This is David Eagleman with the Inner Cosmos podcast, and for Mental Health Awareness Month, we're dedicating a series to understanding the mind when it struggles. I'm joined by doctors, researchers, and those with lived experience. We'll talk with singer-songwriter Jewel. about anxiety.

I started living in my car and then my car got stolen. I was shoplifting, I was having panic attacks, I was agoraphobic. And making it through hardship. To be present is a learned skill and it's hard to be present. We'll talk with John Nelson about clinical depression and the brain implant that saved his life. What I learned is that procedure made me happy because I'm disease-free. And we'll talk with leading experts like Judd Brewer about anxiety. and John Hirschfield about obsessive-compulsive disorder and the science of how the brain can change.

This is a month of deeply personal and honest conversations about what happens when the brain goes off course and what we can do about it. Listen to Inner Cosmos on the IHeart Radio app, Apple Podcasts, or wherever you get your podcasts. And this is how the core myths of generative AI were built by executives saying stuff and the media publishing it without thinking about it. replacing workers. AI is writing entire computer programs. AI is getting exponentially more powerful. What does powerful mean? Well, it means that the models are getting better on benchmarks that are rigged in their favor. But because nobody fucking explains what the benchmarks are, regular people are regularly told that AI is powerful and getting more powerful every single day. The only thing powerful about generative AI is its pathology. The world's executives, entirely disconnected from

labor and natural production, are doing the only thing they know how to, spend a bunch of money and save vague stuff about AI being the future. There are people. journalists, investors, and analysts that have built entire careers on filling in the gaps for the powerful as they splurge billions of dollars and repeat with increasing desperation that the future is here and then, well, absolutely nothing else happens. You've likely seen a few ridiculous headlines recently, though. One of the most recent and most absurd is that OpenAI will pay Oracle $300 billion over the next four years, closely followed with the claim that Invidia will invest, and I put that in air quotes, $100 billion in Open AI, to build 10 gigawatts of AI data centers, though the deal is structured in a way that means open AI is paid progressively as each gigawatt is deployed. And also, apparently, OpenAI will be leasing the chips rather than buying them outright. I must be clear that these deals are intentionally made to continue the myth of generative AI to pump Nvidia and to make sure Open AI insiders

can sell $10.3 billion worth of shares, which they're currently trying to do at a valuation of $500 billion goddamn dollars. I want to be clear about something. Open AI cannot afford the 300 billion dollars, Open AI has not received a dollar from Nvidia and won't do so for at least a month when I think they're going to receive $10 billion, but the rest of that nighty, that's only coming when they built those data centers, which Open AI can't afford to do. Invidia needs this myth to continue, because in truth, all of these data centers are being built for demand that doesn't exist, or that, if it did exist, doesn't necessarily translate into business customers paying huge amounts for access to OpenAI's generative AI services.

Invidia, Open AI, Corweave and other AI-related companies hope that by announcing theoretical billions of dollars, or hundreds of billions of dollars, of these strange, vague and impossible-seeming deals, they can keep pretending that the demand is there, because why else would they build all these data centers, right? Well, there's that and the entire stock market rests on Nvidia's bank. It accounts for 7 to 8% of the value of the S&P 500, and Jensen Huang needs to keep selling those fucking GPUs. I intend to explain later how all of this works and how brittle all of this really is. But the intention of these deals is simple to make you think this much money can't be wrong. And I assure you it can. These people need you to believe this is inevitable, but they are being proven wrong again and again and again. And today, I'm going to continue to do so. Underpinning these stories about huge amounts of money and endless opportunity lies a dark secret.

The none of this is working and all of this money has been invested in a technology that doesn't make much revenue and loves to earn millions or billions or hundreds of billions of dollars. Over half a trillion dollars, in fact, has gone into an entire industry without a single profitable company developing models of products built on top of these AI models. By my estimates, there's about $44 billion of revenue in generative AI this year when you add in Anthropic and Open AI's revenue to the part, along with other stragglers, and most of that number has been gathered from reporting from outlets like the information, because none of these companies share their revenues, all of them lose shit tons of money, and their actual revenues are really, really, really small.

Only one member of the Magnificent Seven outside of Nvidia has ever disclosed its AI revenue. Microsoft, which has stopped reporting in January 2025 when it reported it would have $13 billion in annualized revenue, this, well, I guess that would be for the month because it's month times 12, about $1.083 billion a month. I know that sounds like a lot, but Microsoft is a sales machine. It's built specifically to create or exploit software

market, suffocating competitors by using its scale to drive down prices and to leverage the ecosystem it's created over the past few decades. One billion a month in revenue is chump change for an organization that makes over $27 billion a quarter in profits. But it's the early days. Did you get in here? Out! Go up! Thank you, Scott. Did you not listen to my three-part series on how to argue with an AI booster? I went over it over there. Get out. Okay. This is also nothing like any other tick era. There's never been this kind of cash rush, even in the fiber boom. Over a decade, Amazon spent about a tenth of the capex that the magnificent seven spent in the last two years on Generative AI building Amazon Web Services, something that now powers a vast chunk of the web, and has long been Amazon's most profitable business unit. Generative AI is also nothing like Uber, with OpenAI and Anthropics' true costs coming in at around $159 billion in the past two years, approaching five times Uber's $30 billion all-time burn, and that's before the bullshit with Invidia and Oracle.

Microsoft last reported that AI revenue in January, by the way. It's now October. Why did it stop reporting the number, do you think? Is it because the numbers are so good they couldn't possibly let you know? Hmm. As a general rule, publicly traded companies, especially those where the leadership are compensated primarily in equity, so stock, they tend to brag about their successes, in part because bragging boosts the value of the thing that the leadership gets paid in.

There's no benefit to being shy. Look, Oracle announced they literally filed something saying they had that huge, $300 billion contract. They did that to spike the stock. Why is Microsoft not doing that with their incredible AI revenues? Do you think it's because they're shy? Come on, Satcher. Come on out. Come on, Satcher. You can show me the numbers. But in all seriousness, if Microsoft can't sell this, nobody can. All right. So, I'm explaining this whole thing as if you're brand new and walking up to this relatively unprepared. So I need to introduce another company. In 2020, a Splinter Group jumped off of Open AI, funded by Amazon and Google to do much the same thing as Open AI, but pretend

to be nicer about it until they had to raise money from the Middle East. I'm, of course, talking about Anthropic, and they've always been a bit better at coding for some reason, and people really like their clawed models, but like does not mean profit or even much revenue. Both OpenAI and Anthropic have become the only two companies in generative AI to make any real progress, either in terms of recognition or in sheer commercial terms, accounting for the vast majority of revenue in the AI industry. In a very real sense, the AI industry's revenue is Open AI and Anthropic. In the year where Microsoft recorded $13 billion in AI revenues, $10 billion of that came from OpenAI spending on Microsoft Azure. Anthropic burned $5.3 billion last year, with the vast majority of that going towards compute.

Outside of these two companies, there's barely enough revenue to justify a single data center. Where we sit today is a time of immense tension. Mark Zuckerberg says we're in a bubble. Sam Altabwean says we're in a bubble. Adababa chairman and billionaire Joe Sy says we're in a bubble. Apollo says we're in a bubble. Nobody's making money and nobody knows why they're actually doing this anymore, just that they must do it and must do so immediately. And they've yet to make the case that generative AI warranted any of the expenditures. Now, we're a quarter of the way through this four-parter, but this one was necessary.

I needed to get you up to speed and kind of give you the lay of the land. Because we're going to go a little deeper in the next episode, and I can't wait for you to hear him. See you tomorrow. Thank you for listening to Better Offline. The editor and composer of the Better Offline theme song is Matt Rosowski. You can check out more of his music and audio projects, and Mattersowski. com, M-A-T-T-O-S-K-I-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 newsletter. I also really recommend you go to chat. Where's Your Ed dot at to visit the Discord and go to R-S-Better-O-Line to check out our Reddit. Thank you so much for listening. Better Offline is a production of Coolzone 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.

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