Cheeky Pint - Ben Thompson from Stratechery on AI ads, the end of SaaS, and the future of media

Episode Date: February 12, 2026

Ben Thompson, the internet’s premier tech analyst, joins John for a wide-ranging conversation on the mechanics of the internet economy. They discuss the origins of Stratechery and the "1,000 true fans" model, why Taiwan is the most convenient place to live (and the best Uber Eats market), and why the public markets are wrong to think SaaS is "canceled." Ben also explains why the US failure to control the TikTok algorithm is a disaster, why he’s a "crypto defender" in an age of infinite AI content, and gives John some very direct feedback on Stripe’s ACH implementation.Timestamps(00:00:20) Visiting Taiwan(00:04:59) Aggregation and AI(00:23:53) TikTok/Bytedance(00:29:58) Aggregation and AI redux(00:35:31) Agentic commerce(00:45:08) Is SaaS canceled?(00:52:21) Stratechery(01:03:36) How Ben uses AI(01:06:06) The TSMC break(01:13:53) Rapid fire(01:20:53) Feedback on Stripe

Ben Thompson is the founder and author of Straterey, the newsletter that everyone in tech reads to make sense of what's happening. He's also air leads to the premium newsletter model that's become very popular in media nowadays. For many years, he ran Stratcary as a solo founder in Taiwan. Cheers. Good to see you. Cheers. It feels like people in San Francisco have not properly discovered Taiwan as a tourist destination. Like, do you agree with that characterization?

And what's your recommendation? People always ask me about Asia and the way I always characterized Taiwan is there's lots of great places to visit in Asia. And I would also put Japan on the list. But I like to think I would to Japan before it was cool. Yeah, nothing against Japan. Well, the whole thing with Japan is going to Japan pre-smartphone was a completely different experience than going there post-smartphone. Like, you think, oh, the subway system's amazing, the trains. Try navigating that with no smartphones and nothing's in English. Like Japan used to be very low on English. It's still lower than places like Taiwan. It's surprisingly low. Yeah. And Japan has the

the way to visit Japan is you just walk. Like, don't go to, like, set destinations. The way I would talk about this is places to visit, but the best place to live is undoubtedly Taiwan. The one word everyone says for Taiwan sounds not that impressive, but the word is convenient. Like, it is the most convenient place to live. So part of that is actually...

7-11 has really good food. Well, it's actually downstream from the Japanese because Taiwan was a Japanese colony for the first 50 years of the 20th century, and it's laid out a lot, like, why is it great to walk on Tokyo? Because Tokyo's all mixed use, right? That's how Taipei is as well.

You have these big blocks where the exterior will be commercial, and the interior of these big blocks is all residential, and the first four is all, like, small shops or restaurants, things like that. So wherever you live, you basically have access to everything all around you.

But I think the downside as a tourist is It's kind of an ugly city. Like, Taiwan's kind of notorious for just these dumpy, dilapidated buildings, then you go inside. And they're like palatial on the inside. Like, Taipei is very, very rich. Yes, yeah. It's like in the top 10, I think, as like number of billionaires in the world or something like that. All downstream from building out China, things like that.

It's a very beautiful country from Taipei, 30 minutes to the ocean, 30 minutes to the mountains. East Coast is amazing. But if people listening to this or visiting, like, I feel like one thing they should do is it's a mistake to try and use, help or anything like that too much because like you should maybe just try and go to a night market and follow your belly and see what looks good and like a lot of excellent street food and so that'll be one thing is to don't try to overplan well here's a problem though where tech has made it worse i would argue as a tourist which is uh Taiwan is arguably the greatest uber eats market ever because there's amazing options it's all delivered by scooter so it's

always like 10 minutes to get to get dinner and things along those lines I think you're going to ask me about difficulties to move to the States. Not having access to that is definitely one of them. But the problem is that it's such a huge market now that I think there are fewer and fewer restaurants in that a lot of these places

actually just straight up close their storefronts are just ghost kitchens basically. And all they do is just make Uber Eats orders all day. I see. So, I mean, famously, yeah, the restaurant economy and places like Taipei would have been really good, but it's gotten worse because people are eating in more with Uber Eats and stuff.

I think so. I think so. As far as the, like, walking around and just, like, stuff on, no, there's still plenty of places. It's still great. Yeah. But there are, like, there's a number of restaurants that I used to always take people to, like, holes in the wall that I knew were super good beef noodles or something. And I remember a couple times like, oh, you can't actually go eat there anymore, but they're still in Uber

eats. That's a bummer. It's like a separate problem. The San Francisco problem at restaurants is that nobody drinks anymore. And so the restaurants can't, you know, they've lost a major reference. It's so bad you had to get a pub in your own office. Exactly. We're trying just firsthand to.

to fix it. Be the change you want to see in the world. Should people visit places beyond Taipei or Hershey? Oh, for sure. Yeah. Taipei is great. It's great to walk around. Taipei 101, which is obviously very much in the news these days with the scaling.

But you can go up the elevator and the inside. You go up there because there is a massive ball at the top. The mass tamper, yeah. Yes, which is amazing. If you're into like engineering, that's actually a very underrated thing. National Palace Museum is amazing. But the whole, the East Coast in particular is incredible. You drive, there is a train, but the driving, you can drive, like, you're driving on the coast, like, close to both sides.

Yeah, it's like the lost coast of Hawaii kind of. Exactly. The problem, there's an incredible gorge called Turoco Gorge. That was really, yeah, messed up by an earthquake a couple years ago. So I don't know if it's even reopened yet. But I used to take people to that all the time because it's world class. Yeah, yeah. It is impressive that they said, we're going to build the tallest skyscraper in the world in, like, a very frequent earthquake region.

Yeah, it's a beautiful skyscrapers. Yeah. You've worked all well for the Netflix. Yes. So you've talked a lot over the years about aggregation theory and really popularize this idea where pre-internet, often power would live with the supply, whereas on the internet, because of the different marginal cost dynamics and things like that, power will rest with the demand aggregators.

And so booking.com is a much bigger company than any hotel chain. Something like that. And booking.com is the particular. interesting one because they aggregate all the hotels, but they are also aggregated by Google. So they're like Google's biggest customer, even as they're also on the other side. I feel like booking.com is a very underappreciated success story in tech. You know, they're a European company, kind of much quieter in a lot of ways. But like, if you invested a dollar in booking.com and a dollar in Google 20 years ago, you made much more money as a booking.com shareholder.

And I think people don't appreciate that fact. It's a very well-run business. But where I was going with this is how does aggregation theory apply to AI? How does one need to update the framework? TBD, to a certain extent. I mean, this is part of the huge, probably one of the most angsty debates that I have internally, generally, which is open AI's sort of welfare going forward. I put forward a few years ago that actually open AI could stop making models and be, one of the most valuable companies of the world just because of chat GPT. That's their most,

that's their most valuable asset. And part of the problem issue that they have is that was definitely the case in 2023, 24, but they never, you have to actually build the business model around that. And I've, you know, I think fairly famously, based on all the tweets that I got when they announced that they're going to launch ads, have been losing my mind about this fact for a long time. And I think this is interesting. I'd actually be curious your view of this, which is there's this mindset in the valley of this skepticism of advertising. And people have sort of like internalized that it's bad and evil. Do you do you sense that?

Do you feel that? I agree this kind of a knee-jerk skepticism of ads. And like, look, you know, when I'm a YouTube premium subscriber, when I see someone, you know, watch a video without premium, I'm a guest. Yeah, yeah. It's like, what are you doing with your life? And so, like, I get the knee-jerk reaction, and that Stripe at some level is kind of the anti-advertising company. And, like, we're the opposite form of monetization.

But, I don't know, I have no particular issue. I think it's like a very efficient form of monetization. It makes a lot of sense for certain products. And so I think it's just different strokes for horses for horses. I think you're with Stripe. You're on the, you're on the skepticism side. I think ads are amazing. And, you know, I'm talking.

my book a little bit. Tracker has gotten tremendous traction just by not hating ads, even though I'm not an ad model myself. Exactly, but you're a paid model. Well, it's actually, it's funny. I actually think I got a lot of traction over the years by talking about ads when no one else was, despite the fact that it's the most important business model. And I look back in all my early writing about ads was terrible. I have no idea what I, but just by virtue of talking about it, it was helpful. The reality of advertising is, number one, people if you're making a product in the world, like, Stratacri is very fortunate.

Like, it is definitely a new model or a new internet-native model in that I have subscribers in, like, 200 countries, right? Like, I'm literally, the whole world is my market. And Stripe obviously helps make that possible. Yeah, a few in the Vatican, you know, they're following wrong. I could go check. I would put the odds are very high that I do,

at least one subscriber in the Vatican. And, but where I benefited from is I was a massive beneficiary of social media, particularly Twitter. And that back in their early days, good days of Twitter, if you want to say whatever it was, there was currency in sharing smart links. And so if I was a regular provider of links that people felt made them smart, so they would share them and talk about them and be sort of back and forth. And so that solved my customer acquisition issue. The reality, though, is most, because the other thing about content, actually is the point I should have come back to is it's something to talk about. It's something that's commonality sort of between us that we can both read the same thing. We can both have opinions on and sort of react to it.

The sort of product that I buy on Instagram is not what I'm not going to post about it or talk about it, but it can be tremendously beneficial. And they, in theory, have these small businesses or whatever they might be, or Chinese suppliers or whatever. They have the same opportunity, which is sell to everyone in the world. They just need a way to tell people about it. Someone who buys way too many products off of Instagram. And by the way, one of the great things I'll be back to the U.S. is the Instagram ads are unbelievable. Like, they're not very good in Taiwan.

They're so much better in the U.S. They're like, oh, this is the best part of living in the richest country in the world. It's amazing. Like, I'm like, what's this native content? Give me more ads. Which, by the way, Facebook is very happy to do over the last six months. Lots of ads these days. But I get stuff that I never would have thought of.

I didn't even know about it. And it's great. It's amazing. And it's a real benefit to me as a consumer who, for sure, subscribers, YouTube premium. It looks down on people who don't. But finding things that I didn't know about that make my life better. So as a user, I'm benefiting. As a rich user, I'm benefiting.

As the world is six billion people, most of whom do not have the disposable income that I have, much less you have, much less anyone else in San Francisco has, they get the same experience I do. And something for AI, like when you think about, particularly when it's so costly to provide, and the free product is so much worse than the paid product, of course it's a win for them to be able to get access. So to have a mission of belief that AI makes the world better. and to not embrace ads. No, no, no, I agree with ads being an efficient form monetization. What do you think is the right way for consumer AI apps to do ads? Like, you know, chat jeept just announced that they're doing ads. Right.

And they're doing them as a very separate experience to the answer. No, I just agree. No, this is why it's so bad. This is why I'm so frustrated with them. So what they're doing is the bare minimum easiest solution. Like banner ads, basically. It's banner ads, but it's based on the context of the conversation. And the problem is that, like, they release, like, their ad principles, right?

Which is, our ads do not influence your answer. If you're using the easiest possible way to target ads, which is based on the context of the conversation, we're going to show you a roughly relevant ad. Number one, your market's way smaller because you have to hope someone starts a conversation that matches the inventory you have. Number two, you're getting into a, my t-shirt answers questions that my t-shirt is raising sort of situation where if the ad is clearly connected to the answer, you're going to raise suspicion in the user's minds

about what sort of the connection is. So I would prefer if the ads had nothing to do with the answer. The way you get there is you build a meta-style understanding of the user and show them stuff that's relevant to them, like in Instagram. The best Instagram ads don't have anything to do with the stuff I'm surfing. It's from meta's understanding me broadly.

So are you saying that like the AI ads should be more like Facebook ads than Google ads? And, you know, right now, the focus is on doing targeted ads that are related to the prompt, whereas instead it should all be profiling the user and who this person is and what their interests are. Yes, I think that would be better. It would present less conflict of interest, less uncertainty amongst the user. And it's a model that I think I'm not the world's biggest fan of search ads precisely for the reason why they work so well. I think there's a lot of search ads.

Because the confusion between organic kids. No, they're cannibalization. Yeah. Like, why is it that I have to buy my own name in search ads, right? because someone else will let go in there and you're getting a carvesting a click on the ad that would have been there sort of organically, which is fine, it works,

the search is providing a lot of value, but the challenge, obviously, is they only have one space for inventory, which is in chat GPT. Well, sorry, isn't the defense of Google ads that ever complains about the branded search and, yeah, you're paying for cannibalization, but Google pays so much attention to search quality

that the spot Unsered listings themselves have a ranking of them, like a relevance ranking of them. And so it's really just like the yellow pages where, you know, you need to pay to be listed in the other pages. Oh, it's fine. I don't, I'm not, I don't, again, I'm the ad lover here. I just think that meta ads are more broadly valuable because they're showing me stuff I didn't know that I wanted. But if the AI apps are to generate a profile of you, does that profile include the content of all your conversations? And isn't that the same thing?

So this is thing. So Demis is out there saying, well, I can't believe they're adding ads. We're not going to do that. Which is hilarious because the entire Gemini deep mine apparatus, what is it funded by? Sure. Yeah, it's the Google App machine. It's funded by ads. And that actually is probably the ideal model.

So it's actually very funny. I was actually in New York City last year. I was meeting with someone in the office, in the shared office or across the hallway, it was like a hedge fund or someone. And they came over and he's like, oh, a long-time reader, you're responsible for our worst decision ever. And I'm like, what? He's like, putting money in Twitter. I'm like, I've never said to put money in Twitter.

Like, that's always been a terrible company. I would stop covering them because it was such a bad business. And I'm like, oh, no, I remember what it was. It was when they bought Mopub. And my theory, my problem with Twitter advertising has always been that it, especially it was very textual. I think text doesn't work. This is a problem for the, all this is a problem.

applies to the checklines. Text isn't the best interface for ads. Obviously, visuals are generally better. And there's also a posture. If I'm on Twitter, I'm like, I'm ready to do battle. I'm locked in. I'm looking for information. If I'm on Instagram, the whole point of like seeing an ad is I don't really care what I'm

seeing right now. I'm wasting time. You're actually in a much better posture, I think, to absorb, just like TV. Like you're sort of absorbing, can absorb the ad. And Twitter is like bad for that. But Twitter, because it's an interest-based network, at least in theory, it should be able to understand a lot about you above and beyond theoretically having pixels

and SDKs sort of all over the web. And so my theory at the Mopub acquisition, I thought it was a great acquisition. Because like, oh, they can harness signal from Twitter and manifest it in other apps through this sort of Mopub network. Now, Twitter was incompetent, so they did nothing with Mop,

gave it to Apple Levin, who's now written Mopubb to like the top of the world. But that was sort of my thesis. And I think that could apply it to AI as well. I think the ideal outcome for Google is they never put ads in Gemini, but they understand so much about you because of what you do in Gemini that they can then manifest that through ads on YouTube, through ads on Google, through ads on their other properties. And the challenge for opening eyes, they only have one place with inventory,

which is in chat GPT. Okay, so you're saying that Google could use Gemini to just improve the targeting of the ads across the Google properties. And then maybe if you want to have ads in Gemini, you'd never put ads in Gemini. But if you did, you would also have the profile that Google has. For sure. Of you from across the web. And you can do that.

And you don't need to have ads that are like making the user feel weird because why are you showing the ads about what I'm asking about? Okay. But in the scenario you're just describing for Google, wouldn't that have the same, just like the, you know, meadows, listen to your microphone conspiracy theories, where when the targeting is too good, people get concerned. like, wouldn't you get similar issues? I think that's a made-up concern.

No, it is, but, sure, but, like, people have it. And wouldn't you have a similar issue where, if you're using the Gemini data to make better ads, won't ultimately the targeting be too good and people find it weird? I mean, I think that that's a bridge that every tech company would be happy to cross if they came to it. I see. It's a thing that people say when you have very good targeted. I think there's a lot of, like, honestly, I think a lot of the, there's a real stated versus revealed preference about a lot of this stuff. The reality is, is people like, even the U has something, oh, you could pay for

Facebook or you could show, people would rather see the ads. I think most people don't care. In this, a lot of tech, and this sort of ties into the skepticism of ads, it's sort of an elite town, there's elite regulators, everyone's thinking about these very theoretical things. In a bit of the challenge banner blindness where Instagram advertising works so well because it's a picture feed and it's showing you pictures. And then some of the pictures are like commercial. So this is where Facebook... Whereas with an AI app, you're like looking for an answer

and you don't want to look at the banner. No, it's a huge concern. And this is one of the great ironies of meta slash Facebook is the extent to which... I mean, of course, Mark and everyone hates Apple for lots of, I think, very justifiable reasons. But Apple saved Facebook from itself. Like, back in the day, remember Facebook platform

and there's like Facebook payments and all this sort of thing? and Mark has always wanted to build a platform. And if you're just an app on a phone, you can't build a platform. And the problem is that I think being an advertising-based model is generally incompatible with being a platform. The whole point of a platform is you're letting something else shine, something else bring to the surface. You're just the support structure for something to take over.

So an operating system is not about the, ideally, it's the application on top of it that's you're using. When Facebook was forced to not be a platform, but just be an app, suddenly they could be fully lean into being an advertising thing. And think about a Facebook ad. Even back in the day, it was a feed ad or a story ad. Literally, your entire device is all an ad. And somehow, it's not a banner. That's a little thing on the edge. They literally have achieved permission from users to take over your entire device to show you a full-screen ad every five seconds. It's amazing. And they were forced into it by Apple. Okay, this reminds me of, and I want to come back to the AI dynamics, but this reminds me of a view I've had this, I'm curious for your thoughts on, which is often when tech companies

become really big, they become really big just because the core idea works better than even the founders could have realized. And so meta is a really big company because they have a feed and the feed got really big. And they like were very smart along the way where they bought Instagram and they're like incredibly targeted. No, it's the feed. Good amount ofization. But it turns out people spent a lot of time and many people, you know, the P times queue of that with the feed and they monetized it very well. And that's what got really big. And same with Nvidia. It just turns out that the GPU market got really big and they sell a lot of GPUs. And so maybe founders because they're off. than high-powered individuals who want to have lots of new ideas.

They're often thinking about the next thing or like what the second act or the third act is and everyone wants to invent an AWS. But I'm curious what you would say to the idea that just generally it's making the core thing really big and there's more orders of magnitude at the top than you thought. Yes, I think that's always the case. And I think that sometimes people end up making something that they didn't want to make and they continually pushed back. I think meta is the perfect example.

My impression is Mark's not very interested in ads. He's had very good people along the way that have helped him build these ad products. I think META has suffered from that because he has not been front and center fighting for. Actually, ads are good. They are societal good. They are the driver of all the consumer surplus that tech throws off. Like, the president uses the same search engine as the guy on the street or the same AI or sort of whatever. whatever it might be. That's because of ads.

And the... Probably not. The president probably used like a Palantir, a search engine or something. Yeah, it's probably worse. Google has left a lot to prepare. There's so much junk online. But the... I don't know. Is Donald Trump ever searched? I don't know. That's a good question.

But he's not made that case. And I think meta has suffered because of the failure to make that case. And then you get things like, we're going to do the Metaverse. We're going to do X, Y, Z. It's always coming back. Be a platform. Be a platform. and meta is an entertainment company. I wrote this like years ago about the, like, I think this is actually, it was simultaneously a good call and a bad call.

Do you remember that Paul Krugman quote, the internet's not going to be very big or the fax machine because people don't much interesting to say? I actually defend that quote. And because it's actually true, most people actually don't have that much interesting to say. And I brought up that quote around 2015 by saying, this is a fundamental limiter on meta's long-term potential. As long as they think of themselves as a social media company, they're going to run into a problem with their feeds becoming insufficiently interesting over time.

Now, the move from kind of peer content to... Well, so that was, if I might say so myself, a very brilliant insight. The bad insight was my prescription, which was they needed to do more with professional content makers, like more funding of like the bus feeds of the world and share revenue, all that. That was wrong. Because actually the user generated content. The actual answer is what TikTok did,

which is, TikTok's not a social network at all. Yeah. It is a harvesting in YouTube, you know, the same sort of idea. It's like personalized TV, yeah. What actually matters,

and this is a key thing, people get hung up on relative numbers, and what matters is absolute numbers. So it is better to have 0.1% of your content is good if your content is like, in the billions or trillions, as opposed to, oh, 10% of our content is good, but you only have 100 pieces of content. That's actually worse, even if it's a better hit rate. And so spurring lots of creation, writing the algorithms to capture the good stuff, put it up there, that actually

solves the Paul Krum and fax machine problem. And Facebook was blindsided by that. They were so stuck on their identity of being a social network that they let TikTok take this huge chunk. It was their blind spot. Speaking of TikTok, I feel like you don't write about Baitanz that much. And I'm curious to just what your thoughts are on Bightans from here and the TikTok sale and everything. I mean, what a mess. I had to make a decision a long time ago. I wrote about Chinese companies more previously.

And I think there's, it's two, number one, I have to decide what I'm going to be able to cover or what I'm not. I'm not in China. I was in Taiwan. It is a different internet. and there was too much sort of uncertainty and unknowns just in general about a lot of Chinese companies. I would write about them occasionally in the context of U.S. tech companies. So I think I wrote about like WeChat and what it meant for the iPhone's relative competitive position in China, how it's different than sort of other countries. I think that sort of held up pretty well.

Wrote about TikTok in the context. I mean, more about TikTok, I think, in the context, particularly this kind of meta. TikTok came up around the same time as the was Quibi, which, which is a TikTok, which is a TikTok, I think, in the context. Quibi was the example of that. Quibi was like, it was actually right that there was room for a mobile entertainment product. Yeah. It was totally wrong about the content acquisition strategy.

So even if the hit rate was higher, their total volume was way too small. I follow them, but not super closely. It's just a hard market to understand. And the... But like TikTok's very relevant to the US market. So TikTok, oh, TikTok. So I wrote the TikTok war, basically making the case that the problem with TikTok And back then, everyone was talking about user data.

Who cares? Like, the whole user data thing, people have this view of, like, the East German Stasi and, like, folders, like, going through people's data. Like, these are, like, vector databases with, like, numbers that no human can parse. Like, they're, it's really quite anodymy. It's just really the target ads. And I was very skeptical about that being a forcing function in terms of forcing

divester or whatever it might be. The issue I had was the algorithm. And I noticed, I think it was when the Hong Kong protests happened. And Darry, the then GM of the Houston Rockets tweeted like free Hong Kong or something like that. And there's a huge meltdown of the NBA games that canceled. And I noticed that on TikTok, and this was from, I tested it from Taiwan and via VPN from the U.S., if you search for every single NBA team, you got NBA clips. except for rockets, you got nothing. Oh, that's funny.

And I'm like, I got demonetized. There is a thumb on the scale here. I started talking about it then. And my, I did support the ban of TikTok or the forced sort of divesture from China because it seems fairly insane to have a primarily information source

controlled by your chief geopolitical adversary. Yeah, same like those rules over TV station ownership and it's like not widely different. And so I, I, you know, everything's a trade-off. Of course, I'm pretty well known for being a pretty stark defender of free speech and against censorship. And my issue wasn't TikTok per se. It was the reality of China is the founder of TikTok of bite dance is long gone because he got called to the carpet for bite dance showing a little too much of what people liked, which is mostly like hot girls dancing, and being insufficiently like showing the right things that the party wanted.

it's in China's like the reality is China has the price of doing business is they get you know they're on somewhere on the control structure they can tell you what to do and this just seemed like a very foolish thing to tolerate unfortunately the U.S. political process or fortunately maybe the reality is is the U.S. process and system is such a mess can anyone really truly impact it over time? The way that shows up messily is we somehow do pass the law banning TikTok, and it didn't get banned. And now it is sold, but China still controls the algorithm. So I think it's a big disaster. It's also like, what can I say about it? I said my piece. We ended up in the worst possible case, which is we violated property rights, and we did all this stuff that's ridiculous, and we probably bartered X, Y, Z for ABC, and we didn't get the most important thing, which is control the algorithm. Has that not happened as part of the sale?

No, BiktenSel controls the algorithm. I didn't know that. Yeah. Good job by us. That does seem like it was the point of the spin-out. Well, the data was always the most salient political point. And so when I wrote about it, that was my point. It was like, I don't care about the data.

The issue is the algorithm. Yes, yes. And unfortunately that did not care. Maybe I should have read about more. But anything like, all the politics stuff, there was a period, I mean, thank God for AI. There was a period, I wrote like, when I wrote Agression Theory a couple weeks later, something about regulation.

I'm like, this is going to drive a bunch of regulatory issues and antitrust things and all these bits and pieces. When that actually happened, the late end of the last decade, of course, I was writing about it, I was watching congressional hearings, all the sort of thing. And that is the close I came to quitting and burning out. I think burnout's not a function of how much work you're doing. It's doing work you don't enjoy. And at one point I'm like, either I quit or I stop covering congressional hearings.

So I decided stop covering congressional hearings. I only wrote about antitrust stuff is super prominent and I've been much happier ever since and maybe that's part of the price of just not writing about that is maybe I should have pushed on the TikTok thing more. That's interesting.

I said my piece. Is it strategically very widely read in D.C.? It is. Yeah, it is. Sometimes it's gratifying. It's great when you get called and ask for your opinion or you know you get certain responses

or you see impact, it's less gratifying when you get yelled at and people are mad at you. But fortunately, the key thing to succeeding on the internet is something I have in spades, which is a very high level of disagreeableness. So you can yell at me all you want. I'm not going to change my mind. Okay, but getting back to aggregation theory as it pertains to AI, like a simplistic view you could have is that the AI apps are the new aggregators. And so a huge amount of economic value will accrue to them.

And that's it. You can also say that that's too simplistic in a bunch of ways because one of like we're saying the, you know, booking.com you expected to return your hotels that you should book. But you expect a little less of a commercial incentive from the AI apps. And this is like a little more of an abstract technology where it's actually not trivial to insert all of the, you know, commercial incentives in the right way. Anyway, you come up with various objections. And so do you think the ad model is probably the way to start, which is I just talked about before sort of the lean in versus lean back. Ads are very tied into human psychology and like what you're sort of tapping into and people's response to that. And how do you make something creative?

And in the short term, you know, technology often makes old business models even more powerful before it kills them. Right? So you have something like, you know, suddenly you're a newspaper. I used to be limited to my geographic area. Right. Now I can reach the whole world. Yes. Oh, wait, a few years later, everyone can reach the whole world.

Yes. I mean, pure competition, I'm screwed. And that is certainly a concern about this model. If you get to a world of, say, agent of commerce and the agents are just buying the right thing. Like, I think this is also something that has driven a lot of tech skepticism of ads. People in tech tend to be fairly nerdy, fairly obsessed. They're doing a ton of research to find sort of the exact right thing. Yes.

Why would anyone tell me what to buy when I've, you know, researched it for two hours? That's right. Yeah. But, and so, like, ads have no effect on me. Well, what if that sort of obsessive deep dive approach is now trivily available to everyone because AI is the one actually doing it? Now, where do ads sort of function? And I think this is definitely a bit of a, be careful what you wish for,

scenario. Because what this entails is, of course, more transparency, more details, more understanding sounds good. What it actually entails is sort of perfect competition, which is a very sort of brutal game that can just wipe out entire categories. That's basically what happened in newspapers in many respects. So that's number one. Number two, in a world of this sort of world, you're sort of by definition anchoring on whatever specifications or whatever can be measured, can be put down. And you had the old sort of Steve Jobs adage about feeds and speeds versus like the feel of something where the intersection of liberal originate.

What the what does that mean? And it just like, well, what it actually means is there's things that can't be measured and that don't go on an Excel spreadsheet. And everyone you talk to acknowledges this, say, yes, there's things that can't be measured. measured. And the way it actually plays out in practice is only the things that measured sort of matter. I think this has happened to a, this, I think a huge problem with sports analytics is a great example of this, where there, I think basketball is my favorite sport. There's a lot that goes into basketball and winning that is somewhat hard to wrap your hands. It's not like baseball,

is very measurable. Baseball is very measurable. I do think there's aspects about clutchness and stuff that I'm, that I don't know that are properly measured. But around basketball, for sure, the interaction and way teams play together and how your effort on, or your involvement on offense can affect defense or sort of back and forth. And you see again and again, like to take my, you know, I like Darry, I think there's a reason his teams have won.

They've over-optimized at the expense of some of these other issues. And if you can't measure them, they tend to get devalued. And in a world of AI-mediated everything, how many things that can't get measured fall by the wayside because, I mean, we end up with it's very utilitarian sort of goods that have no soul to them. Sort of a silly sort of thing to worry about in some respects. It's like, or it sounds silly. But I'm a human and I anticipate liking and preferring the humanity of things of all sorts in the long run. But you could

say that, like, e-commerce aggregators, like Amazon and lots of others, have led to, you know, fairly anonymous manufacturers of lots of everyday goods, the kind of Amazon basics type stuff. And a much lower price point than they, you know, were at previously, at still a perfectly good quality. Isn't that fine? No, this is where you throw my ad argument in my face. Which is like, actually, it brings up the base level for everyone. Like, your basic consumer, the access of items they have to.

There's no soul in an Amazon basics power adapter, and that's fine. Everyone thinks back to like, oh, my wash machine was so much better in the 1960s. And it's like, yes, that's true and also far fewer people had wash machines. And so I'm now like making the opposite argument sort of against myself. I will leave and you can have a one person today. This switch back and forth. You can change sides of the booth. And you mentioned Agenda Commerce.

We obviously are big into that and had our announcement with Open AI back in October. Where do you think that goes? How do you see Agent and Commerce playing out? I mean, the contrast between your own Open Eye's announcement and sort of Google's announcement, I think is pretty interesting and speaks to what the companies are driving for. Open Eye wants to be the place you do everything. They want to be like the aggregator. I think a critic would say people compare them to the Netscape.

I think the better analogy, if you're an open AI skeptic, would be AOL, where they want to be sort of like the interface for everything that you might do and it goes through their channels. And Google, just as they were relative AOL, is like, actually we want to equip everyone, knowing that if everyone is capable, we are the greatest beneficiaries because we still marshal sort of the front end demand sort of in that regard. Now, how does that actually manifest in terms of commerce? The funny thing about tech is I don't think of manifest in terms of airplane tickets, which is everyone's example. Like, everyone can never think of a better example than that. But what is the AI going to buy? What is it going to get?

I don't know. I think I would like to think people will want to have agency in their buying decisions. But then again, I, you know, we have like assistance, whether it be like, you know, for work or whatever it might be, and they make buying decisions that we're necessarily not involved in, and that I think is a good predictor precursor of what people will ideally, like, do I really need to know? Actually, I have very strong paper tall ideas. That was going to be my, that's going to be my, but once I, once it's set, can that be sort of monitored and done? So I don't know, I think this is a very unsatisfying answer other than to say it has big implications on things like

advertising and on things like, like, is that going to be a viable business model going forward? what margins are going to be available. Is there going to be perfect competition, things on those lines? Okay, let me try this on you for agentic commerce, and I'm curious to have you critique it, which is sort of how I see things playing out. I think some skepticism was triggered

by people pitching a very far end state with a lot of agentic autonomy. And so it's like, please book me a honeymoon in Japan and all the activities. It was like, no one actually does things that way. Whereas actually, you should go from the bottoms up in some very basic building blocks, where step one is just replacing filling out web forms.

That's an activity that sucks. No one likes it. And so imagine you find the winter jacket you like, and you copy the URL into chat, GBT, and just say, please buy this for me. And that's a much better experience than going and clicking around a site you've never been to before. And so there's just the agents doing kind of tool use on your behalf, and everyone can create that. Maybe it clarifies there's multiple colors, which one do you like?

But it's just replacing filling out form fields. This is, by the way, one thing that I am very, a lot of people are skeptical of this, but I am very optimistic about, which is, I call it just in time UI. Exactly. It's a better you like. That's right. Okay. So that's like level one is a better UI for kind of doing it in action you want to know.

Okay. Then level two is better discovery in search. It is crazy that we've gotten this far in e-commerce with keyword-based. search, like keyword-based search works really well when you're buying a book that you know the name of. It's like, I want to go by this particular title. For a winter jacket, it's like, I don't know, I want, it's like a puffer, like what's it called? And so instead you want to be able to say, I'm looking for a jacket, this kind of, I'm going to this place, it's going to be this cold, you know, I like these kinds of things, whatever.

And so step two is just better search and the ability to search with parameters that like no existing search UI lets you specify the temperature of the place you're going to actually get, you know, a jacket of appropriate warmth. That's obviously with a jacket, one of the core things. And so better search UI is kind of level two from our point of view. Right, which I think is already sort of manifesting. Exactly. You're already saying, and like in the early usage of the kind of chat jebty buying experience, I think that's one of those like super cool features. And then level three, which we haven't really seen play out yet, is this idea again of a persistent profile of the user.

That anticipates their needs. Exactly. I want to be able to just pin things I like as I go along. Or maybe, you know, if I can share my browser history, or maybe if I can just like, you know, share a Pinterest board of just like, these some styles I like. Give me a good winter jacket for the cold. Here are some photos of me, you know, based on this.

And so starting to go. Oh, I have an even better idea. Imagine if you were using ChatGPT and it's circa October 1st. And there is an ad for a great winter jacket that is, perfectly suited to me because they've been understanding my interests. They understand the context of where I am. I'm not searching for wearer jackets because I don't plan well. It's going to get cold and then I'm searching for winter jackets. But what if it could anticipate that and show me an ad at the right time when I need to see it? Okay, maybe that's level four is like the...

That's what I've been wanting them to build. This is my whole bit before. Like, this is like, this is why they're so late. They should be shipping that this year. You're only shipping that this year if you started your ad product two or three years ago. This is doable to date. This is what meta ads are. You need to be on more, you need to watch more reels. Like, just the, I've bought more ski equipment this year that I don't need. Just because it just shows up, I'm like, and I'm moving back to Wisconsin. So I'm buying stuff for the house.

And I get, oh, those ski hangers, I bet those would be great. That sounds very useful. They're still in a box. I would actually put them up. Yeah, so there's a limit to kind of, with just, kind of, banner ad type experiences to what you can do. I think the search thing is very powerful. But yeah, I'm curious what. you think of kind of step one, just the very active checking out, and then, or level one,

the very active checking out, level two, better search, and then level three, defining your own embedding space of preferences. No, I completely agree with that approach. I just think you underwrite the extent to which level three has already been built. Actually, one thing that Mark Zuckerberg said on a couple earnings calls ago that I thought was very astute is we get hung up on technological definitions for, like, what is an agent? And he's like, actually the largest and most successful agent in the world today is Facebook advertising, which is exactly right. Facebook advertising, people have it

in their head that you go and you put in like demographics and you're targeting and stuff. No, no, it's a very autopilot. Yeah. What you do is you go in and you say, acquiring a customer for this is worth $10 to me. Yeah. I'll spend up to $10 and they will deliver you a customer for $10. Yes. Their margin will actually increase because they'll make sure they deliver it at exactly $10, they can do it for more. And they actually make more money. You'll get exactly what you asked for. I think the extent to how powerful this already works.

They're just stuck on the 50% of my ads work. I don't know which ones. Yes, yes. No, on Facebook, they all work. Yes. I feel like a bunch of new, very big, successful companies will be created in AI-powered e-commerce. It just feels like a different enough product space.

But what, you're talking about retailers, merchants, or, I was talking about discovery and kind of the demand side. They're also probably retailers. Yeah. I mean, I certainly think, I think that the part that I think would be new, which is a bit, which you're maybe talking about, is this real anticipatory aspect, which is right now, what is amazing about to go back to meta ads is it helps merchants who have a very specialized product find customers that they never would have found otherwise.

But there is the inverse of, I need a very specialized. specialized product. How do I find what it is? Which I think you were referring to before. But to what extent can that not just be an in-the-moment I need this specific? I remember I needed a server, a piece for a rack to mount like this router because I had like an extra, I didn't want to buy a whole new thing or whatever. I had this extra router. And of course there's some guy in Australia that does 3D prints that perfectly matches this on Etsy or something. And it was great. I found this random guy. I'm sure he made a bunch of money selling me a $40 piece that cost him two dollars to make. Good for him.

But what if an AI should be capable of anticipating that need? So it's not, oh, I have a need, let me go find it. It's like, I know you're going to need this and let me acquire it. And that would be very powerful. In his excellent newsletter, Stratectory, Ben often argues that whoever controls the customer relationship shapes the entire ecosystem. And in mobile apps, has always been this interesting tension here with in-app purchases, where historically, app developers had an intermediated relationship.

with their customer through App Store policies. Over the past year, that layer has started to open up. Mobile developers can choose what they use for in-app payments. Developers now have more freedom, but with that freedom comes new challenges. App Store payments were previously handling a whole bunch of different tasks like payments, tax, fraud, disputes all bundled together. Stripe Managed Payments is built for this new world, handling all that operational complexity for you with Stripe at the merchant of record.

And with our new app to web flow, customers can check out in seconds in an experience that feels native. It converts like in app payments, but it runs on strike. The public markets indicate, as of January 2026, that SaaS is canceled. Are they right? I think it's probably a mix. I think the, one of the brilliance of American business, is actually this is one of my theories about why the Europeans are so gung-ho about data privacy and regulation is because they so often interact with European companies.

So like I was in Paris a couple years ago and of course going on a tourist trip, going to go to the loo, going to the museum model or whatever it is like, or not whatever it was, seeing a bunch of museums. They all have their own homegrown registration systems and they're collecting so much data. And they're widely insecure. It's like, yeah, what's your age? What's your pet? What color is?

Like, it's like, why do you need to know all this information? They're all non-standard forms. They need, this is where you need AI to fill all this sort of thing in. And it's like what, like, there's like this theoretical idea in their head. If we capture this data, it could be useful. So they built these homegrown things in like the 2000s that they are horribly insecure. And I use them. I'm like, where's the regulator?

Because someone, this is ridiculous. So I get the mindset. U.S. companies don't do that. Like, U.S. companies are so good. And I think one of the big strengths of U.S. business culture is understanding, and I think about this personally, because it's what I give life advice. What's the number one mistake people make when they're young in particular? They focus on their weaknesses.

Like, I have to ameliorate my weakness. Like, no, what you do is you double down on your strength. You get richly rewarded for that, and then you hire someone to take care of your weaknesses. Right? I'm a big believer in the getting things done system. Like, great book, getting things done. Even if you don't use the system, the book is really good, lots of great insights.

And there's this whole thing, like tickler files and like all these sorts of things. It's an amazing system. I'm completely incapable of managing the system on my own. So there is a Mac app called OmniFocus that is completely built around the system that I don't have a license for. My assistant has a license for.

And I text him stuff, and his job is to maintain my getting things done file because I can't do it. What do I do? Actually, my wife is very, very optimized around I write three pieces a week. I do an interview and I do three podcasts. And all my focus and energy needs to be on that. And if I do that, that will make a lot of money and I can pay to fix all my problems sort of elsewhere.

And I think American business does this very well. They don't waste time and energy on stuff they're not good at. They double down at what they're good at. And they're focused on the upside, not on their cost centers. Probably a result of the very large market in the U.S. I think so. And just the competition, it would be in a very large common market. So you don't have your, well, you go back to like newspapers.

They have lots of homegrown stuff. Like if you're a publication online, if you're like me on the internet, I get paid to comment on the big tech companies. It's probably the most competitive market on earth, right? Like lots of people who have takes on the big tech companies. And so you have to be super focused. Given that, that speaks to the enduring value of just paying someone to manage these, these business functions from a software perspective.

Now, there's a lot of SaaS applications. Not sure they're all sort of strictly necessary and worth the price. I like to think people tell tech having a big five. I would say there's a big six. The six was Silicon Valley Inc. Which is basically this cookie cutter, VC goes to this founder addressing this specific business case with the SaaS business model. Everyone likes to, they get to talk about changing the world.

It's actually the most predictable thing yet. That's why VC returns compressed, but because they're also very predictable in terms of like this sort of mention going. A big problem there is they're all seat-based. Like anyone's seat-based that is some of a sigil. That's just, there's going to be probably fewer seats. And then if the replacement is more small-scale, ideally, there's lots of, you know, the Internet in general has writing or content is a good example. There used to be sort of you want to be in the big pond and everyone in the big. Pondon sort of ate. If you had a job at Condi Nast that won their magazines, like you lived

life well. Even if you wrote like four magazines, today if you want to be a writer, I give advice to people that want to be content producers all the time. I'm like, look, you don't want to be, you don't want to be in a pond with me, right? Bill Simmons is like the first internet sports writer. And you don't want to be doing a Bill Simmons impression on the internet because he got their first. And what you want to do is you want to make your own pond. The internet enables the creation of a million different ponds. So you get to define your own pond, be the only biggest fish in that pond, that's how you succeed. To the extent AI makes that, I think this is the upside case is AI makes that possible for more than just content, for all sorts of businesses to be

lots of smaller scale individual entrepreneurs or small teams, all of whom don't really fit in the Salesforce-driven, seat-based model for a lot of these companies. So there might be a big return to self-serve, you know, the, or maybe they'll just roll their own because their needs aren't that large. Yes. So that's more a larger structural change. But the problem is it's fine to say businesses will be okay as they are. If you're eliminating the growth, that's the big problem. I think that that's the biggest issue for all the compression.

Via headcount growth? Just growth in general. Yeah. Like what's, if these are just stable businesses with, astronomical stock-based compensation that is predicated on we're going to be very large. Yes. I can see two critiques you might have of kind of the software space and why everything's straighted down. One is where, you know, everyone's just going to use clog code to rebuild their own version in-house, and so as software mode is less. And the second is actually just that

many of these products price on a per seat basis. And so if you're growing head count less, on the first, exactly, yeah. On the first, like, Anthropic just installed Workday. Yeah, I know. Famously. Exactly. So I don't think, I don't think, you know, we're cloud coding. Systems of record are, are, are, that's the category.

Yeah, people do not seem to be, you know, we see this with Friday as well. Like, I don't think it ends Claude coding one of those systems of records. Do you use Workday? Do you use Workday? I don't know what to make of the second criticism, but again, it just feels like for a very broad and deep system of record, it's kind of hard to make the argument that the business is somehow impaired versus a year or two. Right, but I think that that's my point though,

is people saying they're going to zero or wrong. But if the assumption is you're fine, but you're not going to be growing indefinitely, like that shift from thought of as being a growth company to being a stable. I see. That's a haircut. And again, it's combined with these whole compensation structures.

Yeah, yeah. You're now valued on EPS rather than revenue or something. So yeah. Can we talk about your business and strategy? Sure. So you were very early to the, I mean, the sovereign writer concept. I think you're one of the first premium newsletters? I think so.

Yeah. Well, so there's two predecessors to talk about. One is just on Wall Street in general. There's a long history of faxed out newsletters and things like grants or whatever might be. The difference there is those were. very expensive and a very small addressable market. So the difference for shetri is it's much cheaper, and the market's much larger. The other person that deserves a call-out, which I think was the first person to do it before me,

otherwise I think I was the first, was Andrew Sullivan, who did... I haven't really not saying the paid in his other. He did for like a year. The problem is he did it all wrong. You're doing it wrong. He was like... he would churn out like 50 posts a day, right? Just about a gazillion different things.

He totally burned out and like all the sort of stuff. But that happened to be a great fit for the advertising model back of the day because you would always go back there and just always be new stuff. And I'm sure he drove a gazillion impressions for the Atlantic, especially when he was with them. He went independent. He was pretty successful. I think he did like around a million dollars or something like that.

But it was this very leaky paywall. It was like after like 35 posts, then you'll hit like a paywall. And there's a bit where you're like you're punishing people. Your worst users is very easy to get around. But he was actually very inspirational in how I thought about the model in that he was hailed as a failure because he like burnt out and quit. But like he made a million dollars. It's pretty good. I wanted from the beginning, just thinking about the psychology of this, when I started strategically out of gazillion ideas of things to write about.

And I limited myself to writing a max of two times a week. and the reason is I had this subscription model in mind and when I added the model I didn't want it to be I'm taking stuff away and now you have to pay I'm like you like this so much if you pay you can get more

and so I always want it to be you're paying to get more sort of aspect and I think that probably mattered more at the beginning especially because the model was new you know I had my metric I looked at was people who visited trajectory on days I didn't post because they were people that were going there hoping I had posted that day,

and they were leaving disappointed. Yeah, yeah, yeah. And so in this case, usually previously a paywall would disappoint people that they hit it. In this case, the paywall would leave their disappointment. Yes. Because they could now get what they wanted. And so I'm like, if I can capture X percentage of these visitors, it'll be very good. One day goal, one week goal, one month goal, failed to reach all of them.

What happened was, I actually thought it was not going to work. because I have to go back to teaching English or something like that. But it sort of grew and grew and grew. And at six months, I actually hit my one-year goal, which was a thousand subscribers, a thousand true fans. You know, it was a $100,000 run rate. And I posted a little... Sorry, thank you.

How long to get to a thousand? Six months. Okay. And I posted a little note saying, hey, you know, model works. You know, my goal is 1,000 for a year. I've already reached it. And this is the only step change in subscribers we've ever had. In the next 24 hours,

I got 250 new subscribers, 25% increase. What they were was I had identified those people who wanted to be subscribers. They just didn't trust that it was going to work and I was going to go out of business and take their money. And so once they realized I wasn't going anywhere, then they all signed up. And if those people signed out,

so I actually had my metrics were right, but I didn't properly calculate the uncertainty in people's fear of losing their money. So I'm very grateful that now people to sign up for stuff all the time, right? You know, I, of course I'll probably, you know, go to my gray being most well known for trajectory, but I am equally proud of the model and let lots of people make a living doing this.

How far do you think this model can go? Like, again, the defining characteristic to me seems like the unbundling, like, you know, maybe 30 years ago you would have been writing for a publication, whereas now it's unbundling, it's the direct relationship with your subscribers, it's direct, monetization and generally paid. I mean, there might be some ad-supported component as well paid. Obviously, kind of substack has proven that this is a very broad applicability. But how far do you think this goes versus traditional media bundling?

I think there's a couple interesting angles to this. Number one, I think people, including people in tech, severely underrate how large the Internet it is. And like, some of the biggest pushback I got when I announced, like, the trajectory paid product was from VCs. I won't say who. Yeah, yeah. It's like, love you, Ben.

Just doesn't, not going to work on the internet. So, and by bit about ponds before, I don't know that we've scratched the limit of how many ponds can be sort of built in the world and you can sort of occupy. And the other part of this, the critical piece of this, and AI is actually an important factor here, is the key to the model is your costs. So you need, just as technology enables you to reach everyone, you need to leverage technology to keep your cost. costs very, very low. And so for the first several years, for sure, it was just me. So as long as I could feed my family, I was, I was fine. And this is, this is the problem for the traditional, like, media companies. Their cost structures were not internet cost structures. They were, they were predicated on, on much higher revenue. And there, you know, and this is, it's interesting to think

about and talk about this, because a lot of this is, like, not really applicable. It's like before. I read about ads a lot, and I'm not an ad business. In this case, I read, about VC, high-scalable companies, but my actual business is very sort of boutique and small. And artisan in that, yeah, that's right, in that regard. And this is a super important point, is managing your costs. If you manage your costs appropriately, then the possibilities. But that also means there are some things that don't work with this model.

Like your traditional classic investigative journalism, six-month sort of piece. It's not well supported by this. what did support that was the bundle, having lots of different writers in one publication altogether. And the thing I worry about, I wonder about, is bundles are good for everyone involved, and no one wants to be a part of it. So TV is the classic example. Why did we have a TV bundle?

Because you had like, so I think it started in Pennsylvania. So you have like a television station in Philadelphia. and you have the Allegheny Mountains, and you have a bunch of towns there that want to get the signal from Philadelphia, but they can't get a good signal. So they band together, they put up a big tower to get the signal,

they run actual cable from that tower to all their houses. And all of cable television started in small town, rural America, to get TV from the big cities. And Ted Turner comes along, I could just broadcast directly to these towers. This would be amazing. And you get the model, but you had a geographic forcing function.

and you ended up with all these companies with the best business model in the world everyone paid them whether they watched you or not and they made a ton of money and what happened the moment they could do something different I could also go directly I could stream directly and there's just something about business

because it's almost like you have to be forced into the game the optimal game from like a game theory perspective and the moment you can desert everyone always deserts even if it's the best thing and so I wonder So I do wonder, can bundles...

So how does this apply, yeah, to your world? Because in theory, there should be bundles. Subststack should be a bundle. Like, you should be able to be one fee and get everything. But they, you know, they started... I think a mistake substack made... And I'm a huge substack fan, just to be clear. I've made this creep before and make it bad about it.

But is they characterize himself as being totally writer-friendly. And I think that was a mistake because it's impossible for them to be ultimately writer-friendly because the most writer-friendly setup is running an open-source software, on your own server. Like, no one could do anything to you. And by definition... I thought you were going to say, like, the most writer-friendly thing is to have, like,

a humming consumer business. It would be. But the problem is, so they, all their initial terms let... made the bundles impossible. And all the individual publishers owning their own subscribers,

having their own stripe account and all these sorts of bits and pieces. But hang on, isn't there like a... I feel like there's a well-trodden path in tech here where open tables started as, like, entirely it started as on-prem, purely software for restaurants, and then they added the...

customer discovery layer on top foot, Shopify started as a solution just for merchants, and then they added the shop pay kind of network-fike layer for consumers on top of this. Yeah, but what actually, even with those business, though, like, the shop pay bid is nice. It's not the driver of the business. It's a pretty cool part of the business these days. I like it, but at the end of the day, the vast majority of shop interactions are, I see it out on Instagram, and I go there and I get the shop button, which is incredible. Sure, but it makes, yeah, but then it makes the Shopify,

by offering to merchants so much more compelling because you get the shop pay in Ashmark. And I'm sorry I'm going to... I'm skeptical that's the driver of the business. I think it's a nice to have. I think the... But can't Substack just add a Substack Prime bundle on top of it? And merchants can...

Or writers can choose to opt in. Yeah, the problem is the merchants who will make that bundle valuable have no incentive to join the bundle because they could make more just monetizing users directly. So imagine I'm on Substack. How much more revenue to Subsdack? stack have to give me for me to trade $15 a month from my subscribers for a smaller amount from whoever is part of this.

And so the problem is they have to really pay me off to be a part of it. Meanwhile, everyone who doesn't have any subscribers, of course, they love to be in the bundle. So this is why the geographic force. This feels solvable to me. I think it's solvable at the beginning. No. Sorry, I feel solvable now. Yeah, I think a counter example is something like Spotify.

Spotify is arguably the best bundle on the internet. But the reason why they were able to assemble the bundle is because they only need to negotiate with like four entities. And so it's interesting because on one hand, that limits Spotify's upside. Because those entities are able to negotiate such a large share of Spotify's revenue. On the other hand, that's also why Spotify was possible because they only needed to negotiate with four. Yeah, yeah.

And if you're trying to get every artist on earth, well, of course, I got to get Taylor Swift. Okay, good luck with that. Oh, all the small fry will sign up. But the music's unique in particular because music, the moment a song comes out, it's not part of the back catalog. And actually, people only ever listen to back catalogs.

Yeah, yeah. So it's a pretty unique industry in that regard. But that is a bundle that formed, but I think it's because there's only four players. Okay. How do you use AI in writing, strategy these days? I think it probably replaces

what I used to do a lot of it's much more efficient ghouling. Like so I really the most gratifying articles I write is when I write about a topic that I usually don't and then someone from that industry is like wow I did

that was good because you're always You have this imposter syndrome. I mean fortunately I don't really have an imposter syndrome but like if you what's why it all works. No, what's the mechanism where you're reading something about your air expertise? Yeah, that's right. It's like, this is totally wrong. And then you trust everything else.

I am, yeah, I don't want to trigger Gomez amnesia amongst anyone. Yeah. So I will, if people ask me, like, I hate the book question. Like, what books do you read? I read a lot of books, but they're very targeted. Like, I will, I'm a very, very fast reader. So sometimes I'll write an article. I know there's a pertinent book, and I will just read the whole book in the morning.

And like, I know. because there's really context in there. But in general, I really want to make sure I fully understand a space, particularly that's new that I'm writing about. This is partly, though, why I have a big competitive advantage. I've been thinking about tech since I was in junior high school, and I've been writing about tech for 13 years. So I've already done so much preparatory work

that anyone's starting from scratch. It's like, it's hard. So I want to dive into it. I'm one of the world's greatest Googlers. I'd like to think. I know every sort of parameter. how to find it. So I think I can say pretty authoritarianly.

Google has gotten worse. And I don't think it's Google's fault. I just think it's harder. What is it's Google's fault is they got so biased towards recency. And so you have to be super like diligent. But AI is incredible for this. Like just sort of getting background, making sure you understand an issue, the ins and outs of it, how things work.

You can query stuff, dive deeper. So that is by far my number one use case. I do not always, but I will sometimes ask it to, and this is where I like chat chit, like I type in BB at it as an integration. This is also why I'm very annoyed by and am very sensitive to the colling nature. Oh, this is really great.

No, that's not what I'm asking for. I can watch you know that and go in and find stuff. So I do not use it to actually generate any exact content. But. Okay, so targeted research and then critique. Yes. Yeah. Those would be the two biggest use cases.

You've written a lot about the TSM break, this idea that the limiting factor on all AI expansion is basically the rate of TSM capacity expansion because almost all AI chips are fab at TSMC. It seems like as you look at the AI space and everything interesting going on, So, you know, for mostly chip-constrained right now, which would not have to be the case, you could be power-constrained and stuff. But if you're chip-constrained, there's a population of people who want to expand very quickly. The AI Labs, Invidia, people like that. And then, yeah, famously, which, you know, TSM, which is more conservative in how it expands. Why is that?

Like, why does the market signal not cause them to build out capacity faster? Because the risks for fabs are basically larger than for anyone else. You're spending billions and billions of dollars on a fab that if it's not fully utilized, if you end up with too much capacity, number one, all those, all your costs are locked in. Like basically 99.9% of the cost for a fab is depreciation, which you're paying the depreciation, no bet. Like, you aren't sure you're paid in cash full, obviously, but it's on your economy statement no matter what. So the fabs can be extremely profitable. TSM's margins are higher than ever, but they can very quickly tip over into having a huge problem.

And then once it's already built, these fabs can run for a long time. So that excess capacity is a depresses prices for years to go. I mean, we see this in memory all the time. Memory famously goes through these cycles. Like what's going to happen, we're going to believe it or not, we are going to have too much memory capacity. in a few years because we have such a shortage right now.

Like Micron just announced, like they're a huge new fab in Singapore. Right? And everyone's going to do that. And so, but why does it happen in memory? There's three competitors in memory. If Micron doesn't do it, S.K. Heinex will. If S.K. Hynix does do it, Samsung will. And so you have a dynamic where a healthy dynamic, which is the fabs know better, but they can't help themselves.

And so they take on the risk and they build these fabs. The problem we have with logic is that TSM doesn't have that pressure. And so they're actually behaving rationally. TSM is giving up potential long-term revenue. But the downside for a fab in particular is so large that they don't want to realize that downside. Can they not pass the risk onto the customer where it's like, you are going to pay for the entire fab? That's probably what they need to get to. And so Apple famously did a lot of this, sort of prepaid and particularly when TSMT was sort of expanding hugely in the 2010s.

And they maybe need to get even more explicit about that. But I think the better solution and the cheaper solution for the hypers in the long run would be to do what is necessary for TSNC to get a better. Then you get it for free. You don't need to prepay it. So there's this risk that's out there, this risk of overbuilding. Right now, TSM is shifting all that risk to the hypers, to Nvidia, to Apple, and the way it meant, and the reason why they get away with it is because the risk is foregone revenue. Yeah. It's money you don't make.

And worse than that, it's money you don't make four or five years down the road. And everyone, like, what does every company say on their earnings salary now? We could have made more, but we don't have enough supply. And if you think it's bad, why is it bad right now? Chat GPT comes out. Every hyper-scaler starts investing like crazy. What does TSM do? They actually decreased their KAPX year over a year, two years in a row.

There was no market response from TSM to the chat GPT moment. Now they increased the 41 last year. They're going up to like 60 this year. But even that increase to 60 is a less percentage increase than last year. I think we're looking at a massive shortness in chips in 2020. or so. And particularly as the other thing, the compute density of AI is so much larger, right? If you have an agent out doing stuff, it's doing so many more computations in a limited amount

of time than me and my Googling is even humanly possible to do. And all these lookups. So we have a CPU shortage, too. And Intel shut down some of their CPU plans, right? Yes. So it's the whole semiconductor, the, I just, think it's a it's a big problem and we're shifting to for a long time like how can we get an alternative to tsmc for geopolitical reasons and the truth is it's kind of like the bundling thing

it's really hard to get companies by insurance particularly when the insurance is uh number one you have uh like everyone else on someone else to do it right who's going to be the one to go and make the sacrifice but also it might not happen china might not attack time one and also as long as it doesn't happen It's super suboptimal to go somewhere else because TSMC is better. Right. And their customers, it's not just their fab is better. Their customer service is better. And they have all the IP blocks you need.

And they've done this before. And you've existing relationship. And they'll punish you because they have limited. They have control because they, like, they're not going to fulfill all their orders right now because there's so much demand. And so they can pick and choose sort of who. And so people are scared. They don't want to go anywhere else. And the, so how are we going to solve this problem?

And I think I actually wrote on the front page of checkery about this this week which is basically the same thing I wrote an update but this was a like this

someone needs to wait yeah someone needs to the hyperscalers in particular need to appreciate I think a massive crunch is coming and it's now on them

to get Intel up to speed to get Samsung up to speed to get a credible alternative yes in theory you could pay TSSI geopolitical reasons or for short of no we'll get the geopolitical reason for free

okay I think I think there's massive economic reasons to do so, which is all the revenue you're going to be foregoing in 2029 if you don't do it now, and then we'll happily get geopolitical insurance for free. But if TSM are the best, rather than like stand-up intel, which seems hard, isn't the answer to just, again, prepay for an extra fad build-out for... But this is like, how do we feel in tech about ongoing operational costs as opposed to putting in some money up front and fixing the problem permanently? The market structure is a problem. You're dealing with a monopolist. And not a mean monopolist per se. They're not very nice, right?

And they actually have not already not raised prices nearly as much as they should have. Right. But there's this market structure problem that is going to impact the hyperscalers, and it behooves them, I think, to fix the structure. Otherwise, the costs of ensuring or overcoming that are just going to be larger and larger. This seems like the topic you have felt, strongest about it in the past year or two. I felt pretty strong with Applevision Pro.

Okay, fair. What was your take with Applevision Pro? They finally show an NBA game, and they kept changing cameras. They're applying 2D television production techniques to an immersive technology. Just let me say courtside. The TSM break seems like a bigger deal. Oh, probably. I have some rapid-fire questions, or I'm not going to say rapid-fire necessarily, but a collection of disconnected questions for you.

I'll connect them. That's what I do. Great. How should schools do homework now that AI exists? I think they should incorporate it, and they should probably do in-person exams. Like, or in-person, like the... Yeah, I mean, you...

It's silly to try to crush it out. I'm very opposed to these AI detectors saying don't work. I mean, probably I'm particularly sensitive to it because obviously a lot of my pros is in these models. Yes, yes. No one, like, my thing was, I wasn't an M-Dash user,

but I'm a world's biggest semi-colon user. Yeah. I was a big M-Dash user all the long. Oh, fortunately, the models don't seem to have really incorporated the semicose. Maybe I haven't been that influential. But yeah, no, you want kids to use it.

Yeah, yeah. Because whoever can use AI most effectively in their jobs going forward is going to have a big advantage. So there's probably some return to, you know, more in-class being more important. I think the, this is my view on content generally. This is, I just, I think there's a world in which not all content, but some content is more valuable than ever. Because AI is a perfectly individualized experience.

What you read is not necessarily what I read. So stuff that we both read is actually compelling. And I'm very interested in figure out how to leverage that to be sort of beneficial to people in the long run. And what can you get from school that you can't? it elsewhere, right? Like, I can read the notes. I can read XYZ, but there's being in class having a discussion about it, like actually interacting, being pushed on these sorts of things. All this is a sort of a beautiful theoretical depiction of what school might be that is probably very far removed from the reality. But identifying things that are common experiences are

going to be more and more valuable. Common content, common classroom time, live events. Like shared experiences because anything that's individualized is just going to be completely swallowed. Yes. Do sports teams become more valuable in an AI abundance future? Of course. Everything why it becomes more valuable. Yeah. That's something I'm thinking a lot about as far as my business, right?

Like there's some aspects of tens of thousands of people read the same thing every day. Yes. That is actually really powerful. There's something interesting there. The possibility of doing live events where people can come together. I think a lot about community. I think no one's never really solved community around content, like a message board or comments or not getting.

You actually get very bad dynamics. There's a few people that dominate it. Totally, yeah. But what is great is if we're in a group chat and you share an interesting article and you have a discussion about that. Yes. So there's a lot of stuff around that I think is really interesting

that I'm thinking a lot about. What do you think of what's going on in crypto these days? What's crypto? No. I've always been a crypto defender. Like just because digital scarcity is fundamentally interesting. It's probably even more interesting to this point in a world of infinite content, which you thought we had infinite content before, now we have infinite content

on steroids. Not just a 6 billion humans typing away, but agents generating stuff sort of constantly. And in that world, I think crypto as an identifier of authenticity is going to be more and more important. Like at the end of the day, I want the original, I don't want a reproduction. And I'm optimistic about humans' ability to create value where it seemed impossible would ever exist. I'm literally a professional, like, podcaster, content creator and get paid a lot of money to do it. Imagine explaining that to someone on the farm worried about the automation. Speaking of that, you mentioned this, a majority of

strategy consumption is now in the audio forum rather than the written form. As far as I can tell, I don't do, but the more than, well,

more than how my subscribers are subscribed to the podcast. I consume it in the audio forum. Yeah. It's quite interesting. I added the pod, this is actually where I started building my own software.

I was begging everyone to support paid podcasts. There was dedicated paid podcasts, and there was like writing ones and no one would do it. So, of course, I did just hire engineers and build up

myself, at which point it obviously was the right thing to do, not everyone does it. Whatever, that's my fate in life, I guess. But the, yeah, people love it. Like, the interesting thing is, I'm not sure it's been good for my business. Why? Because people don't share. The good news is, is, I think it drives retention. Because people would build up emails because it feels like a lot of work.

And they say, I haven't read this in ages. I guess I unsubscribe. Whereas they just consumed seven minutes or eight minutes. The problem is they don't share. Audio content is not shared. Totally. I listened to it in the car on the way home from work, and that's great. And then I... Never think about it ever again. Yeah, exactly. But it's great for me because I could say the same thing the next day.

You're like, oh, that was a very insightful comment. Do you even know I said it yesterday? Yeah. If we reason about what sectors are going to be important down the road, you know, for the AI build out, energy is going to be a big deal and the ability to actually power the data system is the number. are coming online. That may be a bigger constraint going forward than even chips. Robotics are clearly going to be a big thing. It seems like China is doing better on energy and better on robotics and is catching up on chips, doing okay on the AI models. But does that mean China's potentially very well positioned for the coming wave of tech trends? I mean, I think any country that is capable of actually building things is well positioned.

But then again, the counter argument, if I could sort of put a silver lining on it, is the challenge, the trick going forward and to sort of defy the doomers, as it were, is actually creating new sorts of value, new sources of value in a way that humans are uniquely capable of. And that is, by definition, a sort of an innovation story. It's a freeing up resources from things that can be done by machines to more. productive, it's having a consumer market that pulls out that sort of innovation that makes it possible to write a newsletter or a podcast and actually pay for it. And so there is a scenario where China is well positioned to win the total commodification of everything, which doesn't have much margin. And the actual value creation and what makes humans humans. And generates the value that I think people in AI are skeptical can be created,

despite the fact 90% of us use working agriculture and like 1% do. For some reason, that's not going to repeat. If you want to be optimistic, that's the sort of thing that America has always done well. What's your Stripe feedback for us? Oh, where to start. I mean, I am obviously, it's hard for to write about Stripe because I'm not biased because I was very early. I think you introduced the billing API in 2011, which was a direct spur for wanting to do Shrek

and thinking this was a business model as possible. So very, very big thumbs up on that. The, you didn't warn me about this. I should have about this. Actually, you do have one huge issue that I was just dealing with. Oh, yeah, ACH. Your ACH implementation is someone can go in and if I try to add on to an ACH plan,

so let's say I have a team, because that's where you use ACH for large companies and they want to add someone on. If that add-on fails, the entire plan gets canceled. So we have to build a bunch of logic to handle that independently. So that's a very detailed, specific problem that we're facing. Buggy, ACH subscription interactions.

Okay, that's a good one. There's definitely more. I'd have to go back and think about it. But, I mean, I do think the, you know, we didn't talk about stable coins in this sort of area. I've always been a big skeptic of, like, microtransactions because the problem goes to the investigative reporting thing. You can't build something sustainable if you're only monetizing the back end.

And the only way to do that is to have a very large market. This is what YouTube is a bunch of speculative video makers hoping that they'll get enough views that the ads will pay for it. And there's such a large scale and they monetize their ads so effectively that it works. There's no market like this for written content or like podcast content. and you can't, people are like, oh, let me pay for one article. I'm like, no, what you're paying for when you pay for me is you're paying for my ongoing production.

I'm making a promise to you. I'm going to write something every day, and you're paying for that promise. You're not paying for the actual content. The content is a byproduct of that. The question for AI and microtransaction is you have all these labs paying people all over the world to generate data. And like, you know, if you're like a radiologist, you can pay $350,000. an hour, I saw some article about it and all these sliding scales. And they're all duplicating work.

Because they're all, you know, everyone fills us inside. I can get differentiation. What we clearly need is some sort of market mechanism for data generation that in the long run will replace what we're getting from journalistic enterprises, which are even more doomed than ever before. So how do you generate, like we're paying directly for content and then AIs can get it and you can build a large market like YouTube, that people will specatively do it,

trusting that they'll get paid because the market is large enough. That's what needs to happen. Like a lot of things, there's this massive value of how we get from here to there. But we'll see. I know Cloudflare is trying to push on that, so we'll see what happens.

Yeah. Last question. How would you rate the execution of the major tech companies? Like the Big Five? Yeah, sure. Apple, traditionally, very strong, their manufacturing obviously remains amazing. Like the iPhone

air, that just the alarm went off and made sure I turned this news off. The greatest smartphone ever made. Really? Oh, yeah. I've never even seen one. Oh. It's... It's thin. Is the battery life good? Good enough. It's bad. What's that? It sounds like it's bad then. No, it's fine. I mean, I actually forgot my extra battery and it's saying, okay,

now. And back in a New Wisconsin, I have to wear jeans because it's cold and it slides right in. It's fantastic. Actually, I love it. Okay. I'm very devastated to her. they might not make it regularly. Obviously, Apple's software has gotten pretty rough. Their relationship with the... I mean, Apple is so interesting because the reality is when it comes to platforms,

you have to build... The price of becoming a platform is making a great product. So Apple gets platforms so they make great products, and they're terrible stewards of the platforms. Microsoft is a great platform steward, but they can't make good products, so they never get the permission to sort of have big platforms, which is sort of a tragedy there.

Um, but Apple, it's some, you know, it's an old company driven my managers, not founders. And maybe they, you know, the AI Siri got as bad as it was is obviously really bad. But at the end of the day, we still need devices. They're still better than anybody else. So they'll probably be okay. Google, I've had the hardest time understanding Google, in part because I think Google does a lot of stuff suboptimely. Almost everything, I feel like they do some optimally. But I think that lack of,

Apple can be super optimized. But I think it's their lack of optimization that actually makes them maybe the most resilient of all the tech companies. Because they never get so exactly doing what they should do and they have all this extra fluff and doing things and gazillion science projects. But because their core business model is so good

and throws off so much cash, they can just sort of like be sort of very flexible and I've come to appreciate that about them everything that frustrates me in analyzing them actually has this hidden benefit of resiliency and strength and adaptability

and you know they're like the the amorph what's the what's the slime that just well like and if they're coming in your direction like you're actually in big it might take them a really long time to get there. But when they get there, you're doomed. So Microsoft, Microsoft is always,

I've got a lot of mileage of right about Microsoft. Everyone is, especially into the SaaS era, all these companies are like, oh, the Microsoft sucks. We're going to make the best of breed products. And guess what? Startups in Silicon Valley, they want to buy all the best of breed products

and they have the technology to send them together. Joe, in managing the tire shop, doesn't care about, he just wants this crap to work and to work together. And if it's all mediocre, but it kind of works together, that's better than best of breed.

And might as just squashing these companies to grow and just hit that Microsoft log in it again. Is that going to persist in an AI world? It's probably tied to the SaaS question sort of before in some respects. Their distribution and power there remained sort of substantial. Meta's probably, in my experience, been the best execution. I mean, you usually see stuff like interacting with PR or executives. like they just run such a tight show.

Yeah. That's always been very impressive to me. I think the, again, I think their ad model is underrated. The trick with them is keeping engagement. Like that's what makes the whole thing go. They've done a decent job of that. Hours spent in chat, GPT, hours not spent on Instagram or not spent. And I think that that's an underrated area.

And I think they're kind of betting that, what, that's all fine in well today, but in the long run, this is an infrastructure game. We have cash flow to fund it and Open AI doesn't. I think Open AI might be a bigger threat to Facebook than Google, something worth considering. But Facebook is obviously clearly spending to meet it. So now Amazon. Amazon, there's a lot of, there's a lot of fab capacity and power being spent on Trayium that one wonders could be better spent on other chips, but we'll see what happens.

Aren't people happy with the Trinium chips? The degree to which Amazon optimized cloud computing, I think, is underappreciated. When you're operating a commodity market, so there's two ways to succeed, right? You can have a differentiated product where you can charge a high margin, or you can have a lower cost structure in a commodity market, where the price floor is the market price, but your cost structure is lower than your competitors, so that's where you make your margin. that was how Microsoft, that was how Amazon dominated the cloud.

Their, their cloud was way more optimized than anyone else is. The whole nitro architecture, like just the way they architect everything, doing a lot of their own chips, shifting to Graviton. I think the thing with Graviton, their sort of their arm CPU is they could, who's the number one customer for Graviton, Amazon itself. And so they can move all their loads to that, optimize it, build all the software libraries, and then start offering it on a consistent basis to others. that's the playbook

that they try to run the Traneum where the number one customer of tranium and the long run is Amazon but then they

develop all the capabilities around it for other people for it to be attracted to other people at lower prices and they have that structurally smaller

cost structure the problem is that works when you sort of leveled off in performance right? Amazon executed this model between 2005 and

2025 of course processes got faster in that time but not It wasn't like the 80s or 90s when every leap was massive. Does that work in a relatively new market when there's massive leaps being made generation on generation? And they have Nvidia servers.

Do they have as many as they could? Because they're on this strategy. Probably not. Ben, thank you. Thank you.