Chapo Trap House - 1047 - Let’s Lose Lots of Money feat. Ed Zitron (6/22/26)

Episode Date: June 23, 2026

Chapo tech correspondent and AI skeptic Ed Zitron is back to mourn Our Keir, a good man struck down in his prime. What will the future hold for the UK, and are the writers foreshadowing 2029 in America? We then turn to the world of AI, where more and more companies are struggling to find an ROI on AI and OpenAI is burning unfathomable amounts of money. Plus: Elon Musk’s trillionaire status, the government banning AI models, and the cross-partisan desire to turn the clock back to 2014. Subscribe to Ed: wheresyoured.at  A discount link for 20$ off: https://edzitronswheresyouredatghostio.outpost.pub/public/promo-subscription/oNV2MQLbgl  Get CHUNKS here: https://www.patreon.com/chunkstv

Howdy folks, it's Amber. You may have heard that a while back I headed out to California to start a production company, Cold Feet Films, so that we, the good people at Chopo Trap House, could go Hollywood and buy a solid gold boat. Well, we started the boat fund, and then we spent it all on a movie instead. The movie is called Chunks, and you could get tickets to the worldwide streaming premiere on July 19th at patreon.com backslash Chon. Chunks TV. It'll be available on demand from there on out. Chunks is an anthology of... What the fuck? Six films by our most talented friends. Chris. Chris, this was supposed to have names. Who the fuck is Nick Mullen? The holy original never before... Original. This was an IP cash grab. I wanted

to all the chopbo favorites. These hogs hate it when we do anything new. Sreal dystopian. I told them to make the baseball crank rom-com. I was on set. I dressed up as a big baseball and danced around in the back like the sun from the fucking teletopies.

You think I did that for fun? No, no, no, no, no. this must be fixed. I am the producer. I went bald. I have hair on my forearms like Tom Cruise and Tropic Thunder. I have the big hands.

I hired Bill Hader. Not his character, the guy. He's available because the Barry finale left viewers disappointed. I need to think. Spencer,

La Musica. Hello, friends. It's Monday, June 22nd, and we've got some chopbook coming at you. On today's show, Felix and I are joined by our senior tech and Silicon Valley correspondent, Ed Zittron. It's back again. Ed, hello. Hi, it's a very dark day. RIP, Kist, Dharma. Goodbye, England's Rose. You know, you beat me to it. We are obviously going to talk about AI, open AI, clawed, anthropic, things of that nature. And where's all the money going?

But first thing, we have to begin today with some rather sobering news. Our boy, Kier, Arkeir announced his resignation from number 10 today. And, you know, I think headline here, a great man, a visionary leader, just a decent man, above all elf, done in by a savage and ungrateful electorate. So like I said, we need him now in America more than ever. So hopefully he has some free time to maybe hop across the pond and come to a more receptive electorate that I think will embrace him. I can name all the things that Kirstarber has done. I know all of them.

He definitely did things. You know, remember that. I was just talking to Felix offline about this. He bravely brought data centers into the UK, beautiful data center with Corweaver and Lauter. Now, all right, the Guardian, woke left to the Guardian. They went out there, and they found out there wasn't a data center.

There was just a pile of scaffolding. Now, I know some people might say, if it's made this point to me, is, yeah, I can't build a data center without scaffolding, can you, mate? Yeah, QED. Yeah. Could you imagine going to work at a data center and the three stooges are dropping bathtubs and safes on your head?

Birds are crapping on you. I just, like, when Kier-Starmour came in there, It was like, you thought that shit with the Knicks winning was like a big, you know, big night. Yeah. Every town in America, every town in the world was like that times 10. Yeah. Keir and Nick start with K. Right?

Basically the same thing. You couldn't walk 10 feet without being engaged in group sex after Keir Starmer's landslide win, Labor Party's landslide win in 2034. And it's just like anyone else would have gotten. 15 to 30 years to implement their plans. Yeah. But I guess it's just, you know, two years and you're done. Oh, just because, just because everything is horrible now, just because when they asked him, why do you want to be prime minister?

He doesn't have an answer still even after being prime minister. It's just kind of like, look, we really like try not to be nihilistic on this show. I really think it's irresponsible for people with like any type of audience to be nihilistic. but it is if you have kids you should probably euthanize them. It's over folks. Yeah, it's pretty much over. I hurt my cure today to see if I still feel. I focus on the tools.

My parents work there. The only thing that's real. I saw a wonderful tweet about this as well where someone was taking, took that wonderful picture of Kirstama in the back of a cab. Oh, yeah. He's just like, I don't know what. Yeah, what he just looks like he's kind of. of retracting into himself.

And they just said, this will make a beautiful addition to my collection, like General Graevers. And they added it to a folder just called British people. And it was like, Margaret Thatcher,

Kirstarmer, Prince Andrew. It's like, it's like, we don't really add much to the world, but we do have some of the best, worst pictures in the back of a cab with the worst red eye.

People looking like they just shit themselves in the back of a car. I like that, so like that, there's a famous picture of Prince Philip in the cab looking like he's astral projecting

there's like Prince Andrew was in it like every all of the 35 prime ministers the UK has had in the last like

40 months yeah the last day before they resigned I like to think it's the same cap it's the same photographer yeah get me my shittist photographer

Grinch charge over at the sun. We have a photographer with a glass eye who's going to take a picture of you in the cab that gives you treatment

resistant to depression. I say this as a white guy from England as well. Like, it's real, I'm probably one of the whitest people, Polish, British blood. And then you get these photos, it's like they turn so white,

they turn blue. It's just, they become one of the navvice. What color is this dress? Oh, poor, Poor kiss, snuffed out in his prime. A-Up lovely sends his regards. We gotta get those boys back on the show.

Oh, boy. Yeah, just, I guess, I don't say, I know, the lesson seems to be that, you know, here's a guy who was overwhelmingly popular among basically the top 50 opinion columnists in the UK and no one else. And, like, became into power. And his promise was always with labor

to completely get rid of the left. and thus destroy the Labour Party. Basically, when what time he had, hand over what's left of the country to Palantir and Israel, and then just get out just in time to hand the keys off to the fascist reform party. And I think you can see very similar parallels to the Democratic Party here in this country. Yeah, except we just change our leader a lot more. That really appears to be it.

I have disconnected from a lot of British politics. actually I'll be honest it was the Lib Dem conservative coalition that did it for me I was just when that happened I'm just like fuck this man I can't grow up here like have like in the Lib Dems like in what they're fighting for something and it's just you watch that happen it's just fuck this shit I was already kind of on the way out in the country anyway

just I wasn't expecting much from Kirst Stama and wouldn't you know I didn't get much from Kirstama which I mean I could probably say that about most labor leaders for a while Can you tell us anything about the new, the new guy number 10, Bo Burnham? I truly have not looked at Bo Burnham. I think it's nice that he came out as a, he was a good singer throughout COVID. I think he made a lot of people happy. Didn't know he moved to Manchester.

It's nice for him, I guess. I'm really followed, honestly. You know, just a, it's just, my editor, Matt Hughes said it's like, it's never getting fucking better. And it sucks because I always had some optimism towards England. I think a lot of British people, we've had our time being smug about stuff. We can't do that anymore. We have to just accept our reform going to get in.

I truly don't know at this point. Or like if the Labour Party comes in, are they going to do the same shit they've done so far, which is fuck all. I don't know. And this is very thematic for me as well. Seeing the Labour Party kiss the ass of the AI people just, that just, that really just proved me. It's like, this isn't about workers anymore.

I don't give a fuck about anyone. I mean, I think the most prime ministers, like a real country, you know what I mean? Like a real country, like a country that has multiple airports has had in like a five-year period. And it's kind of shocking because 10 years ago, the sense was that like, yeah, the British economy is like fake and shitty in the same way the American one is, right? the same type of like jobless recovery where they at least got a jump start on deindustrialization before we did and the the popular knowledge was oh they weathered the pains of that before we did so they already the shocks are already priced into the system and it seemed like it would be you know like America there would be a combination of tech and traditional like fire sector

city of London stuff and they would just happily be this major if not the most important player in the EU one of them and that they would just happily live off the dividends

of that for eternity and lo and behold a lot of people were left behind by that system and it is it does seem like a country that is at least in the ways that the people who are capable of attaining power,

at least for them, it is ungovernable. Of course, I don't think it is, it's like the Lord of the Flies over there and just anyone will get thrown out in 60 days. But Starmer in particular, as well as Sunak and I would say half of the prime ministers that got thrown out on their asses and had to resign in shame, they all had the same delusion, which is that they could turn back the clock to 2014, no matter what had happened. Yeah, I mean, Burnham lost to Ed Miliband and Corbyn.

So it's like, if you like those guys and you also, well, now you, well, great, you've got the fourth bloke you wanted. And the problem is, so I moved away from England, 2008, been back quite a few times. So I can't judge the country as much, even though being British gives you the lifetime right to do so. I do feel like Manchester is a lot nicer than it was growing up for me. I want to believe that things can get better and on some level, I know it's particularly difficult with how fucking shit things are getting. I do try and be like, all right, so you change, at least we rotate them quite quickly.

Like you said, 40 of them in the last two months or so. I mean, Australia's competitive as well. Who knows what they're doing over there? Yeah, I can't even put that on my docket. their shit's too weird for me. Like, no offense, Australians. Yeah, I want to believe I wanted to get better. I just don't know.

The fact that Stama had what the equivalent of a supermajority and just kind of was like, well, what we need to do is bringing the nice fellows from McKinsey and let the McKinsey people have a go. And do we need a national health set? And they've been poying with that idea for a while. I don't think Stamber was really on the way out with it. But it's just frustrating because, I don't know,

feel like you have a shot. Nothing happens. You feel like a shot. nothing happens. I don't think there's really a comparison to that in American politics, but maybe. Well, I think it is America is in a similar place, right? I mean, I think there are a lot of parallels between the Brandon administration and Starmor. We, of course, when we came up with the idea of Brandons as a measurement unit,

we actually thought that Starmor was the most Brandon leader on the planet. More than Brandon himself. Oh, my God. He was like two Brandons, and Brandon was. only one Brandon. I mean, we're prevented from having as many leaders in such a short window of time by virtue of having a presidential system. But, I mean, three one-term presidents in a row is as close as you get to that. Okay, it is a different situation in that two of those terms are Donald Trump's terms, and it's not like, it's not quite a Kirstarmer thing where

I don't think Donald Trump got in there and thought, okay, let's return to good old-fashioned Obama era technocrat stuff. Well, that clearly wasn't the case. With Biden, it was even weirder because he thought he could make this weird Frankenstein monster that combined a lot of modern Democratic Party elements

like feverish loyalty to Israel and NATO fetishism with a sort of half-remembered version of New Deal Democrat politics. And it wound up just being this thing that everyone fucking hated. Well, I think that the problem with a lot British politics, American politics, the tech industry, the business in general, everyone is trying to turn the clock back to 2014. They're all trying to get back to a time when like tech built new shit, when governance, governors did things.

There was hope. We had a chance to change the systems we're part of versus reinforcing them. I think everyone wants to do that other than changing the systems back to how they were or making any kind of systemic changes that might actually do that. that my, you know, some regulation of tech to make the tech industry smaller, to push private enterprises out of government. But no, no, no, no, they love that. They love that part. It's just the complaining part that they don't like. They don't want people to be so for, oh, oh, what, you don't get anything. Oh, your life sucks. Oh, your money doesn't go anywhere near as far. And every time you open up your device, it tortures you. Oh, what? Why can't you just be

fucking happy with how much worse shit has got? But the only thing we still have from back then is Gary fucking Vaynerchuk. I thought he was long gone, but we still like, he's fucking talking about AI now. It's just they want to bring back all the shit things in 2014 and then still keep things in the kind of hyper-capitalist reality when nothing really connects properly to anything, nothing makes any sense other than the fact that number go up. It's just very, but Stama kind of stood for that. He stood for the kind of like, oh, what if we just got back to a government that kind of shook hands

with people and took photos. Wouldn't that be nice? Fucking, remember, that was the first time Snapchat tried Snap. Oh my God. We got denied the chance

to see Kirstarmer in Snapchat Spectacles. Fuck this world. Fuck this world entirely. If he'd have had another two months, Kirstarmer would have been at number 10 with those fucking Roy Orbison looking things. Just fucking fucking trying to like

rotate a burger in three dimensions. Oh. And now he's, to Blue Bayou. We missed Keir Starmur going on one of those nightmare kick streams where like Adrian Broner and so we like just abused like 20 women while gambling.

We miss so much. Yeah, we did miss the polymarketerization of England. Well, I think we can still have it though. That is, what you said about Starrmer it seemed like he came in there and set up a bunch of things for Palantir you know, kept the ball rolling on the privatization and gutting of the NHS, certainly, as he pointed out, something that predates him, of course. A. Up Lovely, his theory has always been that Starmer's role, whether he knows it or not, has been to just kind of be like the fall guy, to set up Britain to be Russia in the 90s, where whoever, whatever next three guys are in there, it is going to be like the Yeltsin administration, where all these,

great national asset. Things like the NHS are gutted largely by American companies or public-private partnerships. And everything is just ripped apart and stripped for pieces. And it's pretty fucking stultifying to think about not just that, because that's obviously horrifying how much worse things would get with all those things ripped away. But also, considering how right wing the UK is now how much more right wing would get after that too

after even the most threadbare of things they can still point to and say well we have that we have this thing that America doesn't have once you rip those away how bad can it get it's really fucking awful to think about and

looking at Starvin's 10 years it's hard to I cannot say I disagree with Mr. Lowe of his appraisal of him as a figure. If you were Philip Green from Casino, our favorite guy to compare people to, he's Philip Green from Casino and the mafia and the team serves their palantir.

If he is that, what would he have done differently? He did the exact same things you would do if you were setting that up, you know? Yeah, and I mean, it's just the slow role of nothing. It's, again, we've joked about Nailas and all that. It's just kind of hard to look at anything that's happening in England as something that's an expression of anything other than just either the right wing or the city of London,

just the wealthiest people or the most evil people, some of which share the same, I don't know, Dialogue Conference membership, I guess. They all get to go on the same Peter Thiel, the Peter Thiel cruise that he does. It's just a thought I have for coming on here. But no, it's really rough to watch because the right. wing would like to bring it way back like 50, 100 years, maybe more even. And whatever you call, it's not the late, like the centrist, centrist power circle in England, they desperately want to just go back to Tony Blair. They wish they could fucking put in there.

It's protect, we can we invade Iraq again? Why not? We don't want to invade Iran. That looks difficult. But we could do, we could, why we just, we could relaunch the iPhone, what, 10? And we can just kind of do whatever the fuck. we want for a while. Yeah, just like nothing changes other the number go up.

It's just, it's very, very, very frustrating because it is everything right now. They want to return to how things were in the sense they want us to calm the fuck down, despite things getting worse for everyone other than them. Gist armor will be fine. He'll go and walk into a McKinsey, whatever it is. I truly don't know how one gets a job at McKinsey. I think you get chosen. It's like a stone mason's thing.

To get to the larger subject of AI. I've been watching you, you know, appear on the business press as sort of like the anointed AI skeptic. And like this is in a world where like we've talked about politically, culturally, there seems to be this longing to return to a bygone era where technology and politics still offered something hopeful about the future or the possibility that things would change, that something could change. And I've mentioned to you before that I think AI has been marketed.

quite successfully as this kind of dais ex machina, this magical technology that will change everything, that will change politics, that will change culture, and will make everyone rich, or it just offers a hope of a new horizon at a time when people feel more and more like that horizon of possibility has closed.

So in light of that, I would like to ask you about your recent reporting on OpenAI in that company's books. So can you tell us what is actually going on at OpenAI and the question of are they making money or not? So let's start with the thing they're not. They're losing billions of dollars. How many billions is a good question? So last year, 2025, so I got their auditive financials that have validated by the FT.

So they burned about $21 billion to make $13 billion or so. Now, the funny thing is, is their net loss was higher than that because they did some weird accountancy bullshit. They also claim that they're, it was funny. The FD and I reported this out, and someone, I assume, from Open AI, I truly don't know, was like, actually, when you look at the accounting, we only lost $8 billion. This is partly because they move like $18 billion worth of costs onto another balance sheet that they don't name. But when you actually look at the underlying cost of this, this company spent $19.18.18 billion just on R&D, which is training the models and probably some staff too.

And then there's the funny one. they spent $5.73 billion on sales and marketing costs. That is more than the Coca-Cola Corporation. Now, the reason I bring this up first is they also have a number called, there's a $7.5 billion cost of revenue number. Now, people are going to say, well, $13.07 billion, with the cost of revenue at $7.5 billion, isn't that profitable? Absolutely not.

Open AI is clearly moving inference costs for its free users, or they give away a bunch of tokens as well to people. they do it through startups program and everything, into their sales and marketing vertical. $5.73 billion. OpenAI does stuff on ads with Facebook and Reddit and all them, but they don't spend that much. That would be more than Temu and Sheehan combined,

and they are both those. Those are two of the largest Facebook ad spenders in the world. So what's actually happening here is this company is doing some really fun accountancy bullshit to try and get away from the fact that they spent $34 billion to make $13.07 billion. These companies fucking suck. They're all terrible businesses. But I also think it ties into what we're all talking about, which is everyone is pushing

these shit heap companies up a hill. They're pushing AI for everything because they want to go back to the time when you could just read TechCrunch and be like, oh, Facebook added a new emoji. How lovely. I'd like to invest in that. We can make new, we make, they want to get back to the era when you actually believed Silicon Valley could build another Facebook. When all Silicon Valley can build is Open AI.

a company that raised $122 billion this year in one round, and yes, they're projecting to lose $852 billion, but they end of 2030. It's just, it's KFAPE. It's all pretending that this is, this is yet another Facebook or Apple or smartphone

or cloud computing or app store when it's just a cobbled together mess of a business with a product best known for its hallucinations. Another thing that I've seen you mention is this idea of ROI. Now, correct me from wrong, but that refers to return on investment.

And everyone is looking for, is there ROI in a company like OpenAI? Like, okay, so in the end of you like, when you say like in your writing, that you cannot find any return on investment for a company like Open AI, what does,

what do their boosters or defenders? Like, what is the argument against this? Or like what sort of, when your skepticism, like is it met with some sort of, I don't know, like, example. So the counter example people give is the go, well, it's writing a lot of code. Now, to be

clear, even at the most complex level, these models are probabilistic. People are going to love that when they hear it. Claude code is a series of deterministic scripts, bolted on top of an LLM to make them do more stuff, usually burning more tokens of the process. But long story short, code is the one that everyone gives. Spotify claims that their best coders are now writing no code. They're using LLMs. but no one can seem to actually give you an example of what this means in the end, or whether the code is good or functional. You can, however, look at basically any app these days and see how shitty it's gone. But putting all that aside, the RY conversation on its face is a sign that there isn't RUI

because why would we be debating it otherwise? We wouldn't be sitting there being like, you wouldn't have people emphatically saying, AI is here and it's real. If they didn't feel some compulsion to prove that versus, I don't remember anyone going around being like, if you don't use a smartphone, if you don't have an iPhone, they're going to take you, they're going to, if you don't, if you don't use Google Docs, you'll fuck, man, if you don't have G-Mas. Is Coca-Cola really a delicious beverage? It's just, but the fundamental ROI thing is, it's actually very difficult to measure the cost of a task with AI. It's very difficult because for many years, these companies would sell you a subscription of 20 bucks, 100 bucks, 200 bucks a month.

Within that, you'd have rate limits, and no one really knew how much those rate limits were. They were just a lot. Well, it turns out, according to semi-analysis, because when you use those services, you don't pay the actual cost of the tokens, the AI tokens that run the models, or the models use. And it turns out that semi-analysis found that on the 200-buck-a-month plan, with Anthropic, you can burn $8,000 worth of tokens, and on Open AIs, you can burn $14,000 worth. Now, those numbers are both dynamic. I know that this isn't an economics podcast, but those numbers are both much higher than $200.

Oh, holy shit. Hold on. I have to call my retirement account. Yeah, you really shouldn't have, really shouldn't have levered yourself in this Felix. But the point I'm making is... It turns out I got the order of numbers wrong. Oh. Oh.

Yeah, no. Yeah, it turns out my retirement account was predicated on the idea that $300 is more than $14,000. Fuck. Well, it turns out that's actually Sam Altman's accountant, too. So what happened, the reason I bring this up is most people experience AI in this way. Most people, you pay $20, $100, $200 a month to use an AI service. Earlier this year, around March, both Open AI and Anthropic, went to their largest accounts, their enterprise accounts, and said, okay, guess what?

Great news. Instead of paying us a single monthly fee, you're actually just going to pay for the cost of tokens, served at a per million token rate. Uber burned through their entire AI token budget for the year in a single quarter. Axios reported that a company, Madison Mills over Axios reported that a company because they didn't set up spending control spent half a billion dollars on Anthropic in a single month. And yeah, so all of these enterprises went from this kind of subsidized thing where they could kind of all you can eat to suddenly having engineers spending thousands of dollars a month each.

Zillow ran through their entire cursor AI budget for the year by the end of May. Brex had to limit engineers, I think, to like $1,500, $2,000 a month for a week. I forget Uber's limiting them to $1,500 a month. But the point is that these companies were like, oh, shit, wait, we didn't make sure that this was useful. We just told everyone to use as much AI as possible. And then everyone did that, cost them a bunch of money. And now everyone's suddenly going, wait, is there an ROI for this shit? Wait, wait, wait, wait, wait.

is this is this good i didn't check before you um you uh you brought up uber and um this entire pattern of like new or newish technology gets introduced the pricing is much lower than the actual cost the company incurs a loss uh this is a familiar story in tech right with um a lot of streaming services with uber with grubhub with most of these types of businesses that popped up around, you know, 15, 10 years ago, it was a similar. All these companies lost billions of dollars.

So, of course, not nearly as much as Open AI has in this last year. But those were under the assumption that, okay, we are going to basically subsidize consumers to use these services. And once our service, once, you know, like Uber gets enough market share over Lyft or whatever other competitors, we will have, we will, we will be Coca-Cola and we can jack the prices up to whatever we need to actually make a profit. With AI, the weird thing about it is, is you can't actually say out loud what, what the, what hitting pay dirt will be, right? Yeah. It costs an exorbitant amount of money. And the only way that you could ever really make it like cost a

would be if we move, you know, we achieve like full scale nuclear fusion, energy positive nuclear fusion and convert the whole grid in like five years. Or, you know, I guess build more existing nuclear power plants. But my point is, like, even if we did that, it still wouldn't, it wouldn't make up for the cost of the actual reason that investors were excited about AI, which is the idea. that it could replace labor costs. Yeah. As it seems, as it seems like much more expensive to have to pay for all these fucking tokens than it would be to just hire someone. Yes. And that's pretty much it.

But on top of that, it doesn't do any of the things that a regular person would do with any reliability. Exactly. Exactly. And of course, you can't say that part out loud. It's too, like, ghool. Like, you would, too many people would go, well, what the fuck? This is going to replace me.

But also, I mean, going back for our previous conversation about the desire of all political parties, all viable political parties in the West seeking to return to either 100 years ago or 15 years ago, it's very apt that the dominant, definitely not economic engine. But, you know, the thing that everyone is going to remember when they talk about. the big defining technology of this age is essentially something that just slams together pre-existing images and texts and thoughts and ideas into like a shitty undigestable mess that just gets further and further deformed the more times you print it out yeah and what's funny is it's the perfect thing for our time well but what's great about it as well is open a the history of open AI is like in 2015, 2017, Sam Altman and a bunch of other rich idiots got together, sent emails to each other being like, if the mind was a computer, we could have a billion minds

and other genius. Like him and Elon Musk. That's so smart. Sending each other like just like, actually hot couch guy's shit. Just like stoner level stuff being like, wow, the mind is a powerful thing and we can't let Google have every mind or deep mind. Sam Altman was very much part of the elderly. a guard of the valley. He's one of the first people in White Combinator. He's invested in,

but he was like part of Stripe because Paul Graham of White Combinator. He is very much of the 2010-2014 era. And he's trying to build the company in its cargo cult shit, trying to do what, well, Amazon Web Services cost a lot of money, right? Now, that belief has allowed people to justify like a trillion dollars worth of GPU CapEx. Truth is, Amazon Web Services cost about $53 billion, this is all of Amazon's combined CAPEX, including AWS and the store and everything, was about $53 billion between 2003 and 2017. Amazon Web Services became cash flow positive in nine. Open AI raised $122 billion this year.

Anthropic, if they close every part of it, will have raised $95 billion this year. These are not comparables. But because the entirety of Silicon Valley is just management consultants and like Ayahuascavick, dims. They are all just sitting around being like, what do we do? We throw a bunch of money at it. And if people say they don't like it, we scream at them. We scream at them with all our money. We don't have really any other ideas. It was, you've kind of intimated this earlier. It's when no one has any other ideas. They just think, what if we made a machine that does ideas for us? They're all talking about recursive self-improvement suddenly because they've actually run out of ideas that are like, our next big

idea is that it will do the ideas for us. It will research the AI for us because all of the people that build stuff, all the actual engineers, they got chased out a long time ago. What's left are just software engineers being tortured in every company, being like use AI more, but I don't want to. It makes the code. The code isn't very good. Use more, but also don't use too much. Don't use too much of it. It's too expensive. But use more. Use the perfect amount, which I can't tell you. Yeah. I need to go back to like a more basic question. Please, please. It seems to me that like whether you're a software engineer

or people like in all kinds of email jobs now are under incredible pressure to use AI as part of their workforce and to use it often and more. But at the same time it gets back to this question of tokens. And here's the thing I don't fully understand. Is a token

like essentially just a subscription to use the AI? Because I don't use AI in anything. Okay. Like my equivalent would be like I use, like, things I use for, to do this job is like Google, right? And when I go to Google and I type in, Stanis Barathean gifts and like, you know, the description of my work there here.

I'm paying for Google through, I pay for the internet, like my internet service provider. I'm paying for that. When I go to Google, it's essentially free at the point of service. I'm paying to use the internet. I thought for, like, for a while, these large language models,

they were free, but now they're being metered by a kind of subscription fee which is essentially what's known of these tokens, right? So, like, are you paying a monthly fee? Are you paying per use? Okay. Like, how does it token work? Why are they called tokens?

Happy to explain. So tokens is just the unit of measurement of, like, three quarters of a word, even, Jesus. Three quarters of a word, a token. So they charge on a per million token basis in input and output tokens. So when you feed in, I don't know, your 900 word, Kirstama, Naruto, fanfic, into Claude.

However, if that were, you could use a certain amount of tokens based on how long it was. And then the output it creates being like, make it sexier. And it will be like, it will then in the background to do some, it will build a plan of how to make your Naruto fanfic with Kirstama sexier. And then it will spit it out. And when it spits that stuff out, those are the output tokens. Somewhat of a simplification. So the majority of people, so when you use Google search and it spits out an AI overview that does not make any sense. or what have you. That is burning tokens on some model. We don't know which. Now, when you use

chat GPT or Claude, it will be using a model from one of those two companies, from OpenAI or Anthropic, and you as a user paying on a monthly basis don't experience the tokenization part. You're not, you don't know. Like, you could work it out. There are a means of working it out, but you don't. You don't see. But because enterprises, because they did the thing, the Coca-Cola thing, Felix mentioned it, where it's like, yeah, we're going to jack up the price. prices now, except they did it. And within two months, everyone was like, fuck this shit. What the fuck do you mean? They went from being like cultists. They went from saying like, this is the literal future of everything. It's going to change everything to just like full scale austerity

measures. Just like, I don't know. We couldn't possibly look into open source model. And it's really funny because the very same people at Cisco's, I think is his president, G2 Patel, was saying, yeah, the cost of tokens vastly outweighs the cost of human beings is the return on investment isn't there. And what's funny is like, these are all companies that four or five months ago were saying that AI was keeping them rock hard all day long. But they were like, this is the best thing ever, this is changing everything. And it's because most people using AI are having it subsidized.

And the amount they're having it subsidized is like 20 to 40 times its actual value. And just to be clear, the only people, people, will say, oh, they're doing that because right now they're just in growth stage. No, the reason they're doing that, the reason they're subsidizing so heavily is they know the average person would not pay anywhere near how much it actually costs. And we can kind of see that when we have enterprises already, it took less than three months for them to start flipping out and taking hostages. You brought up the example also of, you know, how people, I had never heard this one before, by the way, how people

talk about how AWS costs a lot, which as you pointed out, the cost of AWS is, you know, minusical compared to this stuff, but most crucially, AWS does the thing that

you pay it to do. Yes. The thing, and the entire thing that it is marketed as being capable of doing. Nothing to my knowledge. There isn't something where, like, Half the time when you try to upload something, host something on AWS, it's just, it doesn't make it. You know?

Whereas with these companies, they are promising something that probably is impossible. But if it was, would cost trillions of dollars and make the world immeasurably works. Yeah. And it's very frustrating as well, because on doing this and the way they're raising this money, the way they're, I'm Open AI raising over $200 billion this year. The reason they've done, why they've done that even, is just being like, yeah, this thing, which does not do this right now, we can't tell you how it will, will definitely become something completely different.

And man, when that happens, you're fucked. You should be terrified of us. You should be terrified. Don't ban us, but be terrified. It's just, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's a They don't know how to build a real company. They know how to build hype, because that's all Silicon Valley is anymore. It's just hype and speculation.

They only know how to do the stuff around the stuff. They know how to get excited about nothing. They know how to explain a waste of... Well, there are people that heard OpenAI from my reporting lost $20.92 billion. And they were like, actually, that's fine. It's good. And that's because this is... Silicon Valley is just a cargo cult now.

It's no longer run by the people who built the things that matter. it's no longer stewarded or invested in by people that do real jobs. I mean, I say this is someone with the email job of all email jobs and that I mostly send emails. And it's genuinely horrifying to watch both what they're doing, but also how fucking easily everyone's falling for it. I mean, the wallet inspector has been rolling through the media for the best part of three years now. And it's like you try and explain it to them. And I'm serious. Journalists, you get journalists who do this, you get investors who do this.

I've had this argument a lot. And they say, they just go, well, Uber lost a lot of money. $32 billion between 2019 and 2022, by the way. Uber lost a lot of money. AWS lost that. They repeat these things like they're in a cult. Because when you actually, well, it's two abstractions. One, when you have to admit, and when saying it is you have to admit the tech industry is in a very bad way.

But you also have to accept that, man, there are a lot of people who can be fooled into just about anything. and fooled into defending it too. That is very funny, by the way, how part of the marketing for it is talking about how scary it is. Like, nothing else is like that, like, again, to bring the example back to Coca-Cola, if they were like, okay, we had a lot of success with like the polar bears, people think they're really cute. But we're going to do this ad where it's a family, right? and the cute little boy with like a missing front tooth drinks the last Coke. And Coke is so good that it's terrifying, right?

So he kills his entire family because they're out of Coke. The family annihilator era of Coke. Yeah, we're going to anonymously leak things to the press where we're like, we invented a new cherry Coke. It's so good. I think people are going to become a thousand pounds. It's not going to force anymore. You better stop working out.

when I create it. Yeah. There's nothing, that is such a sign of like, you just don't really believe in what you're doing at all. But we've talked about this every time also that we've had you on the show to talk about AI, that there are things that AI can do that are genuinely very exciting. I've used the example that my friend who knows infinitely more about the subject than I do,

about how AI could be used to research, you know, something like anti-drug-resistant bacteria that has evolved to, you know, resist existing antibiotics. Which wouldn't necessarily, but that isn't necessarily large language models. That's something else. Right, right, right, right. Exactly, exactly. Or, like, the example I've been thinking of lately is how, you know, a much less important idea than that. but I could very easily see it being used to end this current problem we have in games of like the 12-year-long development cycle.

AI could do a lot of the incredibly dull soul-crushing work that all games must have now, where every bubble in a cup of soda in the game has to have individually rendered bubbles. But even that though, it's like that's also something that isn't a generative. If they reuse assets all the time in games. It's just it's like the promise is always, wouldn't it be nice if and then some other stuff has to happen that makes it useful in that way. And then we can be excited about it. And it's frustrating because it's the same fucking bad faith shit every time. Oh, so can't.

I'm not saying you're doing this. But it's just like, oh, a scan for cancers. Oh, you don't like robots. It's like not what I'm talking about. Yeah, exactly. Exactly, exactly. Like, if this was a more, if we had a more functional economy and a more clear-eyed way of viewing things, this would already be like how it was marketed. They would go, oh my God, it could make, it has all these advantages for researchers. It can make the task of programming so much easier. But instead, it's marketed as this is horrifying.

and it's also going to make, it's going to make it so that Sidney Sweeney exists as a hologramed in your living room. But the funny thing is, is it gets back to the 2014 thing again as well, because they can't do that. They can't do that because it costs too much money. They can't do that because Open AI,

they raised 40-something, $42 billion in 2025, and then in March, 2026 had to raise $122 billion. It's very obvious that the, The economics don't work just from that. And they're like, well, where is the money gone? What's it gotten us?

Well, we got some models and we fed maybe $20 billion directly to Microsoft, Apple, sorry, Amazon and Google. Yeah, and everyone at a tech company is fucking miserable because they're constantly being screamed out to use this machine that makes mistakes all the time and then screamed out when it makes the mistakes. Yeah, but this is how this is how. this is how we did tech, right? That's how they made the iPhone, right? They just screamed at everyone constantly. I guess that's how Steve Jobs did the design aspect. But I think he mostly left the

technological stuff to the people could actually build things. But it's just, it's a bunch of people shuffling around desperate to create a new Google because it's not enough for AI to be normal. It's not enough. If this was an industry with a total addressable market of $50, $100 billion, dollars, which would still be way too much. But let's say it was that, that is not enough. Hyperscalers, so Google app, Google, Amazon, Microsoft, and Meta, even are going to by the end of 2027 spent over $2 trillion on this year. They need this to be Google search plus iPhone, plus another Google search, plus, plus, plus,

this cannot just be that. Because if they had to talk about what they had today, they're like, yeah, we made something really unprofitable. Some people really like it. Some people, it drives them to murder. Also, we need more money than has ever been spent on anything for this. Does it make mistakes? Yes. Are we fixing the mistakes? Well, we can't. Open AI said it's mathematically impossible. However, absolutely, it will at some point do something so good you should be terrified of it. But not today. Other than mythos. Over the next five years. it is likely that Coca-Cola will get so delicious

that anyone who has been drinking Pepsi will be punished. And in fact, the beverage will be so good that if you don't have one with lunch, you will be fired from your job. Pretty much. Except, I mean, diet Pepsi's foul. But that's a separate debate.

They're going to get me. But it really is. It's just these people who are like, how did Google search get big? Well, we pushed everyone. want to use it, which isn't what happened, of course. It was genuinely like a college project of two guys. They were far from a perfect company, but it came from a point where, even though, by the way, Sergei and Larry in the early days, they were like, yeah, you know, if people add ads to this

search engine, it will change the incentive structure of the company to work against the user. It's like, wow, really. It's all of the people that build things have left. Sergey Brin has actually come back to Google, but he hasn't done any real work in 20 years. I think he had some sort of Epstein relation, right? It's just very funny because it's a bunch of people that have run out of ideas who have more money and talent than anyone has ever had before. Like, every single engineer is focused on this. If you need money for a data center, you can go out the door, wave your hand, someone will give you a billion dollars. No problem. As long as you're buying GPUs, it's fine. They have all the King's officers, all the Kingsmen, and they haven't got shit. Wow, you can

can write some code with it. Wow, you can, and mostly when it writes the code, it is copying an open source project that it was trained upon. Like most of this is just, again, recreating the past again and again with mistakes because these things don't think. They don't have a consciousness. No, they can't sell on that. They can't say, yeah, what you've got today is what you're going to have forever. They have to say, oh, it's a superhuman coder and it's going to teach itself. because if they stop tap dancing for even a second, if they drop kfe, they have to look at the economics,

and the economics are actually insane. And people say, oh, it's like the railroads. That was a long time ago. All the railroad companies went bankrupt, but that was also a long time ago. What do you, if that's the best you've fucking got.

Ed, to talk about, you know, all the king's horses, all the king's men, one man in particular, Sam Altman, just as an individual,

as a guy who is sort of, I don't know, like the figurehead of a lot of what you're talking about. I'm wondering if you follow this story that I saw this week about how basically all of Hollywood has simultaneously dropped Luca Guadena. Guadino's Open AI Sam Altman biopic starring Andrew Darfield, which is basically like it's already in the can. And now basically like this movie was financed and now will like essentially will not be distributed because all of Hollywood has some. sort of economic relationship with open AI. I mean, like, do you have any perspective on that? I mean, it's, I don't know if you saw the story where there was from the Haberman leaks, where apparently Donald Trump was just making fun of Jeff Bezos for like,

begging him. So he's like, he's begging me for everything. But that's because Jeff Bezos is a fucking coward, like an actual worm and a coward. And what likely happened here was because they invested $50 billion in Open AI this year with 15, I think 15 billion of that contingent on them going public or reaching AGI, so just going public. And yeah,

so what I think probably happened was Sam Orkman pitched a his he fit, which is the lamest shit in the world. He wants to be, Sam Ormond wants to be this cultural icon, this famed his man of history, this elder statesman, but he's like, the first critical movie, he's like, I couldn't possibly.

Also, Andrew Garfield here, well, Andrew Garfield was in the social network, which is like the template for this movie. And like, you know, the social network is not exactly like a glowing portrait of Mark Zuckerberg. But despite the fact, I think nothing has done, no one cultural item has done more to burnish and, and launder the reputation of Mark Zuckerberg more than the social network. Because it's like, it's like goodfellists for people who want to be Mark Zuckerberg, you know? Yes.

You can say it's like a cautionary tale, but you're like, oh, this guy's the man. He built this billion dollar company to call chicks ugly who wouldn't fuck him in college. Isn't that the dream that we have all of every? man. But like, I don't know what the content of this movie is called

the artificial, the Luca Guadino movie. Like, I never know what to make of this, but like, there are some pretty nasty

allegations about Sam Altman out there. Yes. And the thing is with Altman is he probably didn't even cancel it because of the allegations. Like he probably, I don't think anything with his sister is in there. She alleges he,

like, molested her. It's like a really fucking horrible lawsuit. Like, it's truly awful. I don't think that's even in the movie. I think Sam Orkman is just a very thin-skinned man. There was a clip back in November of last year

where Brad Gertzner, who was one of the most simpering men alive, was like, yeah, so I heard that you might have some growth issues. And Sam Altman just goes, well, you know, if I, I'll get someone to buy your stock, we made way more than $13 billion. He just like immediately starts going. And I think what it is is that Altman is a very self-conscious guy desperate to appear like a cool and chill one. He had a period of time about month,

month and a half ago where he was going on Twitter and doing like 2011 era, I'm so drunk, tweeting. And it's just like, this is just exactly. Who are me? He's just like like fucking three in the morning being like,

I don't think I should be alone with GPT right now. And it's just, he's just a very, I keep coming back to it. They're all just very boring oaths. This is, I don't want. want a movie about it because you say something mean about me yeah that's probably in the

entirety he probably told jeff bezos he needs this to happen or that you shouldn't or he like intimated that it would be bad for him or just he asked him and he made it happen it's like coyote versus acme except i'm sure that this movie will be just i'm sure it's going to be kind of dull because i empire of ai great book by karen how i've read even the um ronan pharaoh sam ointman's story the when you actually look at the life and times of these people they're dreadfully dull they're so dull yeah yeah and i mentioned the kind of stoner style emails they send to each other and it's just like because they're all fucking boring he drives like a five million dollar car he has a house in san francisco we had to sue the people he bought it from because it was falling

apart it's just like oh my god go on move to a fucking h-o-a oldman you'd love it there it's just the most dull shit ever. Dario Amaday dull. Sounds like he's doing the Elizabeth home CEO voice. And it's just all of these people are dreadfully dull. So the movie, I'm surprised anything happens in it. Like, I don't know what is the thing, what is the plot of the movie? Sam Haltman gets given.

He has a company 2005 called Looped that is like falling apart immediately. It gets bought by Green Dart. He's given a percent or two in stripe by Paul Graham for no reason. Paul Graham just said, yeah, you should buy into this. Paul Graham makes him the head of Y Combinator in, I think 2016 says he's the only person for the job. A lot of this is

just quite, I hate the obvious joke, but it's like a lot of this is quite literally an email. A lot of this is just guys emailing people and zooming each other. When he got kicked out, I'm sure the movie doesn't have anything about the board member that Sam Orkman added to Open AI in 2023,

you know, Larry Summers. I don't do anything about Larry. Another star of the social network, seen this movie before. But that's the thing. It's just, I'm sure the movie's quite dull because there's not even, there's, there's no one, Peter Thiel shows up, I guess, you've got Sam, old, when you got Dario Amadeh, dull, dull, dull, dull, you hear him speak that does fuck.

Oh, God, I'm just, every time I think of the movie, I'm like, what could you possibly have happen in this shit? A fucking phone call between Greg Brockman and Kara Swisher, who gives a shit? shit. You fucking you bring up another personality and I'm using that term

very liberally here. Dario, the head of Anthropos. Yeah, yeah, and I've been seen a lot more of him

of his sparkling personality lately. And basically it was in the context of him being asked, has Claude been used in the like sort of

targeting chains of the U.S. military that were perhaps led it to, oh, I don't know, fire two cruise missiles at a girls school in Iran. And his answer was pretty much like... Now, you know, I, you know, again, again, I would say, I think overall, the use of these,

the use of these models is appropriate. I think it's good on net. You know, but military decision makers make terrible mistakes, even at the best of times, and I don't know if we're in the best of times. What we've seen here is clawed assists, but a human makes the final call. So a human made that final call, not Claude. Maybe, but like it's still, it's like, it was human beings who made that decision, not Claude. But like, I do want to ask you about the ban of Fable and Mythos.

It was basically the Trump administration has cited national security concerns and issued an export control directive that suspended access to Fable 5 and Mythos 5 models by any foreign national, including Anthropics own employees. Because you give us some background on that. First of all, like, what are fable and mythos? Okay. So back in April, Anthropic, because they were bored, I assume, were like, well, we're launching a new model, but we're not launching it. It's too powerful. It's called Mythos. We're doing a thing called Project Glass Wing.

And it's able to find vulnerabilities and all sorts of stuff. And the vulnerabilities are scary and we're too scared of it couldn't possibly launch it other than to 15 different partners. A couple weeks later, they're like, all right. we're going to give it to 150 partners. And you know, this whole time, Dario Amadez, they're going, it's too scary, it's too scary to launch to people, but other than the people we like, and China, China, China, just the usual, again,

dreadfully dull people, just China hawk bullshit. What if China can generate Kirstama, Naruto fan fiction, the terrible national security concerns? But then a couple weeks ago, Anthropics says, actually, we're going to launch Fable. Fable is Mythos, a Mythos class model, and this model will be exactly the same as Mythos other than you can't do cybersecurity, you can't do biology. Now, to be clear, there are a few different pieces about this. Mythos is able to find similar vulnerabilities to other things.

It is useful in the way the lot of automated threat analysis stuff is. It does a bit more of it for a massive extra cost, for a massively more expensive. Anywho, Anthropic puts. out Fable and it's more expensive for people. It's pretty good. It's able to burp out some more open source projects. It's really expensive. In fact, it's way more expensive than usual.

And then Howard Lutnik comes in and says, okay, well, turns out that we got a report from Amazon CEO Andy Jassy, who said that there's a way of jailbreaking fable so you can use all the mythos stuff that you're not meant to be able to. Dari Aumaday, who was apparently Access Reports, was at a wellness retreat when they called him, which is really funny. It's fucking off. Just off in a weird tent somewhere. It's like, no, you need to go and do

your job, fun, not. But he got on the phone with the... That's classic Jack Dorsey stuff. Every time there was a huge Twitter scandal and Jack Dorsey was like outgoing message would be like, you have reached me while I'm at a diarrhea retreat in Bengal.

Was it one of his things getting stung? by mosquitoes. Are I misremembering that? Hell yeah. Yeah. But what I love is that Darrow Aberdeh was probably a wellness retreat and he was just at like a fucking hill and just like a regular hotel just watching TV. But anyway, so. Like is there like actually like a dispute between Anthropic and the Trump administration

over whether the U.S. military can use these AI models for their fully fully autonomous weapons systems? Yeah, that was. That was the other thing. So sorry, I should have mentioned that. Back in March, just before the war in Iran kicked off, Anthropic out of nowhere was like, yeah, you can't use Claude, the government, who had been paying for Claude since June 2024, to use it in tons of conflicts.

It was very much part of the system. You can't use it for autonomous weapons, which LLMs cannot do. Or I think it was mass surveillance of Americans specifically. and they then got noted that they got marked as a supply chain risk, which all in all ended up doing very little. Like they were going to get banned, but they didn't get banned. They were going to get removed from the government systems. They didn't get banned from the government systems. But let's get back to Fable for a second because it's quite simple.

The government said, hey, you're able to jailbreak Fable to make it like Mythos. And Anthropics said, that's not that big a deal. And the government said, well, actually, that's a pretty big deal to us. going to have to put an export control that means no U.S. non-U.S. citizens can use this inside or outside of America. So Anthropic pulled them both down. To be clear, this is after two or three years of Anthropics marketing being like, holy fucking shit, this thing's going to wake up, and it's going to be so scary. It's going to destroy 50% of white-collar jobs. Poor fucking Jim Vanderfeld, whoever his name is over Axios, gets like a heart attack every three

months. There's an Axios blog saying that like Anthropics is going to kill us. all with their new models and all that shit. And then the government banned it because they said it was too powerful. It says too powerful is an export control. Unless you're American, you can't use fable or mythos. So Anthropic went, we're pulling this whole thing down. We have no way of doing this. They claim they're working it out.

Maybe they will. Maybe they won't. Be funny if they didn't. But it's just a bunch of fucking people bonking their heads into each other. Like, hey, my model's too scary. It's so scary. It's going to take everything from you. It's scary.

And then the government's saying, well, I don't understand. of this, but I'm scared. I heard the word scary. I'm going to ban this now. Also, I don't like you. Like, that was the big, very big part of this. Well, Anthropica's also pissed off the Trump admin, just by existing, I think, just by being it. They, they call them the woke ones. Like they, I hate fucking peak hexac. I've disliked the man intensely, but he did say that, uh, was it, ineffective altruists? Uh, sl like, hung some points on them, which is unfortunate. at the end of the day, like, the girl's school is still getting blown up.

Yes. Yeah. Right. Someone's doing their job. Yeah. And we don't have any real idea of where Claude has been used by the military. But I'm pretty sure it's not for anything more than his bunch of coordinates. What do you think, Claude?

I think Pete Higgs at use this for like marital and family problems, you know. Should I ask Claude? Have another drink. ask, ask Claude how to win an argument with your wife. Yeah, it's, it's really unfortunate, but also, yeah, when your entire industry spends years scaring people, scaring old Bernie Sanders, who had that weird conversation with Claude, very disappointing, made me very sad when I saw that. Did you see that video of Bernie told me?

Yeah, I did. That really, that really, he may, I think he means well, but that was embarrassing. But it's the ultimate conclusion of no one, building anything for real. No one actually doing anything just dancing around what they think a product might look like or might be good at and then hoping it becomes that magically one day. It's like the last one of the great figures of our era, one of the great personalities, Elon Musk is like, you know, I was wondering if you could give us some perspective on the announcement of the SpaceX IPO, which will officially make Elon Musk, humanity's first trillionaire.

And like this, this is, this is, yeah, a public offering for a company, SpaceX that, like, you know, it puts satellites into orbit and then, like, and then through that, like, Starlink is becoming a major competitor to other internet service providers. Like, what's the, what's the juice here? Like, well, what's the squeeze here with SpaceX? Is this country, is this company worth a trillion dollars? Are they going to start, like, mining asteroids anytime soon? Or is this just, like, I mean, this all seems quite fake to me as well. So the overall thing with the AI bubble is that it's just proof of how many people in positions of authority and responsibility don't know a fucking thing. Elon Musk claims his company has like a $50 trillion total addressable market. It's nonsense. Goldman Sachs or J.P. Morgan, I can't remember which one said their AI revenue is going to 300x by 2030. It's just, it's all a bunch of people lying to get equities to increase. So SpaceX is a company that makes rockets, as Starlink Internet, has XAI, the everything app with Grok attached to generate, I don't know, non-consensual porn or whatever

it does or answer the questions of our world's oaths. And it's ridiculous because this company is not worth that as we're speaking. It's kind of dumping. It's within five bucks. It's listing price. Who knows what happened. But SpaceX is just exit liquidity for the venture capitalist and Elon Musk involved. It's so Elon Musk can have more theoretical stock that he can use for loans. He's like Larry Ellison. He's more like himself. He loves having, that he takes out loans on his various stocks. He obviously wants to merge Tesla and SpaceX into one horrible big company. In any other administration, I'd say that would be impossible, but sadly we're in this one. But the thing is, SpaceX has an AI division, and they built, they rushed to build like a couple

hundred megawatts of data center capacity, faster than anyone else did. Mostly by like breaking laws and buying a bunch of gas turbines that just belch horrible air into minority communities. But he has now rented out, after buying all this capacity being like, I'm going to train GROC to be the most base coding model of all time. Now he is selling all that capacity to Anthropic Google and someone called Reflection AI, and which mostly sounds like the fact that Elon Musk has mostly given up on the AI stuff. He just has it attached so that he can claim he's doing AI. he claims he's building.

He claims a lot of shit so that he could just keep the plates spinning. I don't think Musk is particularly intent on doing anything other than just creating more. I just think he wants more stock that he can sell, that he can use to buy things. Well, I mean, he can claim that he's the world's first trillionaire. Exactly. On paper, but nevertheless, still, otherworldly amounts of money, no one should have that much money or even like a small percentage point of it. SpaceX is just part of the larger plan to expand out his.

equity empire. I think he also wants to merge them so that he can get rid of the AI bits of XAI. I think he's realizing that's a mistake. But who knows at this point, he'll just keep fucking lying. I will just say,

orbital data centers are not real. They are a fucking theoretical concept. They're not going to happen. They're horribly, no one's actually done it. And even if they did, even if they succeeded, I think that they are so woefully inefficient,

it would take so much, more effort just to get the compute to happen up there in the vacuum of space, it would cost far more money. Well, it solves a problem of that nobody wants a data center is built anywhere near human beings live, which is becoming, I think, a growing political problem on both the right and the left. It does seem to be an issue that does seem to unite Americans across a political divide, is that people don't want these fucking monstrosities being built anywhere near a human being might

have to like hear them or breathe in whatever they're belching out. Yeah. I mean, that's not why he's doing it. He's doing it so that he can just say he's doing more AI. None of these people have a plan. That is the striking thing to me about all of this, right? That the orbital data centers, when Elon Musk will randomly say like, you know, hundreds of years from now, we'll have interstellar travel with antimatter because of what we're

doing now. the idea that like AI is self-aware, the marketing around it all being scary. This is the ideas guy economy. There is long, for people who aren't aware of this concept, there is a long-running joke among people who like video games that,

you know, I just have such great ideas for games. I don't know anything about designing levels or coding or coding or any of the new, numerous other things you need to know to actually make a game. But my ideas are so good. And I just, if someone could just hire me as an ideas guy.

But that is the economy now. Trillions of dollars are randomly assigned as value to people who just have the most extravagant ideas without any actual practicality. I mean, there is, of course, like an argument for there being, like, utility and value in SpaceX or any of these companies. It is if you can, you know, make semi-reusable rockets or reliably deliver payloads into orbit at a cheaper and more, at a cheaper cost at a more reliable rate, yeah, that would be economically viable, of course. But this stuff like orbital data centers and fucking anti-matter engines, this is why the value is being assigned.

and you earlier alluded to actual engineers and programmers being tortured and let go and all the the American economy is now just one big game studio with a thousand ideas guys who were all getting paid like $10 billion a year and three guys who work on the code and also test for bugs at the same time yeah and I think that but all of this is kind like it's the ideas man I've thought about a lot as well because that's what's really happened It's all of the actual people that created the value. They're all like, okay, what if the data center instead of being on Earth was in space and there were a hundred bazillion of them? Wow, wouldn't that be good? And all the other guys who don't do anything are like, yeah, wow, wouldn't that be good?

We could have so many tokens. Yeah, I mean, I have 15 sub agents. Well, I got 25. It all feels like the beginning of the death of Stalin whenever a new model comes out there. Like, wow, I can't believe what fable is like, oh, I absolutely. I too, and they're all a bit worried because none of them really know what's going on. Oh, yeah, it's so impressive. And I know I'll hear from someone after this saying, well, I've used it a lot of it.

So they've changed my life and it's the coding to it. Here's the thing. In absolutely no other technological revolution, have I ever had this kind of defensiveness? Other than like on game FAQs and people to argue PlayStation versus Xbox or whatever, or like a particularly, like a particularly overly religious. and Nintendo 3DS fan. Those people will go to war with you. But I never had anyone being like,

well, you don't use the Moonlander keyboard at work, you fucking moron. I get so much out of this. Well, I use that weird mouse thing that looks like a hand, you piece of shit. How dare you attack that? And it's because no one really knows

why they're doing this. Everyone makes these extrapolations because it's all ideas men now. The people, the loudest people about this aren't fucking doing anything. Most of my work has grown out of the fact that a lot of people just didn't see whether this stuff made any money. Like, a lot of my other works just like, is that true?

And it isn't. It's never fucking true. None of the ephemera around this is true. It's just people saying stuff enough times and the hopes that it'll happen, except the people with the actual money and the resources are the ideas meant. And they report to other ideas men. And the ideas men tell the people with the checkbooks just spend as much money on the fucking GPUs at work, I swear.

the CFO of the average company is just like a kind of a whipping boy for the CEO. They're a marketing person now. We've reached the point where they're all doing the stuff that they think happens when things become big. But without knowing why and without knowing that something has to happen in the middle, that has to actually be really useful. And because they've never had any regulation, they've never really had any pushback, The tech, venture capitalists on Twitter act like they're being electrocuted whenever they get criticized in any way.

These people haven't really experienced real problems, thus they can't solve any. And so they're just sitting around being like, if I just put more money into what I think looked like the last guy, I think it will work out. Will that be good? Do you like that? Do you pigs like that? And because the valley has become poisoned by a cultish belief in just the startup, the noble form of the startup, It's just, it's people farting in each other's mouths and the hope that something changes. So where is this going? Because like, this all seems to me like it has like,

sort of, I don't know, rhymes of like the subprime mortgage market. We're like, we've made this the shit too big to fail. I think the people involved in it know, like, know everything that you're spelling out here. Like, they're never going to fucking make money doing this shit. But the costs will eventually be socialized, right? Like, is there a event? Are you seeing like a massive government bailout of big AI? The AI bubble.

No. So just taking a step back for a second. Too big to fail didn't just refer to TARP. It didn't just refer to the government plan. It was the Federal Reserve basically opening the money fire host of the banks. Because the commercial paper market that basically made the economy run. It's a long story, but the loans that people used basically fell apart. So banks just their liquidity mechanisms were fucked.

So they just got fed hundreds of billions of dollars separate to TARP. And that was because had that started, And to be clear, there are arguments for letting the banks fail, but we can debate that another time. Nevertheless, they did that. So the actual cost of two big to fail was trillions and trillions. Also, there was a point to it. Like, you keep the banks because the banks will run out of money, as we all know. We don't want the banks to run out of money.

People won't have money. Then things won't happen in the economy. Banks need to be able to issue and receive, they need to be able to issue credits. If they can't do that, the economy can't run. The actual things. If Open AI runs out of money, I mean, other than giving me a lot of material, there is not actually a giant economic problem. The actual revenues of the AI companies are very, very, very, very small. The largest company, the company's making the most money off of AI on Microsoft, Google, and Amazon selling compute to Open AI and Anthropic.

Open AI Anthropic, I think so far this year, have made a combined less than $10 billion. They have raised over $200 billion. So a bailout exists to stop something from happening both then and again. There is no situation to stop here. If Open AI runs out of money and dies, which the government has actually telegraphed, they were allowed to happen. Being bailed out would not, it would need a bailout very soon after, unless we are just going to, and I do not, right, fundamentally do not believe this happens, unless we're going

to just connect Open AI to the Federal Reserve, which will not happen, the government. The support would not be there unilaterally. Then, well, they're just going to die. But there's a much bigger problem, which is all of those data centers. There's over 100 gigawatts of data centers allegedly under construction. Right? Good, bad. Who knows?

But that's allegedly happening. In truth, only about 15 gigawatts. Once those data centers are built, we're going to need $400,500 billion of annual AI compute revenue just to keep them going. Right now, we've got about the same. 70. And that's the two largest companies, Open AI and Anthropic make up 90% of all of that. And they are unprofitable. We do not actually have the compute demand to back up all these data centers. Now, this is going to become a problem in the next year or two because these data

centers are going to start and they're not going to have any fucking customers. Now, where are the data centers being funded by private credit? Private credit was the thing that stepped in to fill the void when insurance and retirement funds after the great financial crisis needed yields, so needed returns so that their investments could keep growing. And the way they've done that is basically issuing loans to whoever they want, valuing the loans who have in whatever value they wanted to. And yeah, private credit is funneling that money now into AI data centers. And who funds private credit? Pension funds, teachers pension funds, police funds, firemen's funds, state pension funds, insurance annuities, all of that. That's what's funding that.

We may very well need a bail out there, but I don't think people are aware of how bad it's got. Private credits, like trillions of dollars of loans issued privately with no underwriting standards that we're aware of. They are valued at a level that is just internal to the company. On top of that, Blackstone and all them, Blue Al, they're not required to have reserves. They're not required to do very much of anything. So those are the companies funding the data centers. So right now, we're in this situation where the actual places that might need the bailout would be the data centers. And even then, I don't see the hunger for that either.

In fact, I see if they try and bail out data center developers, they've fucked. But really, the king, and this is the one everyone's going to love, the one that everyone has to look forward to. So, Oracle and Larry Ellison. So Mr. Ellison has been a very naughty boy. He's taken out about $21 billion worth of loans. on his Oracle stock. Oracle's stock is continued growth is tied to the idea

that Oracle will be able to build data centers. They are building $340 billion worth or more worth of data centers for one customer, OpenAI. If Open AI is not able to pay Oracle $70 billion a year by the end of 2030, Larry Ellison could genuinely run out of money. Oracle's stock will tank

because they are betting their entire future on whether Sam Altman can, and pay them more money than anyone has ever paid for anything ever. It's so fun. I love thinking about this. I think about this just to make myself laugh. And people say, well, Larry Ellison could get a bailout. He actually couldn't because you can't bail out the value of a stock.

Oracle might get broken up, but you could stop it from going insolvent, which they might have to because they have big government contracts. But the actual stock value of Oracle is what keeps Larry Ellison alive. And my man is leveraged. Well, we can only hope that his son will turn things around. at CBS and CNN and maybe turn those into trillion-dollar industries. He's hoping, but he'll watch so.

Ed Zetron, we're going to leave it there for today. I want to thank you once again for coming on as our senior tech correspondent. Thank you for having. We'll have links to the blog. You're writing in the episode description for today's episode. So that does it for us today, everybody. Until next time, bye-bye.

Cheers. I'm going to