Big Technology Podcast - Subprime AI Crisis, Mr. Beast’s Guide For Excellence, Amazon’s Culture Problems

Episode Date: September 20, 2024

Ranjan Roy from Margins is back for our weekly discussion of the latest tech news. We cover 1) The 'subprime' AI crisis 2) Will companies building on AI persist if prices increase? 3) OpenAI funding news update 4) Do the research houses not care about the business side, and only want AGI? 5) iPhone16 releases to mild enthusiasm 6) Huawei's trifold phone is a hot seller 7) Mr. Beast's leaked guide to excellence at his production company 8) Amazon's culture has problems, says CEO Andy Jassy --- Enjoying Big Technology Podcast? Please rate us five stars ⭐⭐⭐⭐⭐ in your podcast app of choice. For weekly updates on the show, sign up for the pod newsletter on LinkedIn: https://www.linkedin.com/newsletters/6901970121829801984/ Want a discount for Big Technology on Substack? Here’s 40% off for the first year: https://tinyurl.com/bigtechnology Questions? Feedback? Write to: [e-mail]

Is AI in a subprime crisis as spending mounts without returns? The iPhone 16 goes on sale today. Are we supposed to be excited? Mr. Beast has an internal guide to excellence that we'll talk about, and is Amazon's culture in trouble? All that and more is 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.

So much is going on. Open AI is fundraising. Apple's releasing new phones. Mr. Beasts's large internal. guide to how to be great at his company has leaked and it's fascinating. Meanwhile, Amazon has employees going back to work five days a week and Andy Jassy has some very revealing comments about the culture potentially going south. So we're going to break that all down. Journey me as always is Ron John Roy of Margins. Ron John, welcome. It's good to see you back in New York as well. I see your

Brooklyn apartment right behind you and I think after all of our summer travels and and podcasting technical complexity. It's good to both be back in New York right now. I've never been happier to have exposed brick behind me, good Wi-Fi around me, and a solid mic in front of me. This is it. This is Nirvana for podcasting right here. This is all you need in life. Exposed brick, a shore microphone, and good Wi-Fi. And what a week to talk about artificial intelligence. because there's been this thing that we've been talking about for a while, which is that some of the math doesn't seem to add up when you have the amount of money that Open AI is losing

and the amount of money it's trying to invest and still dubious sort of application of the technology within companies. And a piece from Ed Zittron put it all together this week. Now, let me be the first to say that I don't agree with this post completely. I think that it is wrong on a number of facts, but it's interesting to discuss because I think it very clearly articulates the bare case on AI and it's worth picking apart.

Yeah, I think the Ed Zittron piece, and I agree that it's definitely, and a number of his pieces have been very, very aggressive against Open AI, but I think they echo a number of the things that we've been saying. And one of the most interesting parts of this piece was it actually brought me back

to that Goldman Sachs report from, I think, three months ago that we were saying could be the canary in the coal mine for generative AI. Because the biggest question is going to be when people actually have to pay for things. When companies, you know, they invest the budget up front, but when they actually have to start renewing, when they have to start actually extending the contracts beyond just proof of concepts and small innovation group type contracts. And I think we're starting to see it. He lays out a lot of really good detail around what the cost structure looks for open AI and companies like that in that category and then what the economics look like from the client side and they just don't

match up they don't match up in any way absolutely so let's go through some of the numbers because he does do a very good aggregation of lots of numbers that have been reported and I feel like it's valuable to just speak them out loud and we can talk about them so he says open AI is paying Microsoft an estimated $4 billion in 2024 to power chat GPT and its underlying models. And that's with Microsoft giving OpenAI a $1.30 per GPU hour cost, as opposed to the regular $3.40 or $4 that other customers pay. So basically what he's saying is that Open AI is basically paying Microsoft a third of what you would pay typically. And he said training costs are currently three billion dollars for the year and certain to increase. The information has reported that

Open AI's revenue meanwhile is 3.5 to 4.5 billion a year. And this is sort of the, oh, here's another point. The Microsoft, so if you think about the AI being providing value to enterprises, this was a pretty stunning stat that he shared. With Microsoft's 365 suite, which which has Word, Excel, PowerPoint, Outlook. He says that companies are barely adopting the AI-powered co-pilot with somewhere between 0.1% and 1% of its 440 million seats doing so. What do you think about when you hear all these stats? Yeah, I think, so there's three parts, as you kind of outlined there.

There's the economics for open AI, the fundraising for open AI, and then the adoption within the enterprise. Let's start with the adoption with the enterprise. So that stat between only 0.1 to 1% of Microsoft's Microsoft Office 365 subscribers have actually signed up for co-pilot, which is an additional $30 to $50 a person. I think one of the biggest miscalculations that Microsoft and Google are making is starting by anchoring the price at a per se basis like this before they have shown, genuine value for these products, for these add-ons, essentially, and made them so good

and so, you know, where people are addicted to it, where every user is like, I can't live without this. But everyone I know who's tried out these products, some of them work pretty well, some of them don't. And it's not the magic that you're just going to go in Excel. And they just release something where you can actually, you know, there's like a Python compiler that you can actually integrate within Excel, but that was just released as a demo, and that could work pretty well at some point, I'm sure. But in the meantime, we will all just upload our CSVs into Claude and ask it to do basic analyses for us. Like, they came out so strong. And I get the business logic of anchoring the price at a high enough point because you see at some point,

the value will get there. But when it's not there, and suddenly you ask people, companies that have 20 to 50,000 seats. Imagine you're a CIO and you have like 50,000 seats with Microsoft Office 365. And they're asking you to add $30 to every single seat. And I'm sure you'll get a little bit of a discount when only a few of your people even know how to use generative AI. So to me, the adoption part, I think is going to be very rough for on the enterprise side. And again, we've talked about it that it's that first renewal period that's kind of the where the rubber meets the road and we're getting there right now.

Before you move on, I just want to note that like they sold $30 a seat licenses back when the hype was at its height and you basically would get a yes to say we want to pilot AI in any organization in any environment and if you didn't pilot AI

or if you said we're not going to use this stuff your job was at risk and now they've tried it and the number of people getting value from it is so low and you're right it's the first renewal that comes up okay so that is the enterprise application now let's talk about open ais economics as you said as the numbers are laid out it starts to get so much weirder and actually i think the most valuable part of this piece again as you said is it took all these different bits

of reporting and really laid out a very strong case the fact that open a i is getting a significantly discounted rate from Microsoft, that means that its economics aren't even being truly reflected in whatever it's showing to investors. And we'll get into the funding. Then that 3.5 to 4.5 billion a year in July number that was reported, we talked about this. It was a bit fishy because it was actually even from a few months before. And then again, it was extrapolating a run rate out for the entire 12 months, which is never a good sign for any kind of revenue projection. When you, you you're actually talking about where is this going to go, especially when generative AI's hype has already been at its peak and is starting to wane a little bit.

And then there was additional reporting from the New York Times that said it's actually only above $2 billion, that it's going to be at the lower end of the year to date. So it's definitely going to be at the lower end of the estimate. So the company is going to definitely keep burning money. And as there's two ways to make this, you know, approach this business strategy. Take the models you have as of today and try to get more people using and paying for them. And I don't think that's an unreasonable business strategy because chat GPT Plus is pretty good. Using 4-0, 4-0 mini.

But instead, they're going all in. I'm sure they're investing heavily in SORA. I'm sure they're, I mean, they've released 01. They're trying to say reasoning is the next level, agentic AI, et cetera, et cetera. So rather than just focusing on the actual. adoption and conversion of users, they're still going out in this all-out AI arms race mentality that we just have to build the biggest models possible and the most advanced models possible before the actual business case is proven in the near term.

So I think it is a reminder on the actual Open AI's intrinsic economics, not separate from their ability to fundraise, they are so far from making any possible sense right now. And again, we don't have great numbers or reporting on a clod and how Anthropic is doing with it or even perplexity or any of the other competitors in the space. But it seems to me that any company that's going AI arms race builds the next generation of models rather than let's just actually build out this business is at least not on a good trajectory right now. I think Ron John, this might be why we haven't had any open AI guests on the show. but I'd rather speak to these issues truthfully and not tell, not sugarcoat them in the hope that Sam Altman might come on the podcast. Like, we're here to tell the truth to listeners and this is the truth. And we're going to talk about it. And if opening eye doesn't want to come on and face

tough questions and speak about this stuff, then that's fine. And I do think, though, this is a good place for nuance, which is that there's two things here that we're discussing, right? So obviously we talked about the low adoption of Microsoft. That might just be. the a of the Microsoft co-pilot and that might just be a business situation but we can both agree that the underlying product generative AI is actually extremely valuable and we've both found super valuable use cases in our day to day using chat GPT using Claude I had a crazy thing that I started this week where you know you would have needed a nap for this previously but I like told Claude Claude I'm going to go on a Whole Foods diet I'm going to update you with all the meals

that I'm eating, and you give me a whole food score and give me coaching on how I'm going to get to more whole foods type meals. And I'm just like typing in, taking pictures of stuff, it reads the labels, it gives me feedback, it gives me whole food score. It's like an unbelievable nutritional coach. And of course, like, does it hallucinate a little bit, probably, but you can still see through that. And it's just been, it's unbelievable. Like this, this is a better application, quote unquote than any fitness app you know i would have used uh previously and it's all built with in cloud and i'm paying 20 dollars a month for it so wait sorry what is a whole foods diet whole foods diet is you want to eat basically food that's not processed and um going back to my

interview with joan harry about i was just going to i was just going to say i listened to your ozempic grocery episode and i uh i much more than that netflix documentary that interview that that you had with, on the O-Zempic topic, I think almost radicalized me against processed food more than anything else. Yeah. Reading the book, speaking with Yoan, left a lasting impact on me. And yeah, so I'm trying to reduce processed foods and I'm using Claude to do it. And I'm paying $20 a month for Claude, the premium version. And that's just one use case that I have with it. So obviously, it's a great deal for me. And obviously there's great value in this technology. Like People who are like, this technology is worthless and just a party trick are absolutely wrong.

But I think the question that we're getting at here is, are the economics feasible in the long term? And I think that really is the deeper question. No, that's a good point. I mean, any longtime listener knows very well that I'm actually incredibly bullish on generative AI. And I think it's the most transformative technology in the world. And I think before the big technology podcast becomes a health and nutritional podcast, and we start selling supplements, this is what we focus on, the actual business and nuance of the, like, how this is playing out rather than just getting too hyped up in the actual

technology. And I agree. And my question there is, is $20 the actual, you know, optimal price for Anthropic to charge you for using Claude? Or is it still underpricing its product in order to increase adoption? and they're actually losing money based on the compute that you're requiring, these are the kind of things that we don't know yet. And it seems like at least from the open AI numbers we have,

that the business model side of it, these companies are not, they're not paying attention to. They're not even, I know, like, Open AI for myself, I've had when, even paying a reasonable amount for API access, essentially on the enterprise, side, they don't have built-out customer success teams in the way that Microsoft or Google do. Like, they're not building out the business the way a traditional enterprise company would. Even a SaaS startup that's scaling and growing that's worth like $50 million will have

a more built-out infrastructure traditionally to serve the enterprise. So the way they're building out these businesses is, it's different. It's still more research-labish, which is a good segue into the fun. But before we get there, I think that, like, this sort of, this is an important part to stop on, which is that this could be the subprime issue, which is that you have AI companies building on top of this software, not just AI companies, everyday companies. And, I mean, I'll shout out some of the companies that we think have, like, pretty constructive approaches on AI, companies like Service Now and Box. And are they just going to get so used to these

low prices that when and build their products around them, that when the rubber meets the road and these companies need to justify themselves financially, the prices go up and it becomes challenging for the business models and the companies that have gotten used to building with AI and the clients that have gotten used to using the products built within the system. I mean, that's basically the idea of subprime here. I'm just going to read it from Ed's piece. My concern is that I believe we're in the midst of a subprime AI crisis where thousands of companies have integrated generative AI as prices that are far from, yeah, at prices that are far from stable and even further from profitable. Almost every AI powered startup that uses LLM features

is based on some combination of GPT or Claude. The models are built by two companies that are deeply unprofitable, Anthropic is on course to lose $2.7 billion this year and have the pricing designated to get more customers rather than make any kind of profit. actually okay yeah this is a good point to stop on I agree because again having worked in trading at a big bank during the 2000s and sitting front row for the subprime crisis that drove the global financial crisis that is what I thought was the most powerful part of this piece and I think the phrase subprime AI for readers get used to it because I think you're going to be hearing it for for listeners you're going to be hearing it a lot lot more more because yeah it's the it's this idea that there's been no true price discovery around the businesses being built on generative AI and when everything is subsidized anything that goes wrong open AI if they don't raise this next funding round suddenly they have to jack up prices the downstream effects of that will put any number of startups out of business it'll completely transform what a box

or whoever else has to charge different clients. And like the downstream effects will be so significant that, again, it can completely derail the type of progress that we're at least all hoping for. And yeah, I think that's my biggest regret about this. And as someone who is very proud of the tech or very excited about the technology is this idea that because people are ignoring the actual business fundamentals around it and simply just trying to grow at all costs and assume it'll be subsidized, that we're not going to build the proper business, like, case for generative AI.

And you know how we like always talk about how this stuff is kind of weird and doesn't fully make sense when you think about the structures and the goals and the mission and what's happening? I just want to read this one thing that I found was very interesting from this person on Twitter, Rune, who apparently or, yeah, Rune, who apparently works for open AI. I'm just going to read it because I think this does really get the mindset within the company, right? He says, unfortunately, I don't think building nice AI products today or making them widely available matters very much. Minor improvements in daily active users or usability especially doesn't matter.

Close to 100% of the fruits of AI are in the future from self-improving intelligence. Every model until then is a minor demo, pitch deck, to hopefully raise capital from even larger for even larger data centers. people need to look at the accelerating arc of recent progress, and remember that core algorithmic and step change progress towards self-improvement is what matters. One argument that has been that products are at a steady path towards generality, general intelligence, not sure that's true. So basically, this is what's going on in the minds of the research houses. Basically, that they're making money right now is an accident.

And let me actually put that point, a finer point on that from, Ethan Mollick from Wharton. So he posts this photo of the tweets from Rune on LinkedIn and comments. This is an important thing to understand. The major AI labs, including OpenAI, are very much focused on racing for the future. It is almost accidental that the early products are making billions of dollars. Their goal is explicitly AGI artificial general intelligence, not your use case. They are not spending much time commercializing, because most of their effort is going toward building more powerful AIs. So this is one of those cases where I thought I was making potentially an original point

by talking about them ignoring the business case and actually building out business infrastructure. And then someone just tweeted it out. They said we actually don't care about the business side of it. And your daily active users and profitability are not even, worth spending time on because it's just about AGI. And yeah, I think Ethan Mollick summed it up well. That's exactly it that they're, and it's interesting because they were non-profit research oriented companies to start.

So they just never converted. So at least even if you start to convert some of it and you start to get a different cap table, in the end, the core culture of the company is not, you're not Oracle. You're not like Salesforce. you are still at research at your core. Man, this is just so fascinating. Think about this. This is the biggest technological development of the decade.

It is being driven by folks who don't really care. I mean, taking this at face value, I think there's true to it, who don't care as much about the current moment as you might imagine, who are working towards this mythical goal of AGI. And the economics don't make sense. I mean, that's one way to look. The other way to look at it is, of course, they're all about economics, and, you know, they're using the AGI thing as hype, which we heard about last week from Parmi from Bloomberg. But, I mean, if they were just kind of ruthless business people, you'd think they'd be better at commercialization.

So where do you think this is going, man? I wish I knew. I mean, well, I know where this is going. We're going to trough, trough of disillusionment. It's going to be there. It's already kind of starting to get there. And there has to be a shakeout. There has to be some event that forces companies to be more realistic, forces an open AI or anthropic to say, actually, it's not about AGI. Let's actually increase our daily active users and try to understand how to commercialize this technology. There has to be something. But as long as the money keeps flowing in, it's going to keep pushing that back.

And the money does certainly appear to be flowing in given Open AI's latest fundraising. There's reporting yesterday that it's oversubscribed and people are clamoring to get into it and they're going to get to choose who gets to actually allocate capital into the round. So it appears that the interest is still there. Right. But there's also another interesting detail, which is that, first of all, they've already gotten a billion from Thrive Capital, which is Kushner's VC fund, the F.T. reports. But Andreessen Horowitz and Sequoia, not part of the new round. Now, the FD

says they're sitting out. So I'm curious, this is essentially interesting from two ways, right? Okay, they're trying to, opening eyes trying to raise it a $150 billion valuation. So do these companies, sorry, do these VC firms think that it's just not going to work from a business point of view, and that's why they're sitting out. I mean, think about Andreessen, which is so public relations oriented, deciding that they don't want to be in on the next round of open AI. Like, that's a pretty interesting decision. Or is Open AI telling, you know, picking and choosing and being like, eh, you know what? We're not going to go with you this time. Yeah, actually, so in the funding, some of the news that came out, like, again, Sequoia and Drieson Horowitz

on the sidelines, maybe you could make the case that the more generous case would be They have so many competing investments now that they don't want to come at this late stage with an open AI. Generous interpretation. But then to me, the more interesting part is so you have strategic investors, Oracle, Apple, NVIDIA, Tiger Global has shown up again. Even the United Arab Emirates MGX fund is supposedly one of the big investors for this latest round. So suddenly you're getting back into this world where. the most on-the-ground investors are stepping back, and then it's all the outside money, whether it's a strategic corporate, whether it's a sovereign wealth fund, whether it's Tiger Global,

who's become quite famous for late-stage momentum-style investing, and I've written about numerous times. So we are definitely at that moment where it's gone from pure tech investment, like promise on the technology, to let's just try to keep growing this thing by just funneling more money into it. If this goes up in flames, how do you think it happens? I think something falls through in this round. And actually, one thing that you've seen

in the way, every Open AI funding, Open AI for, as we've been saying, a research house, well, one thing they're very good at is fundraising PR. And this is something again. Have you tried search GPT? It's like Google, but with OpenAI. And therefore, the valuation should be trillions.

And here is 01, which is reasoning and agentic, because everyone is saying agentic AI. So I actually think, again, maybe when we said ruthless business people, the one thing they are is ruthless marketers because they are two investors, two investors, because the one thing they're very good at is one, as you just said, kind of dangling the next big phase of growth in front of investors, but I honestly think the other thing is these leaks around fundraising. Because again, in the good old days when an actual fundraising round meant that every investor tried to avoid talking to journalists about it, and it would only maybe come out after the funding was done through a press release, and they wouldn't even disclose the valuation.

Now every day there's more news that makes it seem positive. Suddenly, it's oversubscribed, and this information comes out. And everyone's clamoring to get into it. So I think on both counts, they're very good at spreading the word around their fundraising needs and kind of pushing that narrative. But yeah, I think that's, if something goes wrong this round, I think this is going to be a huge problem in the industry. Some indication that the money is not infinite would completely change the entire course of

where generative AI is going. Fascinating. Okay. So let me ask you this, because I hate starting this. segment with a question and then not answering it. Is there a subprime AI crisis going on right now? Yes. 100%. I 100% believe it because we've, we kind of walked through this entire thing that the economics don't make sense. No one at these companies is actually trying to make them make sense. And I mean, they don't make sense even from the client side in terms of

pricing what a Microsoft is charging for co-pilot. So I'm not just putting open AI and anthropic in likes in this. And then the downstream effects, no one knows what the real economics of the products they're building are. Maybe your Suno AI music creation app actually needs to cost $70 a month instead of $10 to make it make sense for the company. There's so many downstream apps and products and like services that are being created right now that could just completely get upended the moment someone at the foundation model companies has to actually turn a profit. Okay. And I'm going to say maybe not because the one argument that you can make on behalf of the research houses is that the product that they've delivered has just gotten so much better

at a point where we expected it to slow down. And if you think about like early chat GPT compared to where the models are now, early chat GPT compared to where the latest Claude model is, it's crazy. Things like artifacts like you've talked about here on the show where you can build, you know, different games or even like have it write up documents for you and then alter the documents based off of prompts. I think this stuff is especially powerful. And I think that yes, we're getting a good deal on it. But the prices have also been coming down, at least from the APIs. And there's probably a happy middle that they can live in. So that would be the optimistic take. Although I don't have having walked through the subprime argument. I don't fully rule it out. It's possible that Ed is right. All right. I'll admit it. I'll take that.

I'm sticking with 100% yes. And where I'm going from here, the place that could really save artificial intelligence, I'm going to go online to the Apple store and see whether I can get my hands on an iPhone 16. No, I'm just kidding. Speaking of overhyped artificial intelligence, let's move on to the iPhone.

I will not be online. In fact, it doesn't even seem like there are lines for this phone. Not that there have been lines for a phone in quite some time. But the iPhone 16 is on sale today. I was looking at the reviews. Let me just read you a line from the verge. It says, The iPhone 16 Pro is one of the most unfinished products Apple has ever shipped.

That's the first line of the review. The phone is shipping without Apple intelligence, I believe. the Siri looks like the same old Siri. So sorry Ron John. Hate to rub salt in the wound. But that's what we're dealing with. Oof. I was all excited for the weekend.

Now, no more. And now the data is coming from some of the third parties. So this is from Reuters about talking about an Apple's share slip, although Apple's up this week pretty dramatically. And a very good week for the market. But Apple is outperforming. This is from Reuters. Some analysts say delivery times for the new iPhone 16.

indicate weaker than expected demand, possibly due to the delayed rollout of key artificial intelligence features. Okay, surprise, surprise. Early pre-ordered data from Bank of America Global Research revealed shorter global shipping times for the iPhone 16 models compared with last year's 15 pro models. Okay, I won't go through the actual ship days.

That's boring. But basically, you can get your phone much faster than you could get the previous generations. is it are we going to hit the panic button on apple here or should we wait i think in terms of apple's short-term business i'm not uh hitting the panic button yet but in terms of apple's long-term business that was built around the iphone i would definitely hit the panic button i i have not seen as little excitement out of all my apple obsessed friends around the iPhone 16. No one even mentioned it. No one even like the only thing I heard people talking about

was is the camera better. No one is even thinking about Apple intelligence. But I think it's just everything they're promising is not here yet. So why would you buy it? Like it just doesn't make any sense unless you're maybe an iPhone 12 owner and it's just time to upgrade anyways. Nothing they have sold is compelling in any way. And no one's even talking about it. about it because, you know, even the Siri intelligence features that were demoed aren't that incredibly revolutionary or exciting. And maybe if they just worked, then it would still be pretty amazing, but they don't even just work. And do you know what's making Apple look especially bad is this week, Huawei has a trifold phoned that they're releasing also today. It's a phone. It's called the

mate x-t the pre-orders have top five million and it's the world's first trifold smartphone so it folds in two places into three panels and on the secondary markets it is selling at over seven thousand dollars which is more than twice the top end model price so the Huawei trifold is running away with unbelievable hype people excited to buy it while Apple Intelligence isn't even shipped with the iPhone 16 and this brings me to a thread that I wrote that got a nice pile on for the first time in a while it was nice to feel the wrath of the threads users

where I screenshoted the Nick A article about the TriFold and I said instead of Apple Intelligence maybe they should have built a trifold turns out this is what people want and all these people are like that's not what they want you idiot and I'm just like come on this was tongue and cheek but also just like no but it's not I honestly the one thing that kind of makes me jealous is when I see people with foldable phones I think it I really think it's a thing I think Apple three to five years from now will make a big deal about Apple's first a foldable phone but it just makes sense it's just more

portable. It's, I mean, it's the iPad mini. It gets rid of it and it just turns the phone into a combination. And I was pretty skeptical. I still haven't actually used one. This is just me kind of seeing people in the wild, pulling them out, opening them up, watching a show or a video in a slightly bigger format. Even I saw someone, they had it split screen. So they're checking their email on one. And, uh, and, uh, yeah. And it was on two different screens. It was almost like multiple monitors on a flip phone, or I mean on a foldable phone. It was amazing. True nirvana.

Yeah, better than Wi-Fi in a microphone. Exactly. Give me a phone that folds into three screens. But, oh, sorry. To me, the, okay, so Apple, I think they released this advertisement. Have you seen it? No, I haven't. This week.

All right. So I'm going to, I'll walk you through it quickly. But to me, this. is actually my biggest worry for Apple right now is seeing this advertisement because we all know that Apple, actually I guess other than that smashing all creative instruments into the iPad,

little kerfuffle. Oh, Jesus. I forgot about that one. Yeah, but this one, so Bella Ramsey of Game of Thrones and Last of Us, did you watch that on HBO? No, not yet, but I will. Very good. Highly recommend. So for Apple Intelligence, their first two commercials, the first one is so odd she is at dinner and then she's meeting someone from a creative agency

who's pitching her and she is too famous to have actually read the email so she pulls out her phone and it's like oh of course i've read your pitch and then hit summarize this email and then start saying yeah you are talking about x and i think that's a great idea because of why and basically I am like presenting it as I am too good to actually read your email and that's why I'm going to summarize it and basically talk down to you. And again, maybe I'm reading too much into it. But yes, it's not relatable. First is the whole point is show like a busy mother running around who is just trying to

keep up with her day and this helping her. Like that human connection that Apple's advertising and marketing has been so powerful for so many years completely flops here. And it actually worried me more than everything else, just how bad and unrelatable. And again, you have Bella Ramsey who's like, I love from all of her shows. I mean, it's just no one is going to hate on Bella Ramsey. And they flopped it. And that to me, when you're missing that part of the product marketing, which has been among as well as their technological prowess, like their strongest suit, something is rotten. Yeah, no, that's bad.

I want to make jokes at the core, but yeah. Yeah, no, it's the second moment in the short period of time where Apple has had this happen. And there's a temptation to read too much into marketing. It's just marketing after all. But it really does go to speak to the way the company believes about itself. Like marketing is a way where a company shows its values. And for this to happen, you know, twice again after you, like you mentioned, mentioned all of the beloved things smashing into an iPad and as the one of the latest memorable

Apple ad. It's just bad. This is also, if you remember Google's generative AI ad, in the Olympics about like using Gemini to write a letter for a little girl to her favorite athlete and the backlash against that. I remember I'd seen some comment where someone said, every one of these companies just needs one full-time normal person who just sits there and does nothing else but is shown these advertisements and just says yes or no like weird or not weird relatable or not relatable and they don't seem to have that person right now no that's desperately a need hey everyone let me tell you about the hustle daily show a podcast filled with business tech news and original stories to keep you in the loop on what's trending more than two million

professionals read the hustle's daily email for its irreverent and informative takes on business and tech news. Now, they have a daily podcast called The Hustle Daily Show, where their team of writers break down the biggest business headlines in 15 minutes or less, and explain why you should care about them. So, search for The Hustle Daily Show and your favorite podcast app, like the one you're using right now. Okay, so, did you, speaking of YouTube or good marketing, Mr. Beast, have you seen the Mr. Beast PDF? Uh, yeah, no, I thought it was, it was an incredible, document. It was 36 pages outlining like every trick and technique he uses to go viral. And as someone who does a lot of work in marketing, I found incredibly fascinating because it's, it's funny

to me because it lays things out that to anyone over a certain age might feel and sound so ridiculous, but actually are what works. Like my favorite one was he, so anyone who's seen any Mr. Beast video. The preview image on YouTube matters a lot. And that's why they all have this very specific aesthetic to it. But then you said, I spent, so the video title, I spent 50 hours in my front yard is lame and you wouldn't click it. But you would click, I spent 50 hours in ketchup. Both are relatively similar in time and effort, but ketchup is going to be 100 times more viral. And then put an image of someone sitting in ketchup in a bathtub. That's more interesting than someone sitting in their front yard. As you read that out, you're like, is this reality? Is this

is this where the world is right now? But it's very correct. And he obviously has executed this well. Yeah. And so he does go over. I mean, it's fascinating because he goes over, you know, so Mr. Beast, for those who don't know, he's the biggest YouTuber in the world, I believe. And he does all these like crazy videos that millions and millions, 60 million people watch or even more. Like, for instance, he'll put somebody in a circle and say, if you can stay in the circle for a week, then you can win a million dollars. And the videos are excellent. And I think that this guidebook that he gives for his employees, basically, it's not like a sort of blog post for the web about how to go viral, but it's just basically like, I am not able to scale my time

to tell you everything I know about YouTube. And so I'm going to tell you what I'm going to tell you what I know in this document and if you read it and he says if you read it and you can pass a quiz about it I'll give you a thousand dollars um and so I found it interesting not only because it goes into his YouTube strategy another interesting thing about his YouTube strategy I think we can talk about it in a bit but he tries to condense in the beginning of the video like if it's like 30 days and a 13 minute video he tries to convince condense like the first five days into the first two minutes so you already become invested in the journey and then you can go a little slower as who go on to sort of figure out what happens to the people.

And it's a way he's sort of mastered taking our short attention spans, but also stretching them out for longer amounts of time as you go as he does these challenges and things like that. And he goes in this document, which is clearly meant for internal eyes only but leaked. He goes through his analytics. He talks through about click-through rate and the amount of time people stay and how important the first minute of the video is because that's where the most draw. off happens always. But to me, the thing that I found most interesting in this was the cultural

foundation of the company that he works at and him trying to explain what he expects from his employees. And it's just like a real interesting window into a driven CEO, because that's effectively what Mr. Beast is, trying to get things done and trying to instill a sense of urgency and accountability into all of his employees. And there's some like fascinating sections here. Just keeping people's eyes on what they're doing. What's your goal here? Your goal here is to make the best YouTube videos possible. That's the number one goal of this company. It's not to make the best produce videos, not to make the funniest videos, not to make the best looking videos, not the highest quality videos. It's to make the best YouTube videos. That's everything that we're doing. And he says,

pardon the bluntness, but if you're, but this is not Hollywood. And I do not want to be Hollywood. And if that sense is a turnoff for you, then you're probably at the wrong job. He also says things, I think this is just great like cultural set, culture setting for a company. He says the hours, the amount of hours you work is irrelevant. Um, he says, does it really matter how many hours people work? Obviously, we want grinders that put in the hours and love you guys to death that do it, but at the end of the day, you'll be judged on results, not ours. We're a results-based company. Talks about the type of people that he wants to work there. You're either an A-player, B-player, or a C-player. The only room in this company is for A-player. He says the way that he describes

A-player. They're obsessive. They learn from mistakes. They're coachable, intelligent. They don't make excuses. They believe in YouTube. They see the value of this company. And they're the best in the goddamn world at their job. B-players, he says, are people that need to be trained into being A players and C players are average employees. They just exist, do whatever, and get a paycheck. They aren't excessive about learning. And he says C players are poisonous and should be transitioned to a different company immediately. It's okay.

We give everyone severance. They'll be fine. And a couple more. Mistakes. I hate excuses and I despise with my entire soul when people just try to save face instead of learn how they messed up. mistakes are okay genuinely they are and i expect you to make a lot it's perfectly fine every veteran here has cost me millions of dollars at one point cost me a million dollars at one point or another and you can ask them yourself if i ever held it over their heads the reason i'm okay with

fups is because i know that's how you learn uh this is another good one no does not mean no when dealing with people outside mr beast productions never take no at face value if we need a store to buy everything inside and you call the local dolletry and the person that answers says, no, you can't film here. That literally doesn't mean shit. Talk to other employees and see if any are fans or have kids that are fans. Try talking to their boss, their boss's boss, have me DM them on Twitter and try their social team. And then lastly, this, well, actually no, let's pause there. And then I'm going to go to the one that I think is also very interesting. Okay, I think, and I know I've rambled a lot reading this PDF, right? I think it's

it's so interesting because that even more than the analytics that Mr. Beast shares shows why he's so successful. He wants people to be accountable, to be smart in the ways that they ask questions, to feel genuinely that they are able to make mistakes within that company and it's okay and to learn and to be obsessed with the format. I mean, part of what he writes is like, you need to watch YouTube. And if you watch YouTube, you're going to be better at your job. And I think coming into it, if I were coming into a job inside his company, reading that document would give me like a true understanding of exactly what's expected of me. And because he's able to communicate this to his company, I think that's why he's able to do what he does.

Yeah, no, I completely agree that what was so fascinating to me is it was such a reminder that those, his videos seem a bit, I don't know, I'm older, so I don't want to say childish, but just ridiculous at least but like underneath it it's literally like you're reading a document from peter thiel or i don't know like it's just any business leader a hardcore hard-ass business leader that's like this is how we do it this is how we win this is what you need to do and and behind those ridiculous youtube videos is actually a very very professional run organization and that's what actually drives the success. And it's almost, it's almost kind of, for me, it was almost kind of cathartic to know that, that like, okay, you know, getting 100 million views on YouTube is not

actually just, you just sort of do something ridiculous and it just works and it's luck and this person has more luck than the other, that it's actually an operation and a very well-oiled one at that. Definitely. And there's like also fun moments in the document where he just like clearly gets tired of writing long form and just like writes a bunch of sentences with like principles that he believes like here's one of those sections we don't think we don't fake things i want famous people in our videos don't ever put me in a situation where i have to lie because i won't and it will screw the it will screw the video no dull moments in videos you can't fake intensity in videos the video endings this is fascinating the video endings must always be

abrupt to protect retention and now people understand that when we when we end this podcast abruptly at the end. It's because we want you to stay for the entire thing. So Spotify and Apple sees people here for the whole show and we'll show it to more people. That matters so much for the algorithm, so much. And yeah, just like general sense of urgency. This isn't really creative thing, but in general, when on set, be attentive and engaged. Filming days are stressful enough. Be useful, please. And then he ends with like a sort of statement of what you can do. There's infinite room for you to grow here. This isn't a stepping stone at your final destination. And I hope to give you incredible experiences, a fun place to work, and more money than

you could ever dream of making at another company. And then he ends. Now, read this all over again, because I guarantee you didn't retain enough. I think this is a document yet. No, I think anyone who's involved in marketing, any kind of content creation, writing, anything, if you post, you should read this document. Okay. One last part of it that I want to read to, because we like talking about consultants on this show. I don't know why, but they always come up. And I guess everybody has a love, hate relationship with consultants, except for Mr. Beast, because this is one of the things. He says, use consultants. He says, consultants are literally cheat codes. Need to make the world's largest slice of cake. Start off by calling the person who made the world's previous largest slice of cake. He's already

done countless tests and can save you weeks worth of work. I really want to drill this point home, because I'm a massive believer in consultants. I spent almost a decade of my life hyper-obsessing over YouTube. I can show a brand-new creator how to go from 100 subscribers to 10,000 in a month. On their own, it would take them years to do it. Consultants, Mr. Beast's word here, consultants are a gift from God. Please take advantage of them. Yeah, but a note there, I think usually when we're talking about consultants,

it's management consultants and McKinsey and that whole model versus, I mean, kind of talking about freelancers here and I actually agree that I think businesses like a great freelancer is a cheat code because it's someone who's already completely honed their craft usually is good enough that they don't they actually have the confidence that they can be a freelancer and get all the work they need and can bring value instantly to your company so I think that I actually agree with that but I think I'm still reading consultant there is more kind an expert freelancer, like the guy who built the second largest slice of cake. Exactly.

Yeah, no, it's just fascinating that that's a call out. Okay, let's, before we end, I want to talk a little bit about Amazon culture, because Amazon, as we know, is back in the office, well, as we know, news this week broke that Amazon is going to be back in the office five days a week starting January. And this is basically like from Andy Jassy directly. We decided that we're going to return to being. the office the way we were before the onset of COVID, we continue to believe the advantages of being together in the office are significant. Okay, so that's the top line. That was the headline

everyone paid attention to. On our show, we like to go a little bit deeper. And as you read Jassy, you're just like, oh God, does Amazon have a problem? He says, keeping your culture strong is not a birthright. You have to work at it all the time. When you consider the breadth of our businesses, their associated growth rates, the innovation required across each of them, and the number of people we've in the last six to eight years to pursue these endeavors, it's pretty unusual and will stretch even the strongest of cultures. Strengthening our culture remains a top priority for the senior leadership team and me, and I think about it all the time. We want to operate like the world's largest startup. That means having a passion for constantly inventing for customers,

strong urgency for most big opportunities. It's a race, high ownership, fast decision making, scrappiness and frugality, deeply connected collaboration, and a shared commitment to each Man, has Andy Jassy been reading the Mr. Beast document for success? And what was going on inside Amazon that made him think that he needed to write that. The fact that you needed to write that, Andy Jassy, I think is the most telling thing in the entire document. I agree, but it's clear that they reached an inflection point where four years, out of people I know, a lot of the other big tech giants, for people I know who work there, they say they are these kind of like very political machines. But everyone I know who worked at Amazon for a long time said it really did

operate like a startup with high accountability and small teams. You could get stuff done quickly, but at large scale. And that has to be fading away for him to actually write this. My favorite part of this, I still think is the most brutal line I've ever read in a corporate memo because it's so like backhanded. So they're saying, so the return to office is one whole side. but also announcing that they're going to start streamlining, as the corporate brous word is, middle management. And he says, we're asking each S-Team organization, which is, I think, senior, but it's one of the ways.

Yeah, senior leadership. To increase the ratio of individual contributors to managers by at least 15%. Instead of just saying, we're going to get rid of a bunch of useless middle managers, we're going to increase the ratio of individual. Contributors to managers by at least 15%. Winter is coming at Amazon. Winter is coming. And I'm convinced, and I read a lot of kind of similar sentiment,

but the return to office is kind of like a de facto layoff. They're basically looking for people to walk away. They over-hired. They over-hired a lot of the wrong people, and they're looking for people to start leaving. I think it raises a much bigger issue. I'm sure we'll be discussing in weeks to come. around what is the optimal return to office? Are they doing this too aggressively? But I think I saw a lot of

complaints that were posted from like internal slacks people saying, but I work in an office where there's no one else there and my team isn't there. And I was like, I don't think you read the memo correctly. Like you kind of miss the memo. Yes, you do. And that's the point. And he is like, He, like, spells things out that I've, I've never seen from Amazon leader. And, of course, like, startup culture, I can attest definitely existed. I mean, the book behind my right shoulder is called Always Day One because of that. But now listen to what Amazon is like. Jassy says there's things that we'd like to change.

Pre-meetings for the pre-meetings for the decision meetings. A longer line of managers feeling like they need to review a topic before it moves forward. Owners of initiatives feeling less like they should make recommendations because the decision will be made elsewhere. Ooh, that is big company culture. That is bad. That is definitely a different Amazon than we're used to seeing and hearing about. Yeah, for him to just say that out loud is pretty dramatic. It almost, the one thing that worries me is the moment you have to say we are a startup culture when you're a multi-tillion dollar company, it almost means you're not. And they're at that point now. And they're at that point. Yeah, I think this, this is going to be Amazon, where they go and where they are as a company. I think this is just beginning. For this to come out like this, this is going to be a story for the next month. I mean, the months to come out. And they've already laid off tens of thousands of people. So you just wonder where they go from here. Okay. So that's going to do it for us this week. On Wednesday, we're going to have a little debate about Elon, Ryan Mack and Kate Conger, the authors of character limit about Twitter are coming on. And so,

So is Zach Collius. He's a VC who's been on the show before and has sunnier views of Elon. So let's debate Elon on Wednesday. And then Ranjan and I will be back here next Friday, breaking down the week's news. So Ranjan, thank you. Great to see you again. Let's end it abruptly. But we'll end abruptly. We'll see you next time on Big Technology Podcast.