Big Technology Podcast - Software’s Epic Comeback, Meta’s AI Layoffs Blunder, South Korea Stock Market Chaos

Episode Date: August 28, 2026

Ranjan Roy from Margins is back for our weekly discussion of the latest tech news. We cover: 1) Software is rebounding, is the Saaspocolyse over? 2) Salesforce delivers solid earnings and jumps 22% 3) Why was Dario sitting with Benioff? 4) All software stocks are rising 5) Disruption could still happen, but on a longer timeline 6) Meta's bungled AI layoff strategy 7) How much of AI failures today are cultural? 8) Meta pays billions in landmark addiction settlement 9) South Korean stock market volatility 10) The clash of AI belief and reality --- Enjoying Big Technology Podcast? Please rate us five stars ⭐⭐⭐⭐⭐ in your podcast app of choice. Want a discount for Big Technology on Substack + Discord? Here’s 25% off for the first year: https://www.bigtechnology.com/subscribe?coupon=0843016b Learn more about your ad choices. Visit megaphone.fm/adchoices

Software rebounds and puts Sazpocalypse speculation to rest or does it. Meta tries to replace humans with AI and it doesn't go so well. And is it an AI bubble? Don't ask the traders in South Korea. That's coming up on a big technology podcast Friday edition right after this. Two and five Canadians will hear the words, you have cancer. That's why every step and dollar raised matters. On September 19th, join thousands in Toronto for the Princess Margaret Cancer Foundation walk.

Challenge yourself, friends, and family to walk 21 kilometers in support of life-saving research. Together, we can carry the fire and help create a world free from the fear of cancer. Register today at pmcf walk.ca. Welcome to Big Technology Podcast Friday edition where we break down the news in our traditional cool-headed and nuanced format. We have a great show for you today. We're going to talk about the state of the SaaSpocalypse, now that software companies like Salesforce, Adobe, and Microwise, Microsoft seemed to have rebounded from their Saspocalypse lows was this entire thing just an overreaction. We're also going to talk about a program that Meta tried to put into place to replace its human

workers with AI and why it failed. And then we're going to take a look at the South Korean stock market and talk a little bit about why the fears of an AI bubble may be justified, but it might not be a market-wide bubble. It might just play out in certain areas like it certainly has with the South Korean stock market. So joining us, as always, on Fridays to do it is Ron John Roy of Marges. Ron John, welcome back. Great to see you. Saspocalypse is over.

Benioff has ascended to the Iron Throne. It's a new day here right before we, the summer ends. I do want to say that. I did wake up seeing an image of Mark Benio and Dario Amadez sitting next to each other, starting to shill this new, this new Anthropic and Salesforce partnership. And there was somebody right in my mentions. Actually, kind of addressed to both of us since we've been taking the Saspocalypse, you know, warning seriously. And this person writes, Cantoritz and Rajan Roy caught an ass weapon with the, did you see this?

Oh, I saw that. I saw that. And I was just like, okay, all right, this is, you know what, let's lead the show with this. Because maybe software really is back. So let me at least introduce this. Yeah. Okay, so this is from CNBC. Salesforce CEO Mark Benioff says the SaaSpocalypse is nonsense and here's why.

Basically, Salesforce turned in some incredible earnings. The share surged more than 12% after the enterprise software giant delivered a strong quarter and issued better than expected guidance. Earlier this year, this is again from CNBC. Investors feared that increasingly capable AI models could allow the businesses to accomplish more with fewer traditional software subscriptions, undermining the industry's pricing model. Wall Street also worried that companies could use AI to create the software tools that they're paying for, and Salesforce shares went down 22% this year through Wednesday's closed.

But guess what? Salesforce has rebounded, and so have many of the other software names. I guess what Benioff was saying is trying to say and what the market is finally accepting, is that if AI replaces software, it's going to be slow. It's not going to happen overnight, which to me has always been the case. I don't know if the fundamentals changed,

but certainly the cesspaclips is on pause. So, Ron, I just wanted to get your broader reaction to this. You know, was it an overreaction by stocks and by Wall Street in the beginning? And what do you think we can read into what's happening now? All right. I wanted to, this is very relevant to my life here in Enterprise AI. So let's talk through this at a couple of different levels. But I want to start with the announcement.

itself on Claudeforce and Dario and Marks sitting next to each other at a table. And I definitely want to get into the dynamics of that. But what's amazing to me in terms of the marketing chops of Salesforce and Mark Benioff is the actual announcement. I don't want to say it's a complete non-event, but you could already do this in Salesforce and Claude. At writer, where I work, people connect to Salesforce and run all types of queries. it's actually one of the most valuable things I've found for my day to day.

You can do things in chat GPT. So the actual connecting Salesforce data with an AI entry point as a layer over it is not really news, but to package it all up, to have Dario sitting next to you, and to have your stock pop 22%. God bless Mark Benioff, because that man can market like no other. To me, the most interesting part, Like, again, definitely want to get into the actual kind of what it means for each business. But seeing Dario sit next to him in that context and that's every, the meme world got it was kind of wild.

Like Dario goes and says, you know, my chief commercial officer was just demoing this for me where he asked what the biggest accounts that Anthropic is trying to close now. Talk me through the risks of each one. All that data comes from being managed in Salesforce. these are not things Dario ever says or talks about, like the most pedestrian, mundane ways of using AI. Like, how do you think he ended up sitting there? Because it really, that power dynamic and the way he was speaking shocked me. Well, Salesforce is a investor in Anthropic.

investor, but their stake, I believe I saw it. Five billion. Come on. Yeah. You're going out at two trillion. This is not your lead here. This is, this is not from a pure financial standpoint in terms of who your investors are. This isn't a big deal. Can I tell you what I thought when I saw them sitting together? Yes. I want to hear. This is ridiculous. I'll get more. I just thought it's the last week of summer, nothing's happening. Dario's board. Like, this is like the one opportunity that they got to get him with Beniof, and they just did it because nothing was happening this week anyway. That is a very generous interpretation. No, tell me what your perspective is.

Why do you think he's there? I think he's there because pre-IPO, I think this is the first time, and maybe this is reading too much into it, where Dario has been influenced by the investors in the company. And they're telling him all this talk about, you're the last. last private company to be standing and you're going to subsume and every company and scare everyone is bad for the IPO. So you need to go out there and put on a friendly face and show how you're not this kind of like death star looking to destroy all companies and are actually a friendly face and just sit next to Mark and this is a perfect opportunity to do that. I think this was like

heavily influencing him pre-IPO. Okay. All right. Very interesting. So let's let kind of back up a little bit, right, and kind of talk about what's going on here. So what happened, it was you talked about Claudeforce, right? Basically, that's being the ability to use Claude to query your Salesforce records and get insights like, yeah, again, like we talked about, who are the accounts we need to close. If you're, if you're anthropic, the worry has been from the software companies would be that you would go, basically you would, you would stop, finding ways to make money, selling the models themselves, and you would need to go up market.

So it starts to take over the things that, you know, Salesforce are doing. So what you're saying here is basically that like instead of playing on those fears, what Anthropic is doing is saying they're going to play nice with enterprise software. If I'm in, let me just put this way. If I'm an investor in Anthropic, why do I want that? Wouldn't I want this company to say instead of that, instead of, you know, the vision that these multi-billion dollar companies are going to be okay, why wouldn't I have the vision that that is my market? Like, wouldn't I be better suited having Dario basically introduce a,

instead of Claude Force, Claude Customer Solutions. And this is kind of the- Sales-Claude, right? Sales-Claude. Now, this is a great name. Sales-clod. Here's a thing. Here's a thing. You know, the software, this is kind of the bottom line here. The software companies are getting a reprieve. There's, the basic Basically, the news is, okay, they're not going to be, you know, disrupted right away. But it doesn't mean the long-term disruption is off the table. It doesn't mean long-term. Like, long-term, wouldn't your AI assistant, if they hit AGI, you wouldn't need a Salesforce.

You would just dump everything into your AI assistant. You would have it listen to all your conversations. You would have it do all your customer interactions. Like, you don't need Salesforce. That's the whole thing. So I don't understand what the logic is from your perspective of them having to play nice with business software. No, no, so I do think, and like, I definitely think this is pure PR and comms. I think the big risk that they've identified on the IPO is that everyone, like, the more

evil and death starry anthropic seams and the more evil Dario seems, that's a net negative. I think there was a moment six months ago where that played well. like Claude will destroy all software and that the people were into it and liked it and it was fun. That still needs to be the $2 trillion valuation story. So I think this was purely just to be like friendly face. Look, he can sit next to another technology leader and smile and say we can work together. I think that's it. Because when you actually dig into the mechanics of it and let's do that,

I do think this doesn't make sense really for either company the way they're pitching it. Right. So it doesn't make sense for either company because of the sort of because of what I just brought up, basically that like this is going to be Anthropics market over time or why would you say it? Yeah. Okay. So two levels. One, Anthropic, you nailed it. It's you need to destroy Salesforce to get to two trillion dollar market valuation. No, you do like you, the whole vibe code your CRM. Because that's exactly right. Yeah, no, no, I mean, it's, it's, it's, that is the story. That's been the story.

That's what got all the hype in the market. So to walk away from that, I do think is not, doesn't make sense in the medium and long term. For Salesforce, what's so fascinating about this, the central question, even Dario started by saying, Salesforce has all the data. It's basically a machine for managing your CRM. The way Salesforce is positioning themselves, if you get, you. give up the UI layer, I think that's a big mistake because in reality, and this is a big question, whose data is it? Is it the customer's data or is it Salesforce's data? Now, I do think there's

an opportunity. And again, we think and talk a lot about this at writer. Like, there is a tremendous value, in fact, in terms of being the governed data layer and the structured data layer. And Salesforce dominates and owns that. So there's definite value in simply being a secure, governed, structured place for all of the customer data. But how valuable is that? Is that valuable in the same way traditional software margins have been? I don't know. I don't think so. Maybe it will be. But in the end, it's the customer's data. So to kind of build the entire story around it's our data. And Dario even saying,

Salesforce has all the data. To me is just weird. Like, I don't know. I don't see, I'm still trying to figure out. I mean, Beniof is Mark Beniof. And I'm sure even to get Dario sitting next to him like that, obviously the man can play the game well. But to me, what the bigger story is around this by giving up the UI layer is still

kind of surprising or confusing to me. Yeah, that's right. I mean, I think you hit it right on the nail, the nail right on the head with the UI part of the conversation, which is that basically like, all right, if you're Salesforce, now people are going to access your software by having conversations with an assistant, right? Is it that big of a leap to, over time, you know, say,

okay, well, since Salesforce is the database and Claude is the conversation, Why don't we just move the database over to Anthropic with Sales Cloud? And away we go. Yeah. No, I mean, that was the Saspocalypse story, which is, again, going back to, it's kind of still, Salesforce stock jumping 22% in a single day, the second biggest jump it's ever had in its existence, when they're actually going to market with, and maybe it's not a dumb database now, they're going to say it's a smart database, but still giving up that entire side of the way,

the interaction points, what is someone opening in their morning to ask questions about what does my day look like? I still don't quite understand it. But it made the stock jump 20%. So something worked. Well, part of this was Salesforce's earnings, right? So Salesforce is having good earnings, you know, even as AI is rising, even as AI capabilities are rising, and even as AI capabilities are rising, Dario's there with Beniof. And this is something that I think is worth talking about with this whole Spaspocalypse thing, which is like there's a certain level of craziness to how the market has been playing this. Because, you know, just because over time people might have the capability to vibe code, you know, their own CRM or the real threat that I think is

just because overtime, Anthropic, may go up market to take some of what Salesforce is doing. Doesn't mean it's going to happen overnight. Doesn't mean it's going to happen in a quarter. Doesn't mean it's going to happen in a year. Doesn't mean it's going to happen in two years. I think that's one of the things that as people have seen, some of the AI capabilities get better exponentially. They've expected the business disruption and the diffusion to happen just as fast.

And there's a real gap between the rise in capabilities and how they get implemented, right? and how people decide to use them. Like if you're a company that's using Salesforce for years, just because you can do some of your CRM activity doesn't mean you're gonna go overnight to Claude. And so I think that like, even if there was a Claude Force, right, that was better. That says something that takes maybe three, four, five years.

And so I think that's what we're seeing, we're gonna see a lot of this where like, there's gonna be headlines. This espocalypse is on, the cesspocalypse is off. The says, apocalypse is on, this ispocalypse is off. We're in truth, what we're really gonna see is some volatile but you know, we're going to need much longer time horizons to actually measure what's happening here and to actually see these changes meet it out, both in the saspakritus, but also with everything in regard to AI's capabilities, don't you think? Oh no, I fully almost uncomfortably agree to such a wholehearted degree that I need to come up with the reason to not agree so much that this is, it's all, I've said, I mean, it's a timeline issue. Like, this stuff will take a long time to play out.

And in reality, it gives the sales forces of the world plenty of time to figure out a new model or a better model or what's their winning strategy. But Claudeforce, to me, at least the way it's been positioned, like, I mean, when you dig into it, doesn't make sense for either company to me to go get this excited about it and make such a big splash around it. Obviously, the earnings mattered. But to me, again, the PR comms marketing side of it, like, to me, if your Salesforce, it is incredible. Like, the power communication of Dario sitting next to you talking about looking up risks around biggest. Once the last time you heard Dario talk about, like, commercial stuff publicly, something

so pedestrian and mundane and every day, like, closing a deal. I've never I don't think I've ever heard him right so but I will say he is he is like when you speak with Dario about business he is business minded like he knows the numbers he's not like pure scientists like he is definitely a business guy but you're right you haven't seen him like sit with like a SaaS company leader even if it is Benny Off it's probably the most famous of them and you know sort of go through go through you know why their partnership is good you know what the more that we're talking about the more I'm coming around to your to your way of thinking in terms of like the marketing and branding of all this. It's what you saw with the two of them is almost like the, the anti-Alex carp, right? Where it's like, there have been so many CEOs like kind of sitting on their chairs or standing on their chairs and talking about how Dario was evil. Adario was just like, get me one on the line and let's go and see NBC together.

Yeah, let's go sit down together. I'm friendly. Look it. I'm not pulling out like a like trying to attack Mark Beniof. live on TV and let's go IPO market. You can trust me. That's my read. So from June 22nd, 2026 until today, August 28th, 2026,

guess how much Salesforce stock is up? 72%. I mean, this is over. This is like where we, it is amazing what we're seeing now in the stock market where, where like investors have really cooled on this idea like this disruption is going to happen overnight, which was always like like we said, kind of kind of fanciful. And it's not just Salesforce, by the way. Like if you look at IGV, the software ETF, IGV is up 19.68% over the past month.

Salesforce, again, up 41% over the past month and 72% since late June. Adobe is up 16.49% over the past month. and Microsoft's up 29% over the past month. So, you know, one of the interesting, and obviously not investment advice, but one of the interesting things that, you know, you'll be able to see in this moment is like, man, there's just going to be this like volatility and investors running one way and then, you know, because of some headlines and then running right back because of some earnings. And, you know, there's a real opportunity there.

Has anyone who ever said not investment advice not followed up? with investment advice in the history of podcasting. I think like you have to, you know, you have to caveat it. Because if you're like, you don't want, you don't want people. I get it. I get it, but you just don't want people trading off of the, off of these, you know, observations like trade based off of what your financial advisor tells you to do. It's like, I don't know.

I think it's a, it's a worthwhile caveat. Any, any time not to be racist, but. Not to give investment advice, but I'm just giving you. I'm moving on. I'm moving on. I'm moving on. Well, Ron Jun, just because, go ahead. No, no, I.

Dash me. No, no, I think. What are you supposed to say? You're supposed to say trade on it? So the listeners come and they trade on it. And then when it doesn't go right, they sue you. Like, no, you don't, you need to give like the appropriate context here. Well, it's funny, though, because I would say,

Even that caveat so much of, like, you watch the All In podcast or whatever else, like, I mean, there's just so much investment advice that it's just given in any kind of conversation nowadays that I do. Okay, you know what? I appreciate the caveat. We don't want our listeners, as we'll get into the South Korea trading stories at the end of this podcast, ending up in any of these kind of situations. All right, pro caveat. So are you going to, after hearing me talk, after hearing me talk, are you going to go by IGV? I was already, Robin Hood's already open. It's already done.

Just because you said it, Alex. I hold you responsible. Okay, because I was going to say, you're too late. The bounce already happened. But okay. That's more investment advice. The opportunity window has closed. That's more investment advice.

You are done. You're going to get this show shut down because like some lawyer's going to replay this and be like, well, my client is now in shambles after shorting and then longing IGV after hearing. Well, actually, to bring it back to read. August 28 episode. To kind of, I think, wrap this. How much do you think Salesforce stock is up from the beginning of the year? Oh, oh, you want, okay.

I thought you were going to ask me to predict something. I was like, no, no, no, no, no. Okay. What do you put it? Maybe 3% maybe. it's down 1.94%. It's almost flat. So it's fascinating. I mean, again, in terms of thinking back through this year and this story, it is kind of a perfect round trip of software is dead, Claude code hype back in like February, March, April, vibe code your CRM and now back to,

no one knows what's going to happen. And we're back to flat for the year. No, I mean, I think that you could have your, your convictions in terms of where it's going to go, you just have to realize that it's not going to happen overnight. And that's like the case in point for our next story, which is that meta had a very aggressive plan to trim its workforce and transform its workforce based off of the capabilities of AI, only to learn a very difficult lesson, which is that it wasn't ready yet. Let's get into the story. This is from Reuters. Mark Zuckerberg had a bold plan to replace staff, meta staff with AI. Here's how it imploded. In January, Meta, CEO, Mark,

Mark Zuckerberg and his top lieutenants gathered for their annual leadership retreat at his Hawaii compound. There they hatched a radical plan to reimagine work at the social media giant in the age of AI. Code name Project OT short for organizational transformation. The plan envisioned an AI native future for the future owner of Facebook and Instagram. Okay, that's such a weirdly phrased thing for the owner. Okay. A Facebook and Instagram. Gosh. Anyway, dear Reuters. Okay, let me just go through this. AI would take over much of the daily work performed by thousands of human employees. Virtual workers would be overseen inside meta by smaller, talent-dense cadres of human staffers.

And then in scenario planning exercise, two of these people said, executive explored slashing the size of many teams across meta by as much as 60%. Sorry, a lot of reading here, but I feel like it's worth going through a little bit about what happened within there. So basically what they did was they set up this pilot. which had five, they had small tech pods, each consisting of two to three engineers and a designer all equipped with AI tools. The groups would dispense with established processes for releasing new products, such as a fixed six-month planning cycle. Instead, they would aim to build prototypes in four-week sprints. The layers of middle management that would traditionally be there would be eliminated.

Instead, the pods would report up to a single high-level unit had agent-assisted analysis would help upset the day-to-day priorities. All right, Rod, how do you think this went? Okay, before, I mean, I think we can all guess how it went. But the funny thing is, like, as you actually, I'm glad you read that out in its entirety, because it's like in theory or not even, like, that is a good idea to me. I mean, if you separate it from the layoffs and all the other kind of organizational questions, like, this is to me exactly what companies should be testing and doing and figuring out what the new operating model is and that teams should look different.

So I honestly think any, as we get into, if it worked out, any indication of failure is solely attributed to the worst code name for a project ever, project OT, short for organization transformation. Like, come on, guys. If you gave it some, even. Spud would have been okay on this one, but if you gave it a good code name, maybe this would have worked. But Project O.T sounds like worse than McKinsey. You know, when the word from on high came on that Project O.T was happening, do you know how it was announced to employees? How? One meta employee ran into the break room and said, by golly, pause everything. Project O.T. O-T is here. I don't know if that gets a buy-golly.

I was thinking about it all week of when to save the buy-gallies for. I think we need another Leopold for another buy-galli. Though Salesforce up 22% in a day might get one, but... No, no. Salesforce doesn't get a buy-golly. Let's be honest. And the rules of buy-galli, Salesforce doesn't get a buy-galli. Okay, but let's...

The buy-goly bylaws. Buy-goly by-laws, it's got to be a bigger. has to be trillion market cap or higher. Yeah. We have rules here. We have standards. But let's talk about this, though, because it is interesting, right? Because, like, obviously they were influenced by the fact that smaller companies were able to operate faster with AI, right?

They've probably been influenced by the narratives that, like, you can have a one-person, $1 billion company. They've seen companies cut and be successful. I'm sure what Elon Musk did to X probably was in their minds, although who knows if that's a success or not. Probably not, actually, now that we think about it. And they also went to Asia, where, like, things are much more advanced, places like Singapore. Okay. But what they found was that you can try to make your organization as AI forward as you want right now. The capabilities aren't there, right?

So they're just starting to be there. Here's the part where the rubber met the road. Internal data indicated, this is so interesting, by the way, and I'm surprised at this story and get more play this week. Okay, here's what it says. internal data indicated that the tech at the heart of the plan wasn't delivering. Employees' use of AI had resulted in a vast increase in the code they generated, but with questionable impact on productivity.

For instance, code changes made to the internal software platforms and infrastructure employees use on the job were up 22, sorry, 220% year over year. But changes that led to new or upgraded features reaching meta users were only up 36%. infrastructure teams were also warning of reliability warning signs caused by AI coding the AI coding search in April they said unchecked agents were performing large-scale disruptive actions that humans are unlikely to execute the result major technical and security incidents such as service disruptions and possible data leaks spiked 40% from the previous year and the time staffers spent firefighting them went up 70% of course according the internal posts. Okay, this is like the holy grail or the epitome of all the criticisms of AI. You write more code, you're not necessarily more productive, you ship more, and when you ship more, you have bigger security flaws. And when those security flaws hit, you have to spend more time cleaning up after them than you would previously. And then the whole thing basically didn't work.

Even Zuckerberg basically admitted that AI agent technology isn't at the point that he expected it. So what do you think about this, Ranjan? I think employee incentive is kind of like what's probably at fault here. Because I'm guessing given the timeline, this would be exactly when just use more and more AI as opposed to what is your actual end goal and then let them use AI in a much more lean team without middle layers of management. again, like the way you've read out that first part around these, what an AI native team could look like, still makes a ton of sense to me. So if you tell people you need to, you're going to be judged on how fast you move, how many tokens you consume, how much AI you do and use.

Of course, you're going to end up in those kind of situations versus like what is the actual task you're trying to do or project you're trying to execute on. and you do whatever you have to do to get there, and we're going to eliminate all the middle layers of management. Right. And this kind of goes to the theme that we've been talking about really throughout this episode, which is that the capabilities can be there, but to think that there's just like a straight shot to like exponential growth or to this being implemented perfectly is somewhat foolish.

Like these type of bumps in the road are going to happen for everybody. So there's going to be moments where they'll be like, all right, well, AI, you know, isn't working. It's not there. And in some cases, it really won't be there, but in some cases, it will be there. It's just that the human side of things takes a long time to get right. No, completely agreed. I also, I mean, speaking of the human side of things, it is fascinating to me. Like, how do you think these, that level of CEO, whether Zuckerberg or others, like, think about their employees and their teams? Like, things. like there I see like numbers well no but but even if it was numbers like I don't know like so much of the

communication or even the way this reporting shows these kind of decisions being made like these are the CEOs who chose the like hiring and growth trajectories of these companies since COVID I mean these companies have always been pretty heavy in terms of overall employment relative to the actual like cash generating parts of the business, whether it's Google or meta. But I don't know, like it's a, I still wish one of these CEOs would stand up and be like, I hired too many people. We are too bureaucratic.

I am a start like I am a founder. I am Mark Zuckerberg and like I know how to run lean and fast businesses. And we are not that today and we will be. And actually, sorry, he did that. That was a whole year of efficiency thing. They feel like they've all done it. Musk has done it too. I know, I know, but his always feels a bit more performative. When Zuck says it, I believe it. I believe it. Right. And he did his year of efficiency, but where, shouldn't have it

already happened? Shouldn't it have already happened by now? Or, well, that was before AI. And they did, lay off a lot of people there, right, at the expense of morale in some cases. But, but yeah, I mean, they're trying again, but it just isn't working. And in fact, this is the end of the story. right so basically they had a 10% cut they went ahead with it but they had a bigger cut that they were planned that was supposed to go on in november and Zuckerberg called it off he said that uh they that the employees should not expect other company-wide layoffs this year and he expressed desire to give them stability he did also say uh in a recording that roiders was able to get from his remarks to the company that like you have two main expenses uh one is compute and the other is

I think he called it people-related stuff, which is kind of like your salaries. And he said when our compute expense goes up, the other part has to go down. So I think that's like kind of what he's thinking about. But I think it's fair to say that the tech environment in 2026, you know, even if you made your cuts in 2022, is a completely different world than it was in 2022. Okay, a fair point on that, agreed on that. Do you think meta needs to lay off? Do you, like that argument that as compute expenses go up, we're going to have to find

saving somewhere else that's going to be people. Do you think that's the right approach and the right belief? I mean, if your people are good, then no. I think it's the wrong approach. I mean, also like, I don't know, I might get sort of some criticism for saying this, but I always find it a little bit rich when a ultra-profitable publicly traded $1.5 trillion. million dollar company with massive margins is like we need to find cost savings. I mean, I guess. Like if you if you you know, obviously it's important to perform for Wall Street, but, but I don't know.

It's sort of rich to me that like a company that's like, yes, spending billions of dollars for AI talent and billions more on compute won't spend, you know, some portion of that type of expense on people, especially if it thinks the people are good. The only reason you don't do that is if you don't think the people are good. Yes, but I mean, I think that's implicit in that, because when you're willing to spend, what do they pay for Alexander Wang again? I think 14 bill? Yeah.

Like 15 bill? Clearly, he believes that if people are good, he will open his wallet. So I agree. I think that's implicit in any of these kind of decisions. and Project OT. Okay, let's quickly talk about this meta settlement because you brought it up in our document and I think it's worth talking about.

You know, in its most recent earnings call, Meta said that one of the big liabilities for this company is going to be that it is now exposed to all forms of lawsuits about the addictive nature of its products and what it's been doing to kids. Well, Meta was in court with a bunch of U.S. states, about this issue exactly. So there's the private citizen examples

and then there's also the states and it just agreed to settle a suit that was asking for hundreds of billions of dollars for 18 billion. Let me read it quickly from Reuters. META agrees to pay $18 billion to settle U.S. lawsuits over children's social media addiction

and it's going to pay it over the next decade and strictly limit how teenagers use Facebook and Instagram under an agreement with nearly all U.S. states to resolve claims it designed those social media platforms to addict children. The settlements announced on Wednesday and a federal trial over allegations. Meta's products harm children and the company misled the public about their safety.

They were seeking $200 billion in civil penalties. They get 18. Is it over? I'm curious to hear your perspective. Is this, is it over? Are we going to continue to see these type of judgments against meta overtime? All right. I'll get into is it over in just a moment, but I am very very, excited by this news. The reason being that how to fix social media is something I've written about and thought about for a long time. I'm excited because in August 2nd, 2019, I'd written a piece for the margins five point plan to fix social media. And two of the things that I've been shouting about for years now are one to demetricate to remove like counts and actually the numbers

that kind of drive people towards obsessing over their performance, especially for just everyday people if you're not a brand. And one of the settlement, part of the requirements, the settlement was to turn off like counts by default for minors. The other, this is my favorite, like, I honestly think all feeds should just be reverse chronological order. No algorithm. And I think like the way TikTok just destroyed this.

I wrote this in 2019, like TikTok came along and just said, not only are we not going to just add some algorithmic logic to how posts get shown, we're going to do away with the feed. It's just going to be one big algorithmic injection of content into your veins. So another part of the settlement is that this will at least give teens the ability to use a non-alorithmic or chronological feed. I still think that should be the default for everyone. I still use Twitter slash X with the following feed more than the 4U feed.

But I was excited here to see that at least some of these ideas are getting put into practice. I think there's a lot of others. There's a default two hour per day usage limit on users under 18. They can't use it from midnight to 6 a.m. No notifications during school hours. So I think specifically for teens, I think there's a lot of good things. things here. But I honestly think this should apply to everyone, not just teens. Ooh, that's a very interesting. I mean, that will never go forward. But as a parent,

but it should. Do you feel better having a kid in the world with this type of, these type of restrictions? It seems like, it seems great news. Now, part of it is on the parents, but part of it's on the technology companies. And I think this is helpful for parents. What do you think? No, no. I, as a parent of a seven-year-old child, I'm hoping we kind of solve some of this by the time he's like 13 and 14 getting a phone. I am hoping this stuff gets solved a bit more. And I don't think like putting the responsible and the parents, I think it certainly matters. But especially for teenagers like of high school age, the idea if everyone is obsessed with this, the idea of going into school and like restricting it while everyone is just kind of like

looking at each other's like counts and seeing what the most popular kid. I mean, how do you fight? That's the technology. That's the tool that was designed to do that. Like, that's the, to me, the crazy part of all this is like, this is by definition what Instagram is designed to do. Like, that's, I mean, that's from a business perspective, from a product perspective, which to argue against that is crazy. So I don't know. I think overall this is the right direction. I mean, why meta is doing this? I think I have a bit of a theory around, but I

at least am glad it's the right direction. Hit me with the theory. Yeah. I mean, so one of the other things that came out was apparently there was conversation that they would be willing to move down to a one hour per day limit if TikTok

and YouTube were to follow. My read on this is meta knows as a business. Like, it's already in the whole AI game, there's a lot of different opportunities there. They know that they, like in terms of diversifying, they have a lot. And maybe teens, especially from an advertising perspective, there's already a lot of protections around that, even if teens are just addicted to using it. So from a business perspective, maybe you can limit the damage. But YouTube and TikTok is much

younger skewing, YouTube, my God, is like, everyone pretends it's not an algorithmic social network, but in reality, it's the same dynamics that addict YouTube from, I mean, I'll say that, like, I actually, like my son, I will put on a YouTube video and, like, the one rule is you cannot hit any of the recommended right rail videos. And whether he always follows that or not is up for debate. But like, to me, that's like step one of rabbit hole. Suddenly he's like, alt-right or a flatter thing or whatever it is, just 12 videos later. But I think like, I think this was just a straight shot at TikTok and YouTube. He's telling people that they, they shouldn't follow his investment advice right before recommending a stock. No, no, no. He actually,

when he's talking trading tips and his Robin Hood account on YouTube, he means it. He's saying, follow me, put your money where my mouth is. He's not hedging at all. He's not hedging. The seven-year-olds don't do that. They know what they're doing. They're a little more honest about it. He's triple effort on S.K. Heinex, and he's going all the way.

Oh, we laugh. We laugh. I respect that. Yeah. No, but do you think they're going after TikTok and YouTube here, especially YouTube to me? Yeah. I mean, they know everybody, it's amazing how YouTube has become this force. that's eating into everything, eating into cable TV, eating into Netflix, of course, eating into the social networks.

And I would even go further and say there's no such thing as social networks anymore in this world that you're hoping for where there's no reverse chronological order or there's no, there's no algorithmic feed. It's long past the point in time where that was even a possibility. And I think that, you know, social media was a moment, but it's now just all entertainment. Meta knows that. TikTok knows it. YouTube knows it. and they're all competing on the same product, which is effectively shorts.

Actually, I'm curious. I was like talking about this with my wife this week, actually. Because in terms of like using Instagram, none of my friends post, like, middle-aged males, no one's really posting anything. So the entire feed is like entertainment. There's a lot of good stuff in there.

I forget that like out of my wife's friend group, a lot of people are still posting their families, trips, kids, everyday life. And so like actually her feed is still, there is a social network element where my feed it's zero. What about it for you? Well, I think the stories are certainly posts from people. But I would also argue that, you know, even if she's posting and even if some of her friends are posting, the amount of time that you spend on your.

your friends and family content, you know, to use some meta terms, I would be stunned if it was, if it was more than 10% of your total Instagram time. Yeah, no, no, I could see it because actually you would just run out, like even with people posting. Right, exactly. Some of those are brands, but more so like the whole experience, I think, is just to get you in that Reels feed. Yeah.

Social network is dead. Shorts are, shorts are where it's at. Even on YouTube, do you watch, when you open YouTube, are you? Yes. Are you shortsing or are you, uh, uh, horizontal videoing? I'm watching horizontal video, but my shorts feed is kind of, kind of broken on YouTube. It's like, they must know that like, I'm like, uh, you know, I have an account, an active account on YouTube. And I'm posting there because like, it's like every short that I get is like, use this sound to get a million views. Oh yeah, yeah, yeah. You're in Hustlebro like content creator land.

I wish I was in Hustlebro content creator. I'm in this like terrible rabbit hole of like, the worst bottom of the barrel content with the same song and the same title on each one of them. Okay. I would happily sign up for a full day long of Gary V. Schwartz compared to this. Oh my God. I would. Never the words have ever been uttered before, but you just said it. I like them.

I actually, I feel like watching a horizontal video on YouTube kind of feels like listening to music on vinyl. There's just something classic about it. 20 minutes. It feels good. It's nourishing. It's nourishing. It's just that that's old school. Yeah.

I'm getting caught in the shorts feed is a little bit, I'll say. My shorts feed is a good mix of cooking content, music, some video editing stuff, but overall, it's reasonable. Yeah. I got to find some way to get you on my shorts feed for like an hour to reset my algorithm to Ron John content. So I'm out of this terrible. terrible rabbit hole I'm in. Okay, we need to take a break. We have to take a break and we have to come back and talk about a topic that we've addressed on the show, but we haven't gone into the depth that it deserves, which is the volatility, the collapse and the rebound of the South

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and how to lock it down before a threat reaches their front door. That's ironwall.com slash big technology. Stop online threats before they become real world attacks. And we're back here on Big Technology Podcast Friday edition, joined as always by Ron John Roy. But Ranjan, I think it was maybe two months ago where you talked about how like basically people in South Korea were like, you know, triple levering on SK Heinex and driving Ferraris and living life. Well, they've certainly lived a few lives since then because the South Korean stock market has crashed and rebounded somewhat. And I think this story that I'm going to read a little bit of it from the Wall Street Journal is another indicative story because like, you know, people who listen to and watch.

the show and say, why do you talk about the AI bubble? There's no bubble. Even if there's no bubble, let's say, let's take that as granted. If there's no bubble as a given, there could be, and there are already little bubbles and investing behavior that is putting people at risk. So I don't think it's completely worth dismissing. And that's why I think it's worth bringing our listeners and viewers and all of you at home up to speed on this story in South Korea. So it's from the Wall Street Journal, the world's craziest stock market has turned into a fright ride. South Korea now host the world's craziest stock market, showcasing a stomach-churning volatility not seen in major markets in years.

The benchmark Kaspi Index has more than tripled in value, driven by faith in the AI boom to South Korean companies, memory chip makers, Samsung Electronics, and S.K. Heinex soared to a trillion dollar valuation and became twin forces pushing record market gains. Then the index plummeted around 40% over six weeks in June and July, burning hundreds of thousands of investments, investors, a sober warning to those betting big on the AI industry. The roller coaster ride has continued. The Caspia since rebounded about 20% from its lows. Now, just, you know, going down

40% and up 20%, it doesn't sound too devastating if you're not levered. But that is the problem. A lot of people have been levered. So this is just very quickly, the pain fell hardest on South Korea's individual investors who account for 60% to 70% of the index's daily trading volume. They are known as ants, weak individually, but capable of collective power, and fed the market with a deep faith in Samsung and SK Hynix and buying those largely, well, not largely, but with a healthy appetite for levered ETFs, and the ETFs are single stock. So some of them are double or triple levered. So if you bet on Samsung and a double-overed, when Samsung goes up 5%, you're up 10%.

Or triple-ever, when it goes up 5%, you're up 15%. But when it goes down 5%, you're down 10% or 15%. And so when it goes down 40%, you're wiped. And that's sort of the problem that we're seeing in South Korea right now. Ranjan, you talked about how things were roaring within South Korea now, not so much. What does this tell us? I think this, to me, the most fascinating part of the story is actually first this term ants. I kind of when I was reading this, I was looking more into it.

Apparently it started in 2020 in the COVID stock trading boom, but definitely kind of took on its own form during this latest type cycle. But I mean, to me, the most fascinating part of this is the connection with Leopold and situational awareness because like you are massively levered in a concentrated form on one side over here in the US with Leopold, even though like plenty of U.S. investors were definitely involved in in the trade. But also, but and then you have this army of ants and the South Korean traders all pushing this up. And timeline-wise, it is fascinating because knowing that it was the like double and triple levered ETFs came out end of May, like, you just start to see how this all maps perfectly. And as you said,

up 40% then down 20% net might not seem that bad, but I mean, you're getting cleared out if you're levered on this kind of stuff. So I think like, I don't know, it's, there's the trade itself in the medium and long term, and we've talked a lot about timelines today, but also wondering, like, I don't know, how these trades come into existence, how is information being shared, what people are going back to not investment advice, who is convincing everyone that they're missing out on SK Hynix and the other leverage ETFs also, I think, is pretty interesting here. Well, I think this is important to discuss because remember we talked a little bit ago about how fantasy football and online sports gambling have been presented to people as the, you know,

sort of the only place where you could have agency, where everything else feels rigged, where you don't have an opportunity to buy housing, where you don't have an opportunity to really save for retirement. You can't see an economic future. So people go that way. A lot of those same dynamics are out play at play here. And I would say that even though mostly, you know, the story we're talking about is in South Korea, it's something to be aware of, you know, everywhere else. Let me just read a couple stories of individual investors within South Korea who ended up getting cleaned out by this situation. Yun Kyeong-min, a 44-year-old sound engineer, said he still can't believe the financial disaster

of the past two months. After quitting his job, he had invested half of his severance pay into semiconductor socks and saw $7,200 evaporate in a week. If my wife finds out, I will be in serious trouble, said Yun, who said he confessed only to a bit of bad luck without giving details. Youen thought the market would rise forever. Then there's Li Kaiyung. Lee Cuyanga, 25-year-old software developer, said she lost all the money she made when stock soared this year.

She started investing in December when her first paycheck from her new job left her convinced she would never earn enough money to buy a home. She ceded a trading account with around $14,000 from her savings and crypto gains. She invested all of it into S.K. Heinex and later into single-stock levered ETFs. She started her own Instagram to document her ride to riches. See, Ranchon, people are still poking. people are still posting. By May, her account was up more than 58%. And her posts were drawing an average of 4 million views. But however, her holdings are now worth less, 5% and less than when she started in December. Her investments multiplied so fast and vanished so quickly. It felt like it was all a dream. I got greedy, she said. I kept thinking, what if I climbed higher, even higher after I cashed out? concerning. I think this is kind of a

interesting tie-in of all of our stories into one place again. Because like, again, both, do you think she gave the not investment advice disclaimer? Or she did. On her Instagrams? Certainly not. She was like, this is pure investment advice.

She said, follow me to riches. But again, the same addictive mechanisms and the same move away from friends and family content to entertainment content and that entertainment content being investment content and algorithmically being shoved in front of people and then them feeding into actually buying the stocks. It is kind of an amazing, terrifying way

of seeing it all come together in one place. So when people say, you know, this is AI's not a bubble, stop talking about this type of idea, do you think it's fair to kind of point to these examples and be like, you know, even if we don't see systemic risk. Like, we do talk about systemic risk more often. And then we do, like, you know, risk to individual investors if they have conviction. I think, do you think it's still worth kind of covering and talking about just so people are aware of like what could happen if it goes south?

Because, you know, it's happened here, but maybe it happens elsewhere. No, but this is the main thing about any kind of, and even the word bubble is all relative. Like, when is something a washout or a downturn versus a bubble is always kind of different? to like, I think that's more just like how cleanly packaged it is in the narrative eventually. But to me, like Leopold and situational awareness, these stories, this is the early part of any kind of bubbles ending cycle. And again, having lived through the 2008 on a trading floor, like 2007, there was these, there was countrywide and bare sterns and long before Lehman, Like, there was those hedge funds name again that collapsed back in March.

There was, you know, there were these like bits and pieces coming out. And I do think it's very important because both at a human and individual level. And like I think the big difference from 2008 was like for the average person and individuals, the price of your home and your home equity was the kind of like exposure. whereas whatever is happening in this cycle, way more people, thanks to Robin Hood and democratized investing, are exposed. So whatever we see happen, I mean, there's a lot more people with skin in the game right now. Yeah. Can I try to really wrap it up here for us? Wrap it up.

Today we've talked about basically three stories of a belief that that, that, you know, that, the line that you're seeing in AI will happen rapidly and will happen immediately and exponentially, right? So we talked a little bit about cesspocalypse, right? They believe that software was about to be annihilated by AI. Then we talked about meta's attempt to use AI to replace work. And now we're talking about basically this is a story of people believing that the memory crunch was, was never going to let up to the point that like Samsung and S.K. Hynix are worth betting on. you know, triple or double levered to the point like one of the traders said, I thought the market would never stop going up.

Even when it can feel like you're in the middle of an exponential and things are just going to keep going and, you know, the demand will keep going and there's never going to be any let up, there are going to be air pockets here and it is going to be turbulent, right? And I think that's kind of the lesson of this show, right? It's basically just like, you know, no matter how much conviction you have and what's going on with AI, no matter how much it's progressed. and accelerated since 2022. It's not worth, there's a Goldilocks zone between going all in too late and all in too early. And there's real risk in going in all in too early because of the human side of things and the bumps and the fact that there is some turbulence all along the way inevitably. I think you may have just achieved the most difficult thing to do in any kind of

a podcast. Tie up everything neatly at the end. We never do that and are never good at that and usually just trail off and whatever tangent we went into. And I think you nailed it. I think you got it there. Stuck the landing. Thank you. State of AI in 2026. I'm not going to buy Galley, but I want to. So anyway. Save your buy Galley. I keep it by Gali in the whole during you. Great weekend. Wow. It's almost September.

I'll see you in September, Ron John. See you. Summer's over. Walk in for what's going to be an interesting September. The rest of this year is going to be absolute chaos, and I can't wait for it. Yeah. All right. See you.

All right. See you next time. Thanks everybody for listening and watching, and we'll see you next time on Big Technology Podcast. Two and five Canadians will hear the words, you have cancer. That's why every step and dollar raised matters. On September 19th, join thousands in Toronto for the Princess Margaret Cancer Foundation Walk. Challenge yourself, friends, and family to walk 21 kilometers in support of life-saving research. Together, we can carry the fire and help create a world free from the fear of cancer.

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