Big Technology Podcast - Is AI Slowing Down?, Trouble at Tesla, Kate Middleton’s Bad At Photoshop

Episode Date: March 15, 2024

Ranjan Roy from Margins is back for our weekly discussion of the latest tech news. We cover 1) AI sales leaders at Google and Amazon tempering expectations 2) Adobe as a practical example of AI hype vs. reality 3) Does Adobe belong in the magnificent 7? 4) Gartner predicts traditional search volume drops 25% by 2026 5) OpenAI video generator Sora is coming out later this year 6) OpenAI CTO Mira Murati didn't know what data Sora trained on 7) Murati address NYTimes report that he helped oust Sam Altman 8) OpenAI adds three members to its board 9) Instacart CEO Fidji Simo joins OpenAI board, so, more advertising in ChatGPT? 10) A meditation on covering Elon Musk 11) Tough times for Tesla 12) TikTok ban latest 13) Kate Middleton's bad photoshop job --- Enjoying Big Technology Podcast? Please rate us five stars ⭐⭐⭐⭐⭐ in your podcast app of choice. Want a discount for Big Technology Premium? Here’s 40% off for the first year: https://tinyurl.com/bigtechnology Questions? Feedback? Write to: [e-mail]

Is AI slowing down after all that hype? Trouble at Tesla as the downgrades pour in, the TikTok band slows down in the Senate, and Kate Middleton is bad at Photoshop, or is she? All that and more 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. We have such a great show for you today.

We're going to talk about the chances of AI's momentum persisting. There's been some signs of slowing this week. We should talk about that. and also plenty on Tesla TikTok. And yes, we're going to end with Kate Middleton. Joining us, as always, is Ron John Roy of Margins. Ron John, welcome. I would like to start with Cape Middleton,

but I think AI slowing down is the right place to start. Yeah, we'll leave that as the juicy nugget at the end for people to stick with us through the whole show. But this is also juicy right up top. The information is reporting that, let's just, I'll just read the headline, the information is reporting that Amazon and Google are quietly tamping down generative,

AI expectations. And they say in the in the past year, major technology firms have champion generative artificial intelligence as the next big thing boosted the stock market to new highs, but behind the scenes representatives of major cloud providers and other firms that sell the technology are tempering expectations with their salespeople, saying the hype about the technology has gotten ahead of what it can actually do for customers at a reasonable price. I love that last sentence, that the hype has gotten ahead of what it can do for customers at a reasonable price. Okay, translation, it isn't selling the way that people hoped it was going to sell. And I guess to me, this isn't a total surprise. Like, we knew that this was going to take time,

but it is interesting that we're getting this headline out now because it does indicate that maybe finally this year, year and a half of AI hype is starting to hit a wall. Yeah, I think this is the most important tech article of the week. And I'm actually happy about it. I think the hype cycle around generative AI has been so over the top that expectations have become completely detached from reality. And again, as regular listeners will know, I'm a big believer in this technology. But you can picture at so many large enterprises, they've been promised how this is going to transform every part of their work. And then anyone who's used chat GPT or any consumer-facing product knows when you sit down, there's a bit of magic. But then when you start to get

into the nitty gritty of things, it takes time, it takes work. And I think building that expectation for all these large companies that have been sold these dreams and getting them to understand that it will take time, I think is important. And I think we're in the trough of disillusionment as per the Gartner hype cycle. And I actually think it's a good thing, because to go from the trough of disillusionment, then you get to your slope of enlightenment and plateau of productivity, which is where we all want to get. It's important, I agree. And the thing that we've seen has been the picks and shovels

have really done well, like Nvidia has done amazing in this moment because they're providing the technology that allows the training of the inference here. Microsoft, right, which isn't quite that, but they obviously have their investment in OpenAI. And they also have a very clear practical use of putting this stuff into office. All these others are going to really find some time to struggle.

And I was on CNBC this morning very early talking about Adobe's earnings, which came in yesterday. And Adobe's earned, they beat expectations, but they guided poorly for the coming quarter. And the market kicked their butt. They dropped its stock 12%. And there was, it's, you know, it's interesting because they make $5 billion a quarter or more than that. And this is happening over basically a shortfall of $19 million, but it's an important shortfall of $19 million coming up next year. So this is from a fortune. it says Adobe expects 440 million in new recurring creative business in the current quarter

below the 459 million expected. So 19 million less in new recurring creative business revenue. And that's basically, you know, they expected their AI offering the idea that you could prompt and, you know, select images and fill it in with generative fill. They expected that to increase adoption in Photoshop. This is the real question. Is it going to bring more designers online to Adobe, or is it just going to be a better, you know, experience for the existing designers? And it seems like, yes, most likely we're in this early era of trying, this early moment of seeing what this hype cycle, you know, is all about and what nets out as real. And in Adobe's case, it's pretty clear that it's just going to be a better tool for

designers. And indeed, if there is, if there is growth, it might come from other AI tools that are not Adobe. Oh, see, I, I look at it. bit differently here. I think Adobe is a perfect use case for this example of is it slowing down and if so, why? Because if you think about, okay, you take the typical graphic designer who's well versed in Photoshop and anyone, have you played with generative Phil or any of the Photoshop features? I haven't used that, but I have used their actually, believe it or not, I've used their podcast AI enhancement. Oh, we both have. And it is amazing. Like, it's an actually incredible tool. But I use it. I get that free as part of using Adobe Audition, the editing software.

Yeah. So the Adobe podcast software, again, you can put any audio highly recommended, and it sounds professional, takes out all the background noise. But with Photoshop, you know, the bread and butter of Adobe, you have the typical graphic designer will be given these features is likely the average graphic designer a bit skeptical about generative AI. And I've used a number of these features tested them, seen others using these, if you don't know how to prompt properly, it's going to look weird. It's not going to work well. You're going to start to get a bit disillusion. You've already been told that this is going to potentially replace your job or this is going to, you know, change everything. And then you try to do a generative fill and it looks pretty crappy.

So then suddenly it completely changes, you know, what this actual, what the expectations are in the near term, in the medium term. So I think it's going to cause problems the way they've sold this to their existing customers, but I think it doesn't necessarily create some huge new customer base for them, but I do think if and when they get these to do what they're supposed to do and what they're promising to do, they can have insane pricing power. And I've argued this forever, that the companies that are in the strongest positions are the ones that own the tools where users already are. And if they're able to actually bring them more value within those tools, this is a perfect example, they're going to start raising prices and they're going to have

all the ability to and they probably should be able to because they're going to bring incredible amounts of productivity improvements for everyday workers. But it's definitely not there yet. And I think we're going to start seeing that not just this quarter, but in the quarters probably in the next few quarters as well. Yeah, those are great points. So I think what you're talking about is, a, it's not quite there yet. And even if it gets there, There's there, there might be pricing power there, but it's going to be tough to bring on, I think it will be tough to bring on new accounts. So effectively, what you're trying to, what you're doing is you're going to try to get a functionality improvement that will cut into existing budgets. Like the, no, let's say you're using Photoshop and you have a B2B marketing.

You're in a B2B marketing division. You're going to ask, you're going to go ask for extra budget. That's, that's going to be quite, I don't know if you're going to get that budget. So it's not as simple as bringing on new customers, right? it's a matter of like you're going to, this is a play to try to get more money out of existing customers. And good luck because, you know, they're going to be people who are going to be approving these expenses within companies. We're not in zero interest rate where every expense is approved anymore. And they're going to be like, well, you're making the one sheets fine as it

is. So, you know, are you going to really need to pay for these extra seats? And if this AI is as good as you say it is, does that mean that they start to say, well, how many designers do I actually need if I could just prompt and create a one sheet instead? Yeah, I mean, Adobe, I think Scott Belski had said it himself. Like, you know, there is that huge question of, are you by improving your tools to such an exponential level actually decreasing your addressable market? I mean, I think every company is thinking about that, whether it's Microsoft, Google, Adobe, but at that level, they still understand that if they own the platforms, they will not be in any significant trouble. But I don't know. One thing I've been thinking about a lot on this, this might be a little

out there, but I've like talked about and written about how can hype cycles actually kind of will innovation out of existence interrupted in such a negative way that we never actually see the true value. And with generative AI, the reason I'm excited about this moment that's the trough of disillusionment is, is, and then with crypto, would the technological promise ever have been realized? Could we actually have seen all the genuine utilization and killer apps if the price, like, action and the hype cycle around price didn't completely overtake the entire industry? And I wonder, because, like, I think this, there's going to be a lot of negative sentiment when people don't get the exact promise of generative AI across all these different

use cases that they've been promised right away because it's been sold as that. And I think you made a good point on that. It's like those kind of micro decisions around budget are going to be happening everywhere. Google is trying to sell Gemini for workspace at an additional, I think it's like 20 bucks per seat. That's a lot of money for a large enterprise. And it's one of the where at this exact moment, it's hard to justify that, especially at scale, should in six to 12 months or maybe at some time frame generative AI be perfectly embedded in all every Google workspace tool? Yes, and I think they'll get there. But these budget questions are going to happen. And then you've, because of the level of expectation, if they don't meet these

budgets and expectations in the next few quarters, do they start cutting programs? Do these companies start cutting back and saying, well, maybe this isn't going to work and then does it all just fade away? That's right. And, you know, on CNBC they asked me, so does Adobe now belong in the Magnificent Seven if we replace Tesla because they have AI? And my point is totally in line with what you're saying here, which is just because a company is quote unquote doing AI doesn't mean they're going to see exponential benefits the way that the, you know, some in the market might expect. Like it's actually a much more nuanced answer than that. I, I, I, know we're going to get into it, but I just have to say about we're going to get into Tesla

in a little bit. But the fact that we are discussing that Adobe is an AI company and Tesla is not is a perfect sign of the times right now. Absolutely. And yeah, some Tesla discussion coming up shortly. I also think that it's important to point out that when we start to see some numbers and predictions that, you know, there might not be as much there as we actually imagine or I think it's important to view it with a little bit of skepticism. Not to say this stuff can't happen, but Gartner had this prediction that traditional search volume is going to drop 25% by 2026. And that's a huge prediction. And to Gartner's credit, when I asked them to speak with me about it, they put Alan Anton on the phone, who's a VP over there who's responsible for coming up with this

number. And so I asked him, how did you get to this number? And he goes, if you think about it, there are over 1.5 billion Apple iPhones. All it takes is a new rollout. And suddenly the access point to impact that giant number of daily searches, which is like $8 trillion or something like that happens without, or $8 billion a day, happens without people having to download or subscribe to a version of chat GPT. Basically, what he's saying is that like we could see this decline, 25% decline in search if the Apple were to replace like Google search within the iPhone. Now, is that possible, sure, but that would be an $18 billion a year hit to Apple, or, yeah, $18 billion a year hit to Apple revenue. And I don't think it's necessarily a slam dunk they're going to make that happen or anything close to that.

So when you see a number from Gardner, that 25% of search volume is going to go down. It's predicated on such a big thing happening by 2026. And that's what I'm just like, oh, okay. And I was like, so how did you get to the 25 number, 25% number exactly? And he says, and I think this is crucial just through internal debate. Well, you know, through our own internal debate here on the big technology podcast, I'm going to come up with a bigger number. I honestly think 25% in two years' time is conservative.

I have almost completely stopped using traditional search. We've talked about this. I got perplexity on the phone. Even Gem and I am using rather than traditional Google search. Generative search is so much better. Like getting the answers you need is just infinitely better, more tailored to you. And I mean, in terms of what that means for the web at large is a whole discussion. But like, I think every time the average user starts to try generative search, the more it gets integrated already within Google.com itself now more and more.

I think almost every search now, especially I do on mobile, has a generative component up top. It's just a better way to present information. And traditional search has gotten so bad that I think it's going to be bigger than 25%. I'm going to say 32. 32? I don't think so. I think that you are discounting how hard it is to change user behavior. And remember, in this day and age, there are still people paying for like AOL dial-up fees because they've forgotten.

to like cancel those accounts. I mean, obviously they're not going there every day, but it is so tough to change user behavior online. And if you're going to have a 20 or 32% drop in search volume, that's going to really be a C change in behavior. I mean, it's just hard. It's not the stopping of growth, which is what we usually see. It's a complete flip. No, but remember, and again, for better or for worse, search is a monopolized function tool. And Google, controls it. The Apple search bar on the iPhone controls it, which goes to Google currently. Like, Google flips the switch and it completely changes. And they're the ones in control of it. It's a fundamental threat to their business, but they're already moving in that direction.

So the moment they realize that, okay, this is the right way for search to happen. And they make a courageous decision that we're going to disrupt her own business and actually present search in this way to remain the owners of it to make sure that Google.com is still where people go to find information. I think it can happen not overnight, but in a pretty short amount of time. And again, for anyone who's using generative search, it's such a step change in terms of quality of results and just how you find information that to me there's no doubt that that's the way it's going. You know, I will admit that after speaking with Alan, I did believe that this was less of an outlandish prediction than I thought in the beginning, but I'm still pretty skeptical of

it. And look at you, Ron John, coming on here, guns blazing saying AI hype is... 32. Not only that, you're saying AI hype is deflating. That's a good thing. And then you drop this prediction that AI is replacing search by 32%. That's my... But it's two years, two years. That's not six months, not three months. You're in three quarters on my watch. I don't know. It's pretty soon. Better get going on this, on this transition. let me take the hype side again because I saw something fairly incredible this week that we talked about on the Wednesday podcast, but I think is worth bringing up as a counterpoint to like this AI hype cycle dying, which is that there's, this is from business insiders. Software

engineers are getting closer to finding out if AI can really make them jobless. And here's the story. Software engineers who manage to survive the brutal wave of tech layoffs aren't in the clear just yet. AI that does their jobs is coming for them. A little known startup called Cognition Lab's stunned software engineers this week when its team of coding whizzes unveiled Devon, the first AI software engineer. The creation from a barely two-month-old startup backed by Peter Thiel's Venture Capital Fund might appear to have an apt, or appears to have an aptitude that's a notch above traditional engineers.

And I took a look at this. I went to the demo video, and it was pretty amazing the capabilities that they're saying that this Devon AI software engineer can do. So it says it can, you give it a task, it can do a step by step plan, write the code, use a browser to pull up API documentation, debug, and then build an entire website. I mean, if this stuff, you know, there's, I don't think Devin necessarily will be it. And in fact, there's a counterpoint where, like, people on Reddit called it a chat GPT wrapper with extra hype sauce.

It almost feels like a crypto cash grab. But the bottom line is, it's just going to take one of these things to work. And all of a sudden, that could potentially be a revolution in the way that we build, build computing and build software. Okay. I think I'm now seeing we had like cloud revenues down, search down, and now hype cycle around engineering and software development. I think I see where my point of view is coming.

To me, this felt again like a fancy demo video that is answering something that should be happening and will happen at some point. but likely is not happening tomorrow or the next few weeks. I think why generative search, I'm almost more bullish, is no one talks about it. There's no, everyone's typing, Google's typing Gemini, the chat bot, but never talking about generative search. So it's almost one of those that is working and it's working well, but there's no fancy demo videos.

It's just you use it and it's done versus, again, software development by all measures. that's the most structured type of thinking should be AI generated and like should be this should work and I mean it's again it sounds amazing like being able to pull up parse API documentation write code off of that and build a website that's more than HTML and CSS and actually has connectors and interactivity like it should happen but I can totally picture this is one of those things that it's a nice demo video for a chat GPT wrapper. And if we go to actually use it, we're not building a website tomorrow. Exactly. And to me, the thing is really that it sets the

vision. And you know someone's going to build it. It might just be some time. But it sets that vision. And who knows, maybe learn to code is going to be learned to prompt at some point. Oh, it's already there. Learn to prompt. Yeah. So speaking of fancy demo videos, We obviously know that OpenAI released these fancy demo videos of SORA, and we did get some news this week about its video generator. So the Wall Street Journal did this interview with Mirradi, who we spoke about last week, and we'll continue to speak about this week. And she broke some news.

She said Open AI is going to release SORA, the new text of video tool later this year. It could be months. It could be sometime later in the year, but it's coming. It's going to be released this year, which to me actually registered as a surprise that they're going to ship it this fast, because you remember when they rolled it out, they were not 100% sure if it was going to go public anytime soon. And this feels soon to me. Yeah, well, first we'll wait and see when it actually is out there.

But I think, yeah, text of video is certainly almost the most hyped part of this hype cycle because it's one of the most difficult problems to solve. But obviously those initial demos were incredible. I was more fascinated by, in the interview again, Joanna Stern kept asking her with the Wall Street Journal, you know, what data do you train on? Do you train on videos on YouTube? She said, I'm actually not sure about that. Videos from Facebook or Instagram. She said, you know, if they're publicly available to use, there might be that data, but I'm not sure. I'm not confident about it. And we'll get into a shutter stock in a second, but like, which they have a set deal with.

I'm amazed, given all the scrutiny, especially they are to the ones under a lawsuit from the New York times on copyright infringement, they didn't have answers to that. Like, she wasn't a hundred percent prepped. It almost reminded, it made me feel like they've been getting such layups, layups and softball interviews to date around the underlying foundations of these models that to not be able to answer that for an $80 billion company was kind of shocking to me. Yeah, this is Bryant Merchant, who's a columnist and a tech critic. He said, so when the CTO of OpenAI is asked, Sora was trained on YouTube videos, she says, I'm actually not sure and refuses to discuss all further questions about the training data, either a rather stunning level of ignorance of

her own product or a lie, pretty damning either way. And then he makes the point that you're bringing up. Note how completely Moradi freezes when she's asked a straightforward question about training data. Reflects how the opening eye crew is used to softballs or chin-stroking questions about AGI. When a journalist pushes for a real answer about a material issue, she's clustered and defensive. Sort of kind of goes to, I mean, it's a point of pride to me at this point that we haven't had anybody from Open AI on the show because that is the type of question that they're used to and they're, they go for.

And they wouldn't get that here. Yeah, I mean, it's almost like as the CTO of theoretically one of the most technologically advanced companies in the world, this should not just be catnip for you. Like, you should be excited of how we built these models. This is like your intellectual prowess at work. That was the most shocking part to me that this is the kind of stuff that not only should you have an answer for from a media training perspective, you should be excited about this stuff. This stuff is fun. And I think it actually, I think that was a pretty important interview.

And I know like the fact that that clip is going viral. It's going to start to raise more questions or hopefully, I guess, in a good way, have tougher questions to ask about. the models. I think this has been almost like a recurring meme at this point for us on this podcast that how this is an $80 billion company versus how they operate on all the things that companies of that scale are supposed to do still shocks me every single week. Exactly. And, you know, we spoke about it last week about how this open AI name is a misnomer, right? And I was listening to another show and heard this like really important point, which is that, Open AI, I think Scott Galloway made this point actually on Pivot,

that Open AIs Open has become the same thing as like move fast and break things at Facebook and don't be evil at Google. It's just this thing that sort of will dog them forever. It's kind of why I believe they should change the name because it's just you can't, you're clearly not open. You're not going to talk about these things. Like, let's move on. Hey, remember, rename yourself ChatGPT.

that's uh that's still my uh my marketing suggestion for them so um speaking of miramaradi just after we spoke about you know this this new york times article that said she was part of sam's ouster in november she so lots of news broke first of all uh she came out and addressed the article okay so she says some of you have seen a new york times article about me and the old board i find it frustrating that some people seem to want to cause chaos as we are trying to move on but to very briefly comment on the specific claims there. Sam and I have a strong and productive partnership, and I have not been shy about sharing feedback with him directly.

I never reached out to the board to give feedback about Sam. However, when individual board members reached out directly to me for feedback about Sam, I provided it. All feedback Sam already knew. That does not mean in any way that I am responsible for or supported the old board's action, which I still find perplexing. I fought their actions aggressively, and we all worked together to bring Sam back.

Really looking forward to get the board review done and put the gossip behind us. Basically, it seems like she's saying, like the old board leaked this to the New York Times and is coming out and saying like, that's ridiculous. Yeah, whenever you hear the word gossip or kind of people trying to fight back against an article with that kind of tone,

it's not a great sign. But again, the fact that it was likely board members that she was confiding in leaking this to the times clearly is a reminder that things are a bit crazy over there and remain crazy and likely are not going to slow down anytime soon. Totally. And I stand by like our headline of the podcast last week was Open AIs turmoil rolls on and it doesn't seem like it's going to, you know, there's still that instability there. That being said, I do apologize because I did say that I believe that this report was going to lead to some concrete information about what happened and then basically after we had published

on Friday, so did Open AI on the report and it found that nothing was had, nothing happened. So it's, this is the story I think from Axios. Open AI did not publish the investigation but provided a summary of the findings. The review concluded that there was a significant breakdown of trust between the prior board and Sam and Greg. And they concluded that they both added the board acted in good faith and did not anticipate some of the instability that led afterwards. Nothing to see here. Then Sam is reinstated to the board and puts three new members on Dr. Sue Desmond Hellman, who's the former CEO of the Bill and Melinda Gates Foundation, Nicole Seligman,

who's the former EVP and Global General Council of Sony and President of Sony Entertainment and Fiji Simo, who's the CEO of Instacart, so a much more diverse board right now and a more rounded outboard. Interestingly, no Microsoft seat. And Sam basically got on a conference call and said, I'm glad that we've put this behind us. I guess I still question, like, you know, have we? But it does seem like this chapter has come to an end.

I have a theory, as you read the names of the board members. Fiji Simo, she was, she actually was one of the most senior executives running advertising at meta slash Facebook. And I remember when she went over to Instacart, it was very clearly a signal. It was pre-IPO that Instacart is going to build out its advertising business. And they did. They did very successfully. And now I'm not sure the exact percentage, but it's a significant percentage portion of their overall revenue mix.

Does this mean OpenAI is starting to think about advertising in chat GPT? Most definitely. Yeah. There's a rumor. There's a rumor that they are building their own search engine. So Fiji actually makes a ton of sense there. Oh, I like this. I like this.

We're not too far away from chat GPT, giving you an answer and then also providing you a suggested link or suggested product. Absolutely. And Fiji, of course, was an important product executive within Facebook as well. She really knows consumer products that touch a lot of people and all the little tricks that you use to make sure that they keep coming back. So I think she's going to actually be an invaluable member of the board there. Yeah, that's an interesting one. I still wonder that they didn't release the entire investigation, but only a summary. Did they use ChachyPT to summarize it and add to the prompt?

And do present this summary in a way that is still favorable to open AI, but that appears balanced. That would be my prompt. I would be doing that. Absolutely. If you believe in the product, go ahead and use it. Maybe a little out of here and there. But yeah.

Another thing that we talked about last week was sort of this email between Elias Sutskever, and Elon Musk about the desire to not be as open as they would, you know, sort of make it out to be to the public and saying that being open is for a recruiting process and basically how this makes open AIs open seem hypocritical. And we had a listener point out quite angrily in the reviews that left out the fact that, you know, basically the whole blog post made Elon Musk's attempt to take over and to sue open AI somewhat hypocritical. And I agree with that. I think that's actually you know, an important point. That did happen. That being said, like last week, we're just trying to talk about what mattered. And that what mattered was the fact that Open AI had made this

admission. I don't think Elon Musk is really that relevant anymore in terms of what Open AI is doing. Of course, he's going to bring this lawsuit. You know, it might poke them a little bit and help us learn more about them. But they're the big story, honestly, not Elon. And so it's not like a defensive Elon that was skipped over last week. It was sort of a let's put the important story first. Well, no, but how do you then feel about, I mean, Elon Musk is clearly one of the biggest figures in technology and he's suing Open AI and he was a founding member of the company. You don't think he's central to the story?

Oh, I think he is central, but I think the, like the, I don't think that it's as like, what we care about is Open AI. Do we care about and that this lawsuit is going to get more information about them out in the public? Do we care about like the, you know, the fact that Elon's. been exposed for for leaving and then coming back and being self-serving. I don't think that that's as important. I don't know. Okay. I would agree in the sense that like Elon's role specific to the initial like how what his role was at the time and is he going to get some

kind of financial compensation. To me it still feels though like this puts him front and center in the AI conversation at a moment that he needs to be. It reminds the entire world that he was this, the most hyped AI company in the world. He is directly connected to, which still gives him a tremendous amount of credibility around AI in general. And it's something I think is at this moment, and it's important. Yeah, no, I agree. I don't think he's a non-story. I just didn't think he was the main story last week.

But anyway, we probably should have addressed it. And I just wanted to put it out there. Also, just like a word about, and I'll just do a quick little rant here about our sort of exposition. about covering Elon because it does seem like every time we talk about Elon on the podcast, either someone who's pro-Elon or someone who's anti-Elon doesn't like like one thing or a few things that I've said or whatever has been talked about on the show and then leaves a bad review. So I just kind of want to talk about like my philosophy about covering Elon. So first of all, like I definitely like we have to acknowledge that Elon is a powerful and important

figure in the tech world and we have to cover him. And he definitely inspires like strong emotions, just about everybody who knows him and knows of him one way or the other. And it's just like, it's our job to cover him. And at least speaking from myself, I see Elon as a nuanced figure. He's good at some things. He's bad at others. He's good at SpaceX, which had a very important, you know, advance in his program with its starship launch this week. And for the most part, he's good at running Tesla, though really it's been rough lately. And we're going to about to talk about that in the next segment. And I think he's been bad at running Twitter. And And, you know, even though there are these, like, strong emotions, I don't want to feel afraid to speak about him or try to steer away from talking about him just because, you know, it's going to provoke some passions. And, you know, I'll definitely get things wrong occasionally. The bottom line is that, you know, covering Elon and tech more broadly, you know, we're going to do it with a broad group of guests from across the ideological divide. And this is just how I think that we learn and, you know, how I hope you're going to learn about what's going on because to leave.

these perspectives or leave people outside of the conversation, I don't think it really serves anybody. And we're going to ask the tough questions to anybody who comes on and about any story without fear or favor. So, you know, I guess like when I see the ratings blow up like with bad reviews whenever we talk about Elon, it just makes me want to like leave that topic completely alone. But I've just basically decided that like we're going to cover it. And no matter where you are on the Elon spectrum, just asking like, give us some grace. allow us to be wrong on things or write, you know, allow me some room to give it wrong. And if there's feedback or things that you think we miss, we put the email every, every single

week in the show notes. It's Big Technology Podcast at gmail.com. You know, feel free to send feedback and we'll take it into consideration. And also, like, on the ratings, I know I ask for them often, but they really are the only publicly available metric that people get to see around the podcasts and guests and their representatives look at them before the side. whether to come on. So, you know, a bunch of five-star ratings could be the difference between a lower-level executive or maybe having Jensen from NVIDIA on the show speaking with you here. So, look, allow me to just humbly ask and finish this, you know, little exposition to please help us out if you can. Give us a five-star review if you can. And also just understand

that if you, like anything like three, four, three-two and one star, it basically means kill the podcast. Like you'd never want to go to a show with a three-star review. And look, I'm not going to talk about it anymore, but I just felt that that was important to be said. So like Elon, important to cover. We're going to cover him. Not always going to get it right, but I'm not going to ignore it. And I do want to hear from you if you think we're getting it wrong. Yeah. And I as someone who can be tough on Elon, I will admit when I get it wrong. And certainly my predictions around Tesla's revenue and earnings growth in 2022 were definitely wrong. But 2023 and now into 2024 starts to tell a different story, I think.

Yeah. So that's a great segue because in the nature of that little exposition, let's talk about Tesla earnings or Tesla's situation right now. So this is an unbelievable thing that's happened with Tesla. The analyst price target cuts have been crazy, crazy, just like earth-shattering. Because remember, Tesla is already 60% off of its highs. It was at $1.2 trillion. Now it's in the $500 billion range. And three major analysts have cut Tesla price targets this week. Deutsche Bank going from $250 to $2.18.

Wells, Fargo, going from $200 to $125 to $125. This is the share price. And UBS cutting its price target from $225 to $165. Tesla right now is the worst performer in the S&P. 500. It's down 32% or 34% now since the beginning of January. It's of course the growth. This is from from one of the analyst notes. He highlights that sales volumes rose only 3% in the second half of 2023 from the first half where price and prices fell 5%. And basically they're saying that Tesla is now a no growth story. Welles Fargo, Colin Langen. It's a no-gross

growth story. And this is happening as the S&P 500 is up. So what do you make of what's happening with Tesla Ron John? All right. So I think when looking at Tesla's stock, it's always important to detach it from Tesla, the company. Tesla's stock is down from the highs, as you said, I think almost 60%. It's still an expensive stock. The PE ratio is still 37, whereas Ford trades at seven times earnings. So relative to traditional automotive manufacturers, it's still expensive, but it was able to be expensive for a long time because their growth in 2020, 2021, 2021, was incredible. And even just when you walk outside, I mean, here in New York City, when I go home to my parents in Boston, the amount of Tesla's I see on the street is significant.

significantly higher. It used to be this kind of like fun oddities to see on the street and a novelty almost. It's mass market now. Yeah, now it's mass market. But in doing that, and they very specifically from a pricing perspective, significantly decreased prices, they took a margin contraction. The margin went from, I think it was like, around 40% to 25% now. They're moving in the direction of a more traditional automotive manufacturer, which makes sense, given the scale they are. And also, given the growth of EVs across every automobile manufacturer. So I think they are becoming more of a normal car company. And in any other circumstance, that wouldn't be bad, right? Like that would be, okay, you're growing, you know, or maybe they grew so much in the last few years that maintaining

that rapid pace of growth is difficult, but you're still a scaled automotive manufacturer that makes cars people like and come up with a new model, come up with new traditional growth strategies. But when you're trading like a tech stock, you can't do that. You have to have dojo robots on the road map and like you have to sell a much bigger story that is difficult to realize versus this has always been my issues. Just be a great car company. And I think they could be a very interesting company. Yep. And you're right. Like think about Tesla. When it's more of the niche car company, right, it's selling the story, not the cars. Now it's moving toward a mass market car, mass market company. it's selling the cars and the story you're right becomes less important because we're starting

to see the numbers. And the Tesla story is not just about Tesla cars. It's about the technology, autonomous driving, the charging stations, right? Like you're going to be able to charge a Rivian in a Tesla charging station. It's about the batteries, right? People have called it a battery company and all that. Okay, so I'm just going to put this out there. I think all that stuff seemed plausible when you were still small and you had more to grow. And it would even be more plausible now if Tesla was the leading story in the market. If Tesla autonomous driving and the brilliance of Elon Musk was the leading story in the market like it had been for years. But we have a new story. And the story is artificial intelligence. And Jensen Wong is the new Elon Musk. He's

more stable. He's behind the product that's really leading us into the future. And he's selling like crazy and his margins are nuts. Do you think that Tesla will pull off that ecosystem story that was promised? Maybe not Dojo robots, but they become a battery company and the charging infrastructure of the country. And like, do you think they pull that off or do you think they just continue into mass market automobile manufacturer? As with everything with Tesla, it depends on Elon, right? And that's why Elon's central, yeah, it's just a centrality of Elon story here. Can he push that vision forward? That's the vision. We'll see. Now, look at Elon. He's a little bit stretched thin. He's doing the Twitter thing. He's doing all these other things. And does he have

the time and the force of will left to, you know, be sleeping in that factory again and make that happen. And if you look at like the recent calls he's had with analysts and the recent performance of the company, you know, even Dan Ives is talking about how they're, you know, they've been train wrecks. And, you know, I think that the Twitter thing is definitely contributing here. There's no way that's not a major distraction for him. So I think he should sell Twitter and just get on with it and focus on the things that are working. Now, I think, again, as you had gone through, sometimes we get it right, sometimes we get it wrong. If Tesla pulls off this ecosystem story and becomes a battery or charging or insurance company, I will readily admit I was wrong because right now it does

not seem like it's heading in that direction, but you never know. Yeah. And again, like, do I think Elon Musk can pull this off? Absolutely. Do I think Elon Musk and his current state can pull this off? No. Yeah, I think that's fair. And the market needs him to be, you know, it kind of needs him to be that if Tesla, is it a coincidence that Tesla's dropped by 60% the stock, you know, since effectively the Twitter acquisition? Like, no, the market needs him to be this like Tony Stark like figure to believe in him that it's going to happen. And that's why I've said all along that the Twitter acquisition has the potential to be

more costly than just the $44 billion. It's cost him way more than that because there are people who are trading and being like, I don't believe that this guy can do it. Yeah, but I disagree with that in the sense that the negative public perception of Elon Musk that's been growing based on what he tweets has always been there long before the acquisition. Now it's just he's more of a story to the average person rather than the kind of like, you know, tech crowd, myself included. No, his business acumen is now tied directly to those tweets. He owns the company. everybody can see it yeah okay all right that that makes a little more sense then but it really

it's a tough time for tesla space x doing great but tesla will have to figure this out this is a pretty the thing is it's again it goes back to the story and the story is not in its favor and the the um the markdowns or the downgrades at these analysts they're dramatic it's crazy like going from $200 to $125. Well, they mirror the markdowns on the cars as well. Going from like $50,000 average unit retail to $34, it's when you're taking the same car and cutting the price, it's going to, you're going to sell more of them, hopefully, but you're just going to kill your margins.

Totally. Yeah, it's perfect storm. Okay. So speaking of a perfect storm, Tick Tech might be gone, which is crazy. We talked about this on the Wednesday show with Solana, but the bill passed the house. And now it's in the Senate. So as I tease at the very top, that bill in the Senate looks like it's slowing down. So that's from the Wall Street Journal.

Tic Tac's fate now hinges on the Senate. The Senate has hit the brakes and floated possible changes to the measure, dashing proponents hope for quick passage and offering a potential reprieve to the popular short video app. Among the reasons for moving cautiously, senators say, worries that targeting TikTok would curb free speech and said an uncomfortable precedent of meddling with the private business while also trampling on younger voters devoted to the app if TikTok were ultimately shut down. This isn't going to be as easy as a lot of people imagined, even though the fact that the House voted in favor of the ban dramatically. Well, we have been since, I think I've been

for too long of a time saying it's going to be banned. But I think we discreet about this back in our predictions for this year. I said it would be banned. You said it wouldn't. We're getting closer, at least. I think for me, I wrote about May 2019. I said there still can't believe it's not a bigger story that a Chinese-owned app is quietly taking over the American market. And I've been looking at this closely for years, and it's always blown my mind, especially the amount of influence it has from a media perspective, the fact that it's

a black box algorithm. So I will say personally, I'm very happy that this is on the national agenda right now. It's going to be interesting in the Senate. I think, like, it's so rare that there's any kind of issue that brings together coalitions like we're seeing, where you see, I think it was Marjorie Taylor Green and AOC both voting against it. That was amazing. Yeah, yeah, which for me, like, makes me feel more confident in my will for a TikTok ban. But for me, I think it's, it all just comes back to the idea. that a country of like china has mastered the art of controlling the information flow of a billion

people they built the great firewall they are the world's greatest sensor and kind of controller of information and an app that is a black box algorithm has become the most influential property in america and again that's both for younger people but also ticot drives overall culture right now it still blows my mind that there's resistance to this. And I've been trying to read every argument on the other side that could possibly try to sway me. And I still haven't found it. Well, let me do my best then. What do you think about this David Sacks argument that it's TikTok today and X tomorrow?

And effectively that the bill calls these platforms for, I don't really believe this, but I'm just going to like advance it and knock it down. The bill calls for like a forced investment or sale to any foreign controlled entities or ban if they don't do it. And what Sachs is trying to say is that like they could use foreign controlled entities to be like, Elon is actually controlled by China. Therefore, it has excess to be banned. I mean, but that's where a slippery slope argument to me is bananas because like the slippery slope is already here that a foreign adverse. that is the world's leader in controlling information runs a black box algorithm that, you know, controls our attention and media influence. Like I think, yeah, again, I think the idea that it will somehow go after X specifically, I think is is a bit ridiculous. But it is fair. I think questioning

how are different people behold into different interests is something that should happen more, especially in any kind of influential media property. So I don't think that's an unreasonable thing to bring up or ask. And Elon Musk's, if there is pressure related to Tesla's goals in China and how that could influence Twitter, I think it's a reasonable question. So I think those kind of questions should be asked and have not been in the past. And that's why we are where we are. So do you think that if people find enough suspicious things about Elon's,

relationship with China that they should force them to sell X because it could be controlled by a foreign adversary? Well, no. Okay, so two things on that. One, I think it's a question that should be examined and investigated definitely because it's important. But this is so clear that it's wholly owned by a foreign adversary, that they are the dominant controller. It's one thing to be influenced and it's another thing to be owned. And this is divestment to, if by a company that is own not influenced like this is so far beyond just general influence and again that that kind of question of is Elon influenced is a very two steps three steps because of teslas growth ambitions in china it could mean he's making product decisions so that's not going to be in any way

this bill the language of it would never ever touch that yeah exactly i mean if you're going to start asking those questions then you got to ask about apple right like the list goes on yeah yeah yeah exactly Anyway, yeah, I do think the bill as constructed is pretty good. I will miss TikTok if it goes. I like using TikTok. My usage has been way up this week. I guess TikTok has been like sending notifications and things like that. And I've just been like, oh, yeah, forgot about TikTok.

It's such in the mind. They must have like the best usage going. But I, you know, I'm totally, if they ban it, they ban it. And like Salon and I talked about on the show on Wednesday, like so be it. We'll get over it. And meta will get better. That's it. Well, and or they divest it.

But to me, the tell in all this, there's two of them. They're not divesting. They're not. No, no, of course not. I know. This thing will either be not, the bill won't pass or TikTok will get banned. I'm sure of that. Yeah.

I mean, but the fact that they are adamant about not divesting is a tell. The CEO showed you on like Capitol Hill was interviewed and he's like, oh, he's terrible. He's awful. Well, it's funny because he, he, he, everyone loved him for a bit and his, you know, his testimony on the. No, come on. was awful also that was bad but yeah but the fact that like to me the tell is from a public facing perspective you have a Singaporean and everything they're doing they moved the headquarters they tried to push forward you know like a non-Chinese national faces as the public faces of

TikTok the app and then every bit of reporting around any kind of conflict within TikTok the companies operations are all about people have to go to work earlier because they have meetings with bite dance managers in China. Like, it's so directly integrated. And the fact that they once say, we will not divest, we cannot divest, it's an outright ban. And then to the fact that they're hiding it,

like the fact that they're trying to do everything they can to say TikTok is not a Chinese company, I think is just a reminder that it is. Yeah, but now the Senate, the Senate resistance does leave me to believe that this is not a, despite the fact that it passed the house, the way that it did. It's still a real open question of whether this goes through. I'm

sticking my prediction. It's not going to get banned. I'm still team bad. We'll see. Let's end on what may be the most interesting story of the week. Where is Kate Middleton? So, Ranjan, you're an expert in this. I'm not, but I did, I've spent almost zero time paying attention to the Royals, but I do like technology. And over the weekend, or yeah, was it over the weekend or earlier in the week they they've so she's been basically out of the public eye after an abdominal surgery and earlier in the week they posted this photo of her with her kids and people on Twitter started picking out the fact that this thing was photoshopped like crazy like nothing lined up the hair blurred the fingers were warped in weird ways and uh at a certain point

the associated press decides all right we are going to kill this photo. I've never seen this before. They put out this notice. The first official of a photo of Kate, Princess of Wales, since she underwent abdominal surgery nearly two months ago, was pulled from circulation by the Associated Press and several other news organizations because the image appeared to have been manipulated. And then this response is just, it is unbelievable from Kate Middleton. And then I'm going to let you run with it, Rajan. She goes, Like many amateur photographers, I do occasionally experiment with editing. I wanted to express my apologies for any confusion the family photograph we shared yesterday caused.

I hope everyone celebrating had a very happy Mother's Day. What? Okay. I love this story and I got two rants on it. The first is the, I'm not sure if you had heard, the theory, I guess it's more of a theory than a rant, that part of this is driven by the fact that Prince William has been having a potential affair. And this is my favorite British thing. Allegedly. Yeah, allegedly with the Marquess de Chalmondele is how it's spelled, but it's pronounced Chumley. That alone, just bringing and who's married to the Earl of

Rock Savage, like the whole thing is just the most awesomely British royal thing. And I have never been interested in the British royal family. But this is pretty fun right now. Yeah. The Earl of Rock Savage. He did everything. He was a great family man. He just tried really hard. He was there for her. And this was always bound to happen to him. No one talks about the Earl of Rock Savage. Maybe we can get him on the podcast. Yes. He can tell his side of the story. Talk about Photoshop. Maybe you can give some Photoshop. Maybe he knows how to use generative fill in Adobe Photoshop better than the average new graphic designer. But my other rant on this. My other rant, not Kate Middleton, certainly. My other rant, not Kate Middleton, certainly. My other rant. on this though is I out of the I should not be annoyed of this but I am annoyed how everyone is saying AI when it's actual just standard Photoshop errors everyone's like this is AI this is the future of AI you can't trust anything I'm like this is literally bad photoshopping this is like you know moving stuff around or using standard Photoshop feed this has nothing to do with generative AI maybe if she used generative fill it would have actually been good

good. But this is like the conflation with how this could mean AI is going to screw up everything in the world and destroy all trust and increase misinformation, I think is a complete misdirection here because this is just bad Photoshop. And Kate Middleton is bad at Photoshop, if she even Photoshop. Well, that's the question I want to ask you. So the thing, the weirdest thing about this to me has been the social media statements. I mean, those have been the creepiest ones. First of all, she said, I think she said William took the photo, which, like, it was a perfectly shot photo, it seemed like. Like, that's strange. Like, you don't, most normal people can't take a photo like that.

And then she said that she did the photoshopping. I mean, what the hell? Like, do you believe she was doing the photoshopping? That's wild. This is bananas, yeah. I think, uh, how do you put a tweet out like that? No, but here, here's, here's what's happening. I'll tell you.

The royal family. America and England, listen up. Here we go. Due to Harry and Megan's uptick in fame, obviously it's been trailing off a little bit, but they certainly got the big Netflix contracts and they got the podcast contracts, what a Spotify, whatever else. They became the influencers. They became more interesting than the actual royal family itself.

The royal family decided it was time for us to make it become interesting again. And then they saw on TikTok, maybe they even influenced those initial viral. old TikToks about Kate Middleton conspiracy theories, but this is all a PR gimmick to become the center of attention once again. You heard it here. My second favorite conspiracy theory about what's going on with them. My first favorite one is that it's been circulating on social media is that they used Kate's exact face from a Vogue cover for the shot and they like overlay the Vogue cover and then they fade out the Vogue and there's her face. And it's like, people, you put her her face on her face.

Oh, well, Bellingcat came out. Yeah, we'll talk about it. Bellingcat, the investigative journalist operation

that kind of is like amazing at understanding the nuance of digital paths and fraud and everything like that. They had a pretty good response to why this is not what it is.

But the Vogue viral tweets that's saying like I have proven that they're using Vogue, it's actually kind of It's also maybe it's good for Elon Musk, too, because Twitter feels alive and back again in a way that it hasn't been in a while where, you know, the engagement grifters are alive and well. There's fun conspiracy theories going around. There's, it's just in a good way, in a healthy way, in a harmless, hopefully way, it feels good.

I do think Twitter's gotten a little better. Like, they've dialed them the algorithm a little bit more. Like, I don't see as many chat GPT influencers and menswear guys, although I did block me. Medsburg guy. I couldn't take that guy anymore. Yeah. Yeah. Kate Middleton saved us from the chat GPT influencer. That's right. So, okay, let's end on this. Where is she? Where is? I think she's at home watching the numbers come in, roll in, and smiling as she realized she just restored the royal family to be the most interesting people in the entire world.

and that's something we have not had for a long time. So, congrats, Kate. Congrats, Kate. And congrats to all of you. You now know the truth behind Kate Millington's disappearance. All right, Ron John. Thanks so much for joining. Have a good weekend.

And let's keep tabs on Kate. See where she is. We will. Hopefully we'll have an answer by next week. All right, everybody. Thank you so much for listening. And we'll see you next time on Big Technology Podcast.