Big Technology Podcast - Did The AI Bubble Just Pop?, Apple Intelligence Beta Arrives, Friend Dot Com

Episode Date: August 2, 2024

Ranjan Roy from Margins is back for our weekly discussion of the latest tech news. We cover 1) The week's market selloff 2) Consumer spending declines and other negative economic factors 3) Starbucks as a economic barometer 4) Favorite boba 5) AI spending comes under scrutiny 6) Big Tech earnings performance 7) NVIDIA's resilience 8) Apple Intelligence beta arrives 9) Siri is still bad 10) Ranjan depressed about Siri being bad 11) Review of OpenAI's ChatGPT 4o voice edition 12) Friend dot com launch 13) Olympics recap 14) The case of Gianmarco's lost wedding ring --- Enjoying Big Technology Podcast? Please rate us five stars ⭐⭐⭐⭐⭐ in your podcast app of choice. For weekly updates on the show, sign up for the pod newsletter on LinkedIn: https://www.linkedin.com/newsletters/6901970121829801984/ Want a discount for Big Technology on Substack? Here’s 40% off for the first year: https://tinyurl.com/bigtechnology Questions? Feedback? Write to: [e-mail]

Is the AI bubble bursting as the market in tech goes into freefall? Apple intelligence is here, on my phone. Let's talk about it. And is an imaginary friend company the next big thing? That's coming up right after this. Welcome to Big Technology Podcast Friday edition, where we break down the news in our traditional cool-headed and nuanced format. A big show for you today because right now, Wall Street is in Freefall,

the S&P 500 down 2%. Today on Friday, after a week, the AI spending numbers came in and they were big. So how much is this connected? We're going to also talk about Apple Intelligence and Open AIs. ChatGTP-T-40 voice edition coming out at limited preview, and then, of course, friend.com. So it's going to be a fun, very jam-packed show, a lot of information coming your way. I'm joined, as always, here by Ron John Roy of Margins.

Ron John, welcome. How you doing? I don't know if I'm going to be able to remain cool-headed today as I'm watching the charts on my screen all just collapse in a sea of red. But I'm going to try to stay cool-headed. It's all going down and we're just losing it here on a Friday. Sell, sell, sell, run to the exits. But what is happening? You've been watching this very closely. We were expecting something different this week. We had big tech earnings. Everything seemed to be okay in the second quarter. The Fed was coming to speak about the fact that we're going to see a rate decrease. So why is everything so red? I think there's two main parts of this. First is the macroeconomic news that's

come out this week. And then I do think AI tech spending has the AI bubble burst. These are questions that I'm actually excited to discuss today. But first, in terms of the macroeconomics news, the Fed held rates. They said they were going to be a bit more cautious on the outlook. So still giving hope even before the last few days that they will cut rates at the Fed held rates. the next meeting. But today, in Friday, the jobs growth was slower than expected. The U.S. added only 114,000 jobs. Unemployment rose to 4.3%. So it's the high since October 2021. Basically, the economy is slowing. And we've been seeing more signs of that. We've been talking about it. That's why everyone's almost been begging the Fed to start cutting now. And there's a lot of

talk whether the Fed is actually making a policy error by not cutting and getting ahead of that slowing growth rather than waiting for an actual deceleration of growth. So I think the economy is not in a great place and the Fed might be making an error and that from a macroeconomic standpoint has everyone fairly concerned. Right. And then just on the consumer spending thing, I'm curious if you think is this. So we saw I think consumer spending was going from like 3% growth to 2% growth. Do you think consumer spending is down because the Fed's rates are starting to hit people, or is it just because, and this is something that I've been thinking about, is that a lot of people saves up a lot of money through COVID, and we're just blowing through it, and now they're finally through it. Yeah, I think it's both. I think it's price, I mean, increased prices certainly are going to have negative impact.

Another area we saw it was, and going back to your idea around consumer. had saved a lot of money and personal savings have declined dramatically since where they were in 2021 when we were all flush with uh flush with ppp loans and uh whatever other stimulus everyone got here's act yeah exactly so i think i mean we're even seeing it like from the consumer side on luxury brands are getting hit very hard right now and it's the first time in a long time the luxury customer had been you know completely untouchable for years and now even luxury companies are getting hit. On the low end, McDonald's had their first slowdown in growth in a few years as well. I don't know if you've seen McDonald's is now trying to, they're going, it got to the point. I think it was like 12 bucks for a value meal. Now they have like a special $5, $5 meal trying to get. So on the lower end as well, people are getting hit.

So I think it's fine. We've seen all of these trends slowly coming for a few years now. Everyone has been talking about it. And now it's real at every part of the market. And it began with Starbucks. I mean, Starbucks was really the canary in the coal mine where, like, Starbucks sales slow dramatically. And people were like, it's the in-store experience.

It's the, it's lost, some of its luster, it's the expense. And maybe that was like the initial signal. Like, is Starbucks now our weather vein in terms of where economic activity is going? I go back and forth on that one. I think, yes, actually, it's true that, like, spending $5. or more on a cup of coffee or some kind of latte drink versus just making something at home is probably like the perfect indicator of whether how likely people are to spend. But I also have to say I was in a Starbucks the other day and they have like all the advertised

drinks are like lavender matcha or like weird lemonade and stuff. It doesn't even feel like a coffee shop anymore. They're doing bubble tea now. They're doing bubble tea? That's what I've heard. Those are the rumors I've heard. I don't know if I love bubble tea. And in New York City, there's plenty of great places.

I'm going to have to try it, I think. I'm not optimistic, though. You have a favorite bubble tea place in New York? I'm shouting mine out. I'm a tiger sugar guy. It's a chain, but they have this classic brown, brown sugar tea that is just insanely good. You can get it right at the edge of Koreatown near Penn Station on 32nd or 33rd. what's your sugar what's your sugar percentage are you i go i go no more than a third if i can help

it okay yeah for for non-bubble tea connoisseurs you're able to specify a third half uh how much sugar you want if you ever go full it's pretty intense so i can't tell if this is going to make our listeners stick with us even more now that they understand our expertise on this subject or whether we've lost half the audience but or i'm just going to say maybe in this economy where we all and watching the market right now, I might go get a bubble tea and get 100% sugar just to make me feel a little better right now. Just feel something. You know, Ranjan, maybe it's a good analogy where has our economy just been on a sugar high of artificial intelligence and drank that up and felt really good and then crashed? Because you and your opening remarks indicated that you

think AI spending has something to do with this. I don't know if that's the case, but go ahead, make the argument. That might be my favorite segue Alex has ever made on this show, and he makes a lot of good ones. So, yeah, okay, here are this. I am very excited to speak about this, even though it is bad, because we talked about over the last two weeks, the Goldman Report could be that really just questioned the long-term value creation potential of generative AI, could be the tipping point, the inflection point that set off the end of this wave of AI hype. And I think that I think it happened. And what we're seeing this week is the first time that Amazon, Meta, Microsoft, even Snap, all these companies came out and talked about how they're just investing tons and tons of

money into AI infrastructure. Meta is spending, they set up to $40 billion in total capital expenditures, majority of which will be infrastructure related to AI. Microsoft is going to spend $56 billion next year. Google's projected to spend $48 billion. And $48 billion for Google is actually 17% of total sales. So these are not small numbers and investments for them. But then on the other side, they're starting to get questions. This is the first time in earnings calls rather than asking, are you investing? Like a UBS analyst was asking the Google's CEO Sundar, you know, when is it going to help revenue generation and create greater value over time versus just cutting costs?

Morgan Stanley analyst in the Microsoft earnings call was saying there's an industry debate raging around these capital expenditure requirements, but will the monetization actually match that? And we have talked about this a lot. We talked about at the micro level, when it comes to renewals after that first year, you're big corporate and you signed up for Azure AI or Gemini's on Google Cloud's AI services, are you actually going to see value enough to keep investing in it? And from the big tech companies, they're spending so much money. But even the Microsoft CFO said the value could be realized

over the next 15 years and beyond. You never hear public company CFOs talking about massive capital expenditures and giving a 15-year time frame to public market investors. So I think the Goldman Sacks report kicked it off. Everyone's going to start questioning these expenditures and the big tech companies, they basically this week said, we don't care, we're doing it. So how this plays out, I mean, we're certainly seeing the market's reaction. Right. But a lot of the big tech stocks are doing okay. And I think it's worth, I mean, except for Amazon. We can talk about Amazon. We can talk about Intel, but I think it's worth noting that, like, this is not, this slowdown that we're seeing in the market is not driven by AI spending. This is driven by broader economic macroeconomic

factors. Does AI spending help it? Not really, but I don't think this is causing the real issues. And case in point, I mean, meta, you know, these companies that we talk about, meta basically went out there, delivered great earnings results. They've grown revenue 20% over the last four quarters, which is insane given how much money that they're making. And, And the stock didn't drop when they said it, when they raised the, it was the bottom of their guidance, right, where they said they're going to, they're going to raise the amount that they're going to intend to spend. Microsoft, similar thing. Microsoft actually missed its cloud number, but then it bounced back the next day when people read the report and Satina Della said it's a capacity issue for them to sell, not a demand issue, right? They just didn't have enough hardware. where Alphabet, I think, beat expectations did the first $10 billion quarter in Google Cloud history,

although Google did miss on YouTube revenue, but I don't think there's anything to do with AI. I'm trying to think. And then meanwhile, Nvidia just went up because it saw all these numbers hitting. So I would challenge your perception here that this is the end of the AI bubble. So this week, the market reaction is not just from a. spending. I'll give you that. I think it's not the entire market is in a sea of red because these big tech companies are spending tens of billions of dollars on AI infrastructure. But I do think the narrative that's held up the market during any downturn over the last year,

year and a half is this wave of AI innovation is going to just lead to incredible cost savings for companies. So increasing profit margins. incredible new avenues of growth. The world is going to change. That narrative has been so strong that in any kind of potentially, you know, problematic moment that held the market up. And the big, obviously, the big seven were driving this. And I mean, they have been a significant segment of the overall market growth anyways. So now that they are getting questioned and now people are starting to worry. Again, do we trust them to almost think of that? I'd seen one comment around how someone said, you never hear 15-year markets timeframes from public markets. That's asking us

to be a venture investor, and I'm not a venture investor. I'm a public markets investor. Like, the companies are asking us to trust them around this spending and the fact that they're finally getting questioned. And as we've discussed over and over again, there probably will be some very short-term issues around customer satisfaction and customers like actually realizing value enough to keep investing themselves in generative AI efforts, even though I'm long-term positive and optimistic about it. So I think it's not necessarily today and yesterday that the AI investment is causing the sell-off. But I think over the next couple of weeks and months, it's going to be a problem and this has been what's held up the market so far and it's going away let me just make the

counterpoint to that isn't it a miracle then that if this is such an issue for investors that these big tech companies aren't selling off more than the rest of the market is i mean in some cases they are but i don't think it's due to a i if you think about amazon for instance amazon selling off more than the market i think they missed their their whisper number in terms of the number that people really expect them to do. But they still grew at 19 percent. Amazon web services. They turned in record profits. And then you think about the others like meta, right? We talked about meta spending. They're down, you know, a percentage and change today while the S&P 500 is down 2%. Google, right? People so upset about Google spending. If that was what's going to drive them down,

I mean, I know it's hard to take a single day, but Google is only down, you know, two percent and change while the S&P is down two. And then Apple is up today. We have to remember that Google had $24 billion of profit off $85 billion of revenue. Microsoft had $22 billion in profit off $65 billion. Like these numbers are still insane in terms of how profitable these companies are. So yeah, I agree on a relative basis. That's a problem. But that's what these numbers were good.

The reason meta, and it's still, I think it's only up about 4% since the earnings blow. And it was a blowout. It was like they crushed it. I mean, Mark Zuckerberg wearing two chains. I still, that, for anyone who got Mark Zuckerberg, they sent out this thing around their ability to understand objects within video. And in the demo, he's where he wears a second gold chain that I think he actually got from T. Payne, if I remember correctly. That would track. Yeah, which is all ridiculous.

But that was the sign that we all should have bought meta before their earnings because no CEO would ever do that unless. They knew they were going to crush earnings. But, like, again, these companies are still firing on all cylinders at the moment, and they're not up. And that's why, like, and it's met us up small relative to after hours. It jumped like 11% or 12%. But people are having to question it because I think it's going to play out over months right now, but I'm still standing that that Goldman report was the turning point.

And I think the entire conversation around generative AI, has changed and it's in a in a good way things are going to be questioned a little bit more i think it would be good if there was more common sense around ai i just don't know if it's happening let me explain let me give you one more example invidia right like they've benefited greatly from what's happening this week there's a wall street journal story out about invidia big tech's a i race has one main winner invidia and says it's invidia's market everyone else just lives in it, though not nearly as well. The superstar chipmaker hasn't participated in the latest round of earnings reports, but the most dominant news of those reports is great

news for Nvidia, as Amazon, Google, Microsoft, and Meta have all reported significant jumps in capital spending, and it's mostly going towards data centers and Nvidia's AI systems. And Nvidia has had a bit of a pullback of late, but it's still a $2.75, $2.79 trillion company with room to run. I mean, it's cheap compared to. to its earnings. So, you know, I mean, if we're going to think about like the bubble stock, it's in video. Yeah, but that's where what's so fascinating about this moment is, uh, and, and even in that Goldman report that just trashed Jenner to AI, like, and honestly, I thought it was, I thought it was good that it came out, but I actually thought that they seem to be

missing some very, very clear benefits that everyone has already able to like show. But the funniest part was at the end of the report, they're saying, oh, but you should still buy AI infrastructure companies because even though we're saying this technology is not going to work out, everyone's still going to invest in it. So you might as well buy these companies. And it actually makes sense because, again,

all the big tech companies are saying, we're going to still be investing massively in this. So, yeah, Nvidia is still the poster child for this. If Nvidia ever starts to have problems, then we know things are changing. Right. what happened to Intel have you been following this their earnings came out yesterday i was at the stack exchange uh for cnbc closing bell and then of course it went into closing bell overtime

once all these reports came in we saw intel hit and we're just like holy crap you know it was down 26% today it's laying off 15 000 people it's going to pull back its dividend this is a disaster for intel have you been watching this at all i mean i saw the i saw the price action and i saw saw the, especially the layoff announcement was interesting because it's been a while since we've heard about mass layoffs at any of the, in tech in general. And this was the first time in a while I even saw an announcement like that. But I think overall it's just, a company like Intel should have been a leader in this entire wave of AI investment infrastructure. They haven't been. And I think it's one of those things that stuff is moving so fast.

that if you are not, and which is Mark Zuckerberg's argument that he made in the earnings call around why they're investing so much, is that if you don't invest now or you don't get it right, you will be left so far behind a few years from now that, you know, like these tech companies will become shells of their former selves. And I think Intel has not shown any clear direction of who it's going to be in this overall landscape. Whereas Nvidia and everyone obviously, everyone knows or even like the global foundries of the world or are you know all these other companies that are infrastructure players the intel no one knows who they're going to be and the market reacted accordingly yeah so i'll give my intel take here which is quite similar to yours i mean we had pat gelsinger on the show and he was pretty impressive but i think for intel the problem is that they're just and it might be cliche to say it but they are stuck behind invidia that's where all the money is going in semis right now is into GPUs. And Nvidia just has this advantage between the actual chips themselves, the software that's being used to train, and the networking between

the servers, which is actually a key part of their advantage that nobody talks about. And it's just very difficult to dislodge them that way. So Intel's really been able to, unable to compete with them on AI chips. And then you could say, all right, they have these accelerators that you could use and maybe you could train that way, but this is the other problem for Intel. Where they would come and substitute where people are looking for, let's say, cheaper cost or, you know, some purpose-build technology, the big tech companies are building that themselves. You know, Google has a chip and all the others have their own chips that they're building,

like Microsoft is building its own silicon, and then you're trying to come up against these companies and there's just no room to sell. I think that's a fair read. boundaries take a long time to build they're trying to do that too and it's just going to be forever yeah i think i think that's a fairy that now their competition isn't just infrastructure it's the tech companies themselves and i mean getting lost in those multiple fronts of battle is a is a scary place to be absolutely all right so let's uh as we wrap up this segment like it's we go deep and now let's take a step back where do you think the economy is going from here because we'd talk for a long time about

whether there's going to be a soft landing. And for a long time, it seemed like there would be or even a no landing. And maybe this is just the wheels touching down, right? Inflation is still low. The market, the S&P 500 is still up 12% this year. There's actual innovation and energy in the economy. So where do you think the next few months take us? Okay. I don't want to be Jim Kramering here and jinxing everything. But I'm going to say, I think this is going to be just a healthy short-term correction. I think it's been a while. The VIX wasn't above 20 in a couple of years. I think this is the largest sell of since October 2022. I think there's a need for a bit of a correction. I think it will be okay. I think the underlying story, we've known the consumer slowing down.

we've know if the fed cuts and reacts accordingly which all signals are pointing to i think things will stabilize and maybe soft landing maybe kind of like just a short-term breather overall but i mean obviously trying to predict anything given the just how complex the world is right now is a difficult one over especially over the next few months right and this is of course not investment advice and do with this what you will. But when I saw the drops this morning, I moved some money from my checking account into my brokerage account and just bought some exchange traded funds. Yeah. I mean, this could be the buy the dip moment or this is the beginning of the end and we're going to see something. Say goodbye to that money. Yeah. Last last for you on

this one. So you say, okay, maybe AI is in the moment of a bubble burst. Where do we see AI going then in the next couple months? This is the part within this mini crisis of two days right now. I'm again happy because I think we've needed some common sense and a bit of a correction in just overall optimism and hype around AI. And I think, again, knowing actually that these tech firms are still going to invest in the infrastructure. and even if that causes some short-term pain, and overall, the market just starts to get a little more sensible around things and actually just starts building. And we talked about this last week with Claude encoding for me.

There's still, like, week to week, there's these magical moments with generative AI for me that just absolutely blow my mind and just make, you know, unleash like a thousand dreams of what this could do in different ways around business. and what kind of products it could create or experiences. Like, I'm still, again, I think we'll all figure it out, and it's actually better for the market and overall innovation around the technology to not have everything just out of control.

Did you just manifest the trough? Is that what you're telling us? I'm a trough guy. We've been saying this for weeks. I have the Gartner hype cycle on my wall with a big star around the trough, and that's where we do our best. All I have to say is if this is the trough, then it's a pretty good sign for AI.

Yeah, exactly. I think if this is as low as it goes, it's going to be pretty damn good. If that's, if it, if even just we relatively stabilize around here over the next few months, I think that'll be a very, very good trough. Right. I got a couple examples of like why we still might be at the crazy part of the hype cycle, which is coming up after the break. but look before we go to the break i just want to say that we've gotten a lot of really really

good listener feedback and when i say that we read your emails we really do and we've seen some great feedback on the big technology podcast at gmail dot com email address we've seen some great feedback coming at us on x always great to have a dialogue with you guys and gals when you have something that you want to talk with us about so um just want to say thanks i've definitely learned a lot from our listeners uh over the past couple months and appreciate you all writing in and listening. Okay, so take a quick break, come back and talk about Apple Intelligence, which is on my phone, Chattebt4-O and how it's talking to you,

and then my new favorite startup, friend.com. Back right after this. Hey, everyone. Let me tell you about The Hustle Daily Show, a podcast filled with business, tech news, and original stories to keep you in the loop on what's trending. More than 2 million professionals read The Hustle's daily email for its irreverent and informative takes on business and tech news.

Now, they have a daily podcast called The Hustle Daily Show, where their team of writers break down the biggest business headlines in 15 minutes or less, and explain why you should care about them. So, search for The Hustle Daily Show and your favorite podcast app, like the one you're using right now. And we're back here on Big Technology Podcast Friday edition. Ron John, you have this big, what's your big smile? You have this big smile you've been sporting for the past, I don't know, 30 seconds.

that you're about to tell me about Apple intelligence and long-time listeners know my dream in life, all other innovation and everything aside, if they just fix Siri and make it good, I will be the happiest consumer in the world. So please tell me that what you have installed starts to help it. Please tell me this. Please. However much I enjoy making you happy about life, which I do. I very much enjoy that. I'm very, very sorry to say around John. Oh, no. Series still sucks. It's terrible. It's so bad. It's so bad. All right, please, tell me what you've learned. Here's the caveat. And I said this on air yesterday, so I'm going to just say it again for our listeners' perspectives. This is not the final product. Who knows what they've shipped underneath it? I'm on Apple's iOS 18.1, and that gives me access. to the beta of Apple intelligence, and this is not going to really come out till fall.

But I can say that they have a long way to go from here to where they're trying to get because if this is the final product, and we know it isn't, but if this is anything close to the final product, be prepared for extreme disappointment with Apple. And I'll just give you a couple examples of what I try to have Siri do. I asked it to show pictures of my wife and it showed pictures of a celebrity with the same first name. Okay, that's what it did.

Wait, that's in Apple Photos? No, it went to the Internet. So it couldn't even navigate through the photos on my phone. It went to the Internet and showed me a picture of this celebrity. Oh, my God. And then it was not able to process directions.

It could not answer basic questions. the one thing I thought was cool was it helped me text somebody like I had it say okay I'm you know I was going to get a haircut yesterday so I had it like pull up my barber's cell phone and I dictated a message to it and it sent but like wait but we could already do that yeah like if that's intelligence I don't really know where we're heading there's also this other cool feature that actually I'm really excited about as a podcaster where you can record calls and it will transcribe for you and so So I made a call, I hit record, the recording worked, but the transcription did not work.

Like it's supposed to transcribe the notes and that wasn't working either. Did it even have any transcription and the transcription was bad or it just didn't even transcript? It just said this isn't working at this time. There was an error. So Apple intelligence from my first look is unintelligent. I do I often wonder around how a company like Apple from a product marketing standpoint thinks about these beta releases because I mean maybe it's just us and our listeners who care and like from a larger market perspective you know no one is really paying attention so it actually does help them work out the kinks and get to a better product but I have to imagine like after the presentations and demo that they did, even the first release they would understand that it has to be pretty good.

So that does have me worried a little bit. Yeah. And look, don't take my word for it because here's Ethan Mollock, the Wharton professor and AI expert. He says on Siri, because it's a small model, it also isn't that smart. In fact, it feels like using the old Siri with minor improvements. If I ask it, I want to go to dinner and a movie tonight and make sure I can get there by six and home at 10, I would love some spicy Latin food and an action movie. It fails miserably.

This is not actually a hard problem for LLMs, though. A slightly larger model, Lama 8B actually does a much better job. And look, this is the, if you want to be hopeful, he says, this is just the start for Apple AI because future update will make it so that Siri on your phone can ask a larger Apple AI in the cloud to help when it can't solve a problem or even pass really hard questions to chat GPT, and it will be able to interact with apps, triggering, triggering, actions and taking in information from multiple sources, the technology will certainly improve.

And I think this is the most important thing he says. He says, AI carries risks. It is unpredictable. It hallucinates. It has the potential for misuse. It's not always private. So Apple decided to reduce the danger of misuse or error. They have turned Siri into a co-pilot.

You can see these sort of co-pilots appearing in many products. Very narrow AI systems designed to help with specific tasks. In doing so, they hide the weirder, riskier, and more powerful aspects of large language models. Copilots can be helpful, but they are unlikely to lead to leaps in productivity or change the way we work because they are constrained. Power trades off with security. Power trades off with security, yep. I think this is important, right? It's basically like, I think what Malik is saying is,

Apple is effectively not quite ready to be weird enough to reap the full benefit of generative AI. And that's why you're seeing these half measures. And my prediction is if Apple does not get bolder with this technology and leaves it in co-pilot versus pilot mode to use Molex analogy, that we are going to see blow back to them. Because remember, that Apple intelligence demo, it blew people away. The stock flew up the next day after it happened. happened and people were talking about how Apple has just made the masterful Gen. AI play. Ben Thompson had an article about it. If they don't deliver, if their demo and their dream of this technology, which was always going to be good, think about the Vision Pro, doesn't live up to the

promise in reality. I think this is going to be a very bad moment for Apple because unlike mixed reality, AI is a category that's moving and moving fast and has real, real application already. and you can't swing and miss there. Wait, did Mollick's post use the phrase like co-pilot versus pilot, that idea? Or did you just come up with that? I just built on what he was doing. I like that. I think I talked about co-piloting.

Yeah, no, no, but I think, oh, I think this is a, we can run with this one a bit. I think this might require a post here because I think that's a really, really good distinction. because, again, this idea co-pilot is something that's been introduced in a smart way to kind of remove the responsibility from the model. And it's fair, like, especially in a lot of use cases, starting, I mean, GitHub branded. It's a coding assistant co-pilot. And really creating this branding and idea that it's something that's there to help you that doesn't make decisions, but actually just is there to add a little bit of assisting,

but is not all-knowing and responsible. But the way Apple demoed intelligence was a pilot, it was like, and the whole idea of agentic AI is that it actually makes decisions and takes actions using different systems based on just a prompt, just initial prompt. It should be smart enough and have that element of reasoning that will know which system to call

and what decision to make. And that's a pilot. And that's a much tougher problem to solve. And we talked about this. It always was. was going to be harder the way they marketed this. And it's, even when Apple advertises, if you say, like, what's my flight status without specifying the flight, it goes into your email, looks for a flight, then knows to use that

information to call flight tracker.com or whatever other API service to actually get that information, those are actual decisions being made. And that's the act of a pilot. and if Apple, and it was always going to be a harder problem to solve. So that could be a big worry for them right now. This is unfair. But I am flying to Ireland on Sunday. So let me see if I can get Siri to.

Oh, don't even. Don't do it on air. I might just slam my computer shut. All right, try it. Try it. Try it. Hey, Siri. Pull up the flight information for my Sunday flight to Ireland.

Oh, okay. It gave me Dublin. It gave me a Google search. Dublin, arrivals and departures, live flight information, and then find your trip on American Airlines. I'm flying jet blue. I, we might have to end this right now and not even get to friend.com. Two tiger sugars coming up. 100% sugar, please. I mean, that from like a. system standpoint should be the easiest problem to solve. My, like, you were almost unfil, like, throwing it a layup with how specific that prompt was. Like, my flight on Sunday to Dublin, that's like an email search. That's not even a generate, that doesn't require an LLM almost. And it's just not getting it. Doesn't know what to do. So that's disappointing. But

they have until, let's say, August, or no, it is August. They have until, let's say, October to figure it out. So I hope they're... It's two months. Two months. You guys got it. Now, M.G. Siegler has like some good context. He says that if you think about the Apple approach, it's intentional. And meta is shoving AI into the faces of hundreds of millions, if not billions of users across a range of products. So is Google in other ways and other products. Microsoft is trying to if anyone will use their products. And Open AI is trying like crazy to build up a user base of such sizes, including with the help of Apple. Okay, as is every other startup in the space, so much so that EU regulators appear to be actively working this summer so as not to miss an opportunity to mess it all up.

And he says, oh, over there, it's Apple just casually laying back on a raft, drink in hand, floating down the AI stream, ready to launch stuff people will actually use when it's ready and not before. And that's what Apple does. Yeah, I think, I mean, and that is the product rollout strategy that we have seen. I mean, even that comment around like, I mean, right now, this idea of voice as an agent, and in our document you had another from Ethan Mollick around the idea that like using voice to now become the interface for generative AI is interesting to me. And again, Siri should have this as a possibility because to me, generative AI, even whether you're using Claude or chat GPT or any kind of chat interface, when you start talking. to it in a conversational manner is when it gets good for anyone who's like used these tools a lot like really and it's funny because even like friends and co-workers when they see how I'm using chat sometimes it's almost weird to them and unnatural and I'm like oh that was pretty good but you got this wrong

could you actually try to fix this or oh great answer can we do more of this can you dig a little bit more into this it's weird but in written form to an AI people do find that weird but maybe voice it just becomes much more natural because that's how you that's how we all talk so maybe that will be a saving grace and maybe Siri will work yeah well it has some catching up to do because this is the other thing that Ethan Mollick wrote about which is the open AIs chat chip chip G 4 o voice edition has come out in limited beta now I haven't gotten access to this but I have seen some incredible demos on the internet, including someone asking it to count to like 10 as fast as it could. And it goes like 1, 2, 3, 4, 5, 6,000, 9. And then it says, okay, now do it louder and faster and count to 50.

And it gets to 30. And it goes, 31, 32, 33. And it like takes a breath. It's crazy. And this is what Mollick says about chat chip BT for, oh, voice edition. He says, if Siri is about making AI less weird and more predictable chat cheap ET voice is the exact opposite. It does not use a small tailored model, but rather provides access to the full power of the generalist GPT40. While there has been a kind of voice mode available for chat GPT for months, this is very different. It engages in natural conversations with interruptions and fast flow. And he says interacting with chat GPT via voice is just plain weird because it feels so human in pacing, intonation, and even, here it is, fake breathing. It is capable of a wide range of simulated emotions because it isn't just triggering

a recording. Instead, the system is apparently fully multimodal in outputs and in inputs, talking in and producing sounds in the same way older generations of LLMs took in and produced text. Right now, it appears many of these features are locked behind guardrails, but those are the capabilities that it has. I can't wait to try this thing, and we give OpenAI a hard time. here. But I do think that, you know, talking about them being in the hits business, this looks like it's going to be another hit. No, I think, I mean, they had, what was interesting about when they launched voice and the whole Scarlett Johansson, Bruhaha, was they have had voice available on the chat GPT's iOS app for a long time. And it's worked pretty well. And again,

the idea, before it was more like one prompt of response and a prompt and response, but obviously the demos are showing it's even more human-like and more natural and more back-and-forth conversational, that you could even interrupt it and, like, it'll know that you are interrupting it and take the new prompt as feedback. So I think it's, yeah, I think the whole voice area, and they might get their next hit, what it means for their business. We'll find out, especially if the AI bubble is collapsing. I think Open AI's got some bigger issue. than most but let me ask you this is this potentially their biggest hit of all time no i i don't think open ai will ever have a hit in the way the chat ch pt was i think too quickly even i think

like everyone i talked to now is switching to clod is like in terms of where you you started that by the way yeah i think you led the cloud revolution you taught me about it i became a clodhead And then the rest of the world became Claudeheads. Claudeheads unite. It's funny, most people I talk to from an individual consumer standpoint, it's like everyone has a $20 budget that they will allocate to one chat bot at that moment. So it's like, oh, I'm doing chat GPT plus. I'm going to go Claude Pro. Maybe I'm a perplexity pro.

But everyone seems to just I allocate that this is my 20 bucks. I'm going to choose one that I find to be the best. and go there, which is, again, for these businesses, a reminder of how cutthroat and competitive the consumer part of this whole equation is and how difficult it's going to be. Absolutely. So, oh, yeah, let's go, let's go speaking of voice. Let's go to friend.com.

Let's go right to friend.com. Friend.com, how do I describe it? Let's just let wire describe it. It says, we're this AI friend around your neck. And so friend is a wearable and Wired says it's a pal, a buddy, but mostly an AI chatbot that lives inside a pendant that's around your neck or around like a necklace thing around your neck. It always has an opinion to share about what's going on around it, which it communicates using text messages and push notifications on the phone it's paired to. Always listening is one of the main taglines of the yet unreleased AI device. The friend has an onboard microphone that listens to everything happening around the wearer by default.

You can tap and hold it to ask a question, but sometimes it will send messages, commentary about the conversation you just had, for example, unprompted. It's powered, and here we go, by Anthropic AIs Claude 3.5, which can engage in helpful conversation, offer encouragement, or rib you about being bad at a video game. and this thing like became i don't even know i couldn't tell this week was it an object of mockery or was it an object of true fascination to me it seems ridiculous to have an ai friend around your neck and that's conversing with you it just screams like i'm a loser i don't know if you wear it but i'm curious what you thought about the launch of friend dot com and is this is this really do we call the top on the ai moment now or is this just the beginning of something big All right. So friend, well, there's friend.com release this video.

And I think the video, sometimes you, I honestly wonder, it was so cringeworthy and bad that it almost, I mean, you had to watch it. It was so fascinating. Again, it's people in social situations turning to look down at this pendant around their neck. Even one of them is a girl on a date and the guy is, she tells the guy, they're on a rooftop. And she says, I never bring anyone up here except for her and looks down at the pendant around her neck. And then the guy says like, oh, like something around, oh, I guess I should be grateful or like, I appreciate that. It's so weird and black mirrory that I do wonder, are people that out of touch who made this? Or do they just want to go viral and bring attention?

Because otherwise, none of us would have ever heard of friend.com. And it's pure earned media. So from a customer acquisition standpoint, pretty cost effective. So it brings attention to it. But my favorite part of this story is to make this more ridiculous, if a AI friend pendant on a necklace around your neck all day long is not weird enough, there was actually two competing like wearable AI startups called Friend. And one of the founders bought Friend.com and spent 1.8 out of their 2.8 out of their 2.4

five million dollar seed round on the domain and you know reportedly to kind of secure any kind of copyright potential issues of if you own friend dot com you're going to have more of a claim the other founder responded with a rap video a rap battle video to the tune of uh they not like us from kendrick of course that was it yeah yeah and uh it was just i mean it looked like an episode of silicon valley It was amazing to watch. It kind of made me want to get back to common sense and AI. And maybe this week, the fallout in the market will help on that. But it was a fun week for AI pins everywhere.

Right. And we should note that the one that got the friend.com domain is the one with the AI pendant that we were just talking about. Clearly they're good at marketing. I mean, with the video and the name counts for something. The CEO apparently said, people just don't get consumer. I view this as saving money, much less money needs to be spent on marketing. It's a one-time thing. Okay, I'm just doing the math, though, and 2.5 million total raise, 1.8 million on the domain.

You're going to get a hardware AI company off the ground for 700 grand. I do not understand how that works. The thing that's tough about this is I want, and we talked about this with Humane as well, Like the idea of creative new hardware form factors that leverage AI, I really want to see. I think that would be cool. I think like hardware innovation is something that we have not seen in a long, long time. And the idea that instead of everything having to live in your phone bundled by Apple or

whatever other big tech company to see cool new little hardware devices come up and just create just pretty singular experience. is leveraging AI. I really want to see happen. I'm excited about and I think would be great. It's just sad that everything seems to be just a complete whiff. Right. So for the AI friend pendant, okay, so this is one plausible explanation, which is that they basically raise their series A hoping to market and raise their series B. And just put all this money into the marketing and they weren't really planning to build a company with that. It's more of like the proof of concept and see if you can raise again. And this is from someone named Andrew

Ria, who's an entrepreneur. He was with on deck, one of those guys. He says his take on the friend.com launch. This was a great go bigger, go home bet. The product vision is bold different. Maybe it doesn't work, but it's certainly controversial and controversy is great for marketing. Consumer is so hard. You have to do something this bold to have a shot at breaking through the noise. The launch was beautifully executed. The 1.8 million domain was a great red herring clickbait for people that wanted to hate. They will almost certainly raise a large round off of this hype. Obviously, the founder has a gift for building movements or moments, which is rare. Okay. Is that the playbook? Three things on that. First, if that is the case, and I had made that comment a little

while ago that earned from an earned media standpoint like any marketing department would actually call it a success if this is the future of how business works that is the most depressing thing in the world for me but second it is kind of a Kardashian model if you think about it like first and which a lot of other people first be an influencer first build the audience and then build the product so from that standpoint, again, it sadly and depressingly could almost be right and correct. But then, third, the idea the way he says, like, you know, now they'll definitely raise another round off of this hype. I think that's exactly the kind of thing that pre-Goldman report would have been a definite thing to happen in a post-Goldman generative AI report world. Maybe he's going to be a bit tougher.

For sure. Okay. So, as we ran out this episode, I think it's a good moment to talk about the Olympics. Have you been watching the Olympics following them at all? Of course. I'm a huge Olympics guy. So we just have a couple minutes left. I think we should just trade some favorite Olympics moments. Do you have any?

Opening ceremonies, their performance by Gojira, the heavy metal band that started with a headless Marie Antoinette. And it was funny because, again, controversy is a good thing. It was considered a bit controversial, but it was the most epic thing I think I've, like, ever seen on TV. They took over Ilde La Cite, which is like the prison, it was a castle, and then the prison during the French Revolution and just heavy metal, just roaring through an entire castle on the river. Like, it was that, from a sports aside, that was my favorite part of the opening ceremonies. Yeah. Did you watch it or? I did watch parts.

it last week. I also, for me, my favorite moment at this point has been the Turkish marksman who just kind of casually strolled up to the target, blasted his way to a silver medal, and then was just like, I don't need equipment. I'm a natural shooter. I thought that was amazing. The memes have been incredible too. It's funny how the Korean woman's shooter with the, like, eyewear, just looking badass was great. That would have been had a couple of memes. Yeah, yeah. But I mean, from the actual sports standpoint, I think swimming is probably my favorite thing to watch at the Olympics. And I like that it feels, I don't know if this is correct, but they're moving more metal events further up before it felt like you always had to wait even for swimming and everything else at least like a week into it. I think they were doing a lot of the qualifiers before the opening ceremony so they could get right into the medals.

and I think that was a smart decision. Can I also say there was another great moment where they had this like regular dude dive into the pool and pick up a swim cap that had fallen into the pool where the swimmers are supposed to swim in? And the memes on that were amazing. This guy's just like in his little speedo and he's like, I'm just as puzzled as you are

that I'm about to go in this pool. And people were like, this is VC's showing founders how to operate. I think that one. Yeah, no, no, and I saw, I think, a bunch of versions of that one, and the shooter memes, like, I think overall, this is probably the most memed Olympics, I think I can remember at least where, and one thing I remember on social media, I think the 2016, like, you couldn't, they wouldn't allow video sharing. So, like, any time anyone shared a clip of a video, you would get the copyright owner disabled. No, I mean, as a reminder that like to make this stuff relevant, like hyper relevant in everyone's mind, because I mean, all my feeds are just dominated with this stuff. People at work, everyone's just talking and sharing the memes.

So it's pretty great. Again, yeah. Can I share a couple more? Bring the world together for good memes. I agree. I love that the South Sudan basketball, which is apparently funded by Luel Dang, is just going out there and kicking some ass. Oh, I love that story. It's an amazing story.

It's like a Sweet 16 style story. It's great. They did not have an indoor basketball court in South Sudan when they started this effort. And I mean, before the Olympics, I think it was a friendly or was it a qualifier? I think it was a friendly against, again, the U.S. Yeah, I saw the notification on my phone. I'm like, what the hell is going on? That's, that is a feel good story.

That's like the Olympics story. I think that could be the probably. most heartwarming story from the whole thing. And it's crazy because, so apparently South Sudan and Sudan had a civil war before South Sudan separated and the Olympics played the Sudanese national anthem and you see the players being like, what the, oh, wait, I missed that one. I missed that one. Trying to think of, okay, so let me just share then.

Finally, my favorite story of the whole Olympics, which is that, did you hear about this, the Italian flag bearer? His name is Gianmarco Tambari. He was carrying the flag in the opening ceremony, and it popped his wedding ring right off his finger and into the Sen River. Oh, I remember hearing that. Explaining that one as you go to the Olympic Village on those cardboard beds is going to be a tough one for my man. Yes. So he said that he was trying to carry the flag as high as possible.

possible and that his ring will remain forever in the riverbed of the city of love. And then he tells his wife, if you want, we will throw yours into that river so that they will be able to be together forever. And we will have one more excuse to, as you have always asked me, renew our promises, and get married again. That's what they all say, John, that's what they all say, John Marco. I fell in the send when I was carrying. A ton reaction to a beautiful story. you want the trough man hey it fell in the sand when i was carrying the olympic river i'm sorry when i was in paris at the olympic village with all the thousands of other athletes i'm sorry god well i will still take it as a heartwarming story into my weekend shape up john marco

shape up come on look at the john marco is doing all he can carrying the flag he posted about it offered to get married again but yeah come on it will remain forever in the the riverbed of the city of love. That is a man scrambling right there. Unbelievable. You broke my heart about Siri, so I will... You really got me bad. I'll come back at you with... You said we weren't going to be cool-headed today and you delivered. We were not. Ficious war between the two of us. All right. So next week we have Nick Bostrom coming on the show. It's an interview I've teased for a while. But he's the AI doomsday philosophy.

that said, basically, that there's a chance we'll be living in Utopia, and we get real weird at the end talking about simulation theory and whether we converge with AI and rip our way out of whatever simulation masters have us doing. So stay tuned for that. And then plenty of other great shows coming up this August. Ranjan and I will be back, of course, next Friday, breaking down the week's news. Thanks for coming on this week, Ranjan. Great speaking with you until that last segment. Marco shape up unbelievable we'll see you next time on big technology podcast