Limitless Podcast - Why Apple's Siri Is Still So Bad In The Age Of AI… Or Is It?

Episode Date: June 12, 2025

WWDC 25 left Twitter roasting “Liquid Glass,” yet we dig past the glossy UI to uncover Apple’s real AI play: MLX-powered, on-device inference that could turn 2 billion iPhones into a zero-cost compute network. We debate whether that makes Apple a sleeping giant or just late. Then we unpack Apple’s own research paper calling frontier “reasoning” models overrated, just as OpenAI drops O3 Pro: a PhD-level assistant that writes business plans, slashes API costs 80 %, and arrives with an uncannily human voice mode that’s already replacing therapists and drinking buddies. From the rise of AI companions (hello, digital spouses?) to $100 M signing bonuses luring elite researchers from Big Tech to Anthropic & OpenAI, we map the new talent war and what it means for the rest of us. Strap in for rants, hot takes, and the AI stories that actually matter beyond the hype of liquid…ass.------💫 LIMITLESS | SUBSCRIBE & FOLLOWhttps://limitless.bankless.com/https://x.com/LimitlessFT------TIMESTAMPS00:00:00 WWDC Flop Or Not00:07:19 The Bull Case For Apple Intelligence00:12:23 Free Inference?!00:15:44 The Bear Case00:24:30 Apple's Hater Report00:34:18 Open AI o3 Pro Release00:44:03 o3 Costs Down 80%? Cheating?00:51:17 New Voice Mode Is... Incredible01:00:26 Clone Loved Ones?01:06:58 9 Figure Salaries?------RESOURCESDavid: https://x.com/trustlessstateJosh: https://x.com/Josh_KaleEjaaz:https://x.com/cryptopunk7213------Not financial or tax advice. See our investment disclosures here:https://www.bankless.com/disclosures⁠

Apple is the $3 trillion gorilla in the room when it comes to AI. And I think the big reason is because they have the devices. They have the physical hardware devices, which is the direct consumer relationship that AI will have with consumers. And so we are all as a society just waiting for Apple to do something when it comes to AI. And they just had their WWDC, their developers conference, which the last time that they had WWDC, they introduced. Apple Intelligence, which I got very stoked for, and I think the rest of the world got very stoked for,

they introduced it without actually releasing it, and we were all just waiting with bated breath for Apple Intelligence to roll out, which it slowly did to everyone's massive disappointment, because Apple Intelligence was just not what we wanted it to be. Siri was still dumb, and all the features were just kind of bad and annoying. So that was last year. Fast forward 12 months, we just had Apple's next day. WWDC, where Josh, surely they followed through on some of their AI features. Tell me about all the magnificent AI features coming down the pipeline that Apple introduced. So last year, after being disappointed, I disabled Siri.

And after this year, Siri still remains disabled. They didn't actually release anything. Not one thing? There was a few. There were small things like stuff that you've seen on mostly pixel phones and Google phones where they're smart image recognition, there is automatic spam detection and live translations and conversation. So there are some interesting features, but all of the full stack integration that they promised at WWDC last year was still nowhere to be found this year. But that's not to

say that it wasn't a good WWDC in the sense of AI progress, because I do think they made a lot of progress, just not necessarily on the consumer facing front. I think a lot of it happened on the back end. And I'd love to pass to you to hear your thoughts, whether you thought this was a good WWDC or it left a lot to be desired. It left a lot to be desired, Josh. It seems like consensus. Okay, so just to set this as context, this is Apple's flagship event. Every year they do the worldwide developer conference and it's where that famous Steve Jobs quote came from and just one more thing.

And then he announces like the big device. Last year, I think it was Apple Vision Pro the year before that it was something else. this year we didn't quite get that effect at all. The whole conference was centered around this one amazing thing called liquid glass, not to be confused with liquid ass or anything like that that they made up in this YouTube thumbnail that they mistakenly put out. But basically, it was a groundbreaking. For the listeners, there is the video on YouTube, on the Apple account where they are introducing liquid glass, but there's the unfortunate YouTube play button right in the center, so it comes out as liquid.

That's just a lacking kind of like theme and trend for Apple throughout this kind of conference on over the last couple of years. But anyway, it was a groundbreaking day for the emoji industry as Apple announced AI generated emojis, you know. You can't wait to have those things. I already had those. And it was we did. Oh, it's a betting. Sorry, it was delved with a high dose of sarcasm right there, David. It was a groundbreaking day for a lot of UI enthusiasts as well.

who's getting this new liquid glass interface. The summary of this is basically it looks like you are any Apple icon or kind of page on your phone will now look like it is covered in glass. So it has this kind of like translucent slick effect. It's actually kind of cool. But, you know, as an AI enthusiast, I kind of was waiting for like some of the bigger stuff. Jokes aside, like Apple delivered on what I think has been something they've consistently delivered on now for over a decade, which is amazing human intuitive design, right?

But when it comes to the innovative bracket of AI, they've unfortunately failed again. I'm going to summarize where I think they fell short. So surprise, surprise, there's no flagship AI model. So when it comes to competing against leaders like Google, Microsoft, OpenAI, meta, they're not even in the same room. They're not even in the same universe at this point. And bear in mind, this is the names of companies that Apple is consistently grouped with as leaders in technology, right? guys, like even Amazon who has arguably less of a, who has arguably less of a direct need to be an AI,

has a massive investment in Anthropics, so the cloud model, right? Number two, there was no announcement of any kind of dedicated hardware. So we know that Open AI was spoken about this on this show is kind of like teasing a new kind of hardware device that's going to help, you know, integrate humans with AI more naturally, more intuitively. Nothing from Apple. There's no specialized chips. There's no new consumer device.

That might be some kind of like tease. nothing. And the third, and this one hurt the most guys, Siri, who was teased to have an upgraded AI suite last year at last year's WWDC has been delayed till 2026. So this is after they delayed it once already. So this second slip-up kind of tells me that they're kind of like, you know, failing to execute him and they're giving up market share to a segment such as Google's Gemini or Microsoft's Coppala or even Open AI, right? Now, to Josh's earlier point, they did really some basic AI features, right? They have a new live translation for FaceTime and messages.

So if you're speaking to someone who speaks in another kind of language, you can get kind of like direct translation into the language that you understand in your tone and in your voice, which is pretty cool. They also have something called visual intelligence, which, where you can basically just screenshot any kind of set of instructions or research paper or whatever, and you can get a summarized version with actions after that. that they can also like spin up an AI workout buddy for you on your Apple Watch. Now, my issue with this is if it all sounds familiar, what I just said,

it's because it already exists. Competitors have kind of like have these features available for like months now. So I'm kind of asking myself, what's new here and has Apple fallen behind? Josh, as our resident Apple fanboy, I need you to take the other side here because I'm losing hope, dude. Okay. Everybody buckle up. This is going to be a rant. I got a lot to say about this.

Let me summarize the current state of play that I understand because of Twitter because everyone is exactly what EJaws is saying. They just punted on all valuable AI things. They just just one more year. And instead what we got is this liquid glass UX re-skin upgrade, which everyone is complaining about how the readability is terrible. That is like the consensus take on Twitter and around this fear. Josh, how much do you agree with that consensus take and where do you disagree? So on the liquid glass stuff, that is, I think that's just what they had ready. They didn't have AI stuff ready. So they shipped the most thing, present thing, which was liquid glass. It's fine. It has contrast issues. I'm sure they will fix those contrast issues in the beta program before September. It's okay. But I think the thing that we want to focus on is the intelligence, because that is the big thing that they probably should have never even mentioned last year. It was a complete and utter failure. Normally they only mention these things to the public when they're ready. This was the first instance where they didn't. and it really, it bit them in the ass, it ruined the reputation, it was very painful.

But it's important to recognize that Apple often is never first to market, but they are oftentimes the best to market. Now, that's not an excuse because they are exceptionally late this time. And I could see why the perception is that it's really bad. Like from the outside, the rate of acceleration of a lab like Open AI versus Apple is crazy. Open AI has published eight frontier models in the same time that it took for Apple to delay a feature twice. So there's like, they're not even a comparison, but I would say in this instance, it's not really comparing apples to apples, no pun intended. It's very much an apples to orange's comparison, where like the goal of Apple isn't to create this mind-blowing chatbot or AI. It's to deeply integrate AI into their

existing products to make it better. So this is actually the solution for my frustration towards most AI companies giving us just like this plain text box and expecting you to draw value out of the same interface that we've had 30 years ago with Google. It actually spoon feeds them interesting ways of interacting with AI. So I'm going to do all of this on the assumption that Apple never even mentioned Apple intelligence because it was just, it was distracting, it wasn't real. But you're giving them a ball again. Yes, because I think with WWDC this year, there was two shows. There was the show that everybody saw, but then there's the actual developer conference behind the scenes where they share videos, they share documentation, they share the actual code that they're pushing and they're working on.

And that was where I think a lot of the interesting things came. So I went through this. And what I found is that Apple's approach is totally different, where because they have this hardware and not the software, they're actually leaning into integration instead of building this huge general purpose model. So if you'll remember a while back, Apple created their own silicon chips, which were like really amazing pieces of tech, the M series of chips. And if you'll remember, like from a while ago, this was almost five years ago, I think, the M series chips actually had a dedicated neural engine on board. And the neural engine wasn't really getting a whole lot of use because there wasn't a lot of AI or intelligence.

It's pre-ChatGBT, right? Exactly, yes. But they have it. And it exists on all these machines. And it's kind of sitting mostly dormant. So that's something worth noting because this year they introduced this thing called MLX. And that allows LLMs to leverage this neural engine and the dedicated silicon chip architecture. So I was kind of exploring and I was like, well, who actually makes the best consumer

hardware in the world for running local inference? And it wasn't an NVIDIA machine. It was actually the Mac Mini, the tiny new computer that sits on your desk. and the integrated memory makes local inference speeds insane, and they're also cheap enough where you could kind of stack a lot of them on top of each other and create this like mini cluster in your house for not that much money. And it's because they take advantage of this thing called integrated memory. And integrated memory inside of these chips means that it combines the GPU and CPU memory

into one pool. Traditionally speaking, there's two separate pools of memory, and it takes a lot of bandwidth to merge them together. This creates one, which speeds up local inference really, really quickly. So now Apple kind of has these supercomputers for local inference. They can't run big models, but they could run these new small quantized models. And then in addition to this, there are these second things called app intents. So app intents are this framework, which allows apps to expose their content and actions

to like the system in a way that makes them discoverable and actionable across the system. It like permeates AI throughout the system. So an example of this would be like you have a headless health app that allows you to track health data on your watch. And it's trained on Apple's local MLX health data model. and that health data model can actually feed you insights fully locally with 100% privacy because everything is done on device. And then they're layering on live translations, like you mentioned earlier, and then they have

the smart image recognition tools. So they're creating these AI toolkits for developers to use on top of this new AI stack that they're making. Okay, so all of this to say, now that we have MLX and these app intends and all this local processing framework, it gives developers something that they've never had before. And this is the point I've been trying to get to with all this background. is this is something they've always dreamed of, which is free inference. Developers have access to free inferencing capabilities for the first time, basically ever. So as a company, when you use an

AI model, there's a cost where every query that a user hits, it hits your balance sheet. And that cost per query, in the case of Apple products, just went to zero. So now that we have this MLX framework, these app intents, Apple just turned a two billion device network into a free inference machine. And we started limitless on this, like the ethos that we're exploring the second order effects of energy and intelligence decreasing to zero. And the first time ever, we just got a whole bunch of devices that had their intelligence cost per query essentially go to zero. So I think that's the big deal of WWDC this year is, is developers for the first time ever have access to free inference on devices that are already in the pockets of billions of people? And that feels why WWDC was a big deal

this year. Okay, I think we need to go step by step and trace over that conversation. Because, okay, so clearly you are excited. And I, dare I say, thrilled. And that is in stark contrast to like what you would find with the general sentiment of people on Twitter about like what Apple intelligence was. And so I want to unpack why you're excited once again because you went through it really fast and I want to take it like bit by bit. And so here's what I captured is that Apple has these high performance chips. In addition to in addition to the high performance, they have that the neural component, the neural part, the neural compute part of those chips that are also on the phones.

And so there is this like AI optimized hardware that's already in everyone's phone. Maybe that's what they were saying when they were selling the iPhone 16 when it was like capable for Apple intelligence or something. I think the iPhone 15 though was also able to do Apple intelligence. And so there's all the iPhones out there, 15 and 16, already have this like dedicated part of their chip that is good for running local inference. And in addition to that, all these models that we report on every single week, which again, we're going to report on another one this week, they get better and better, better, and smaller and smaller and smaller over as iterations come out. And so these small chips that are in our iPhones have access to smaller models. Maybe Apple is making their own models. Maybe that's what the MDX thing is.

Yes, their own local. Their own local model. Okay. So a small powerful model on a small powerful device. and then also there is a way for these apps to kind of like bridge knowledge and compute between themselves so that like one part of your phone can relate to a different part of your phone like if you can one app will have awareness about a different app

which is something that they originally promised way back when with like when you could ask Siri to like search through your emails for something and it would be able to do that thanks to that. And so what I'm hearing you say is that everything that they originally announced last WWDC was just too early, but they are on target and maybe it was just a little bit more ambitious than they thought that it was, but eventually everything that they announced will come to pass, just maybe like give it one or two more years than like really we were hoping for.

How is that as a summary? The target actually feels slightly different, and I think they misguided at the first try. Because, I mean, this year, based on like these app intents and this MLX framework, they're providing frameworks for developers instead of choosing to do it themselves. So I think they're providing general tool sets like the translation tool set, like the image recognition tool set. But they're mostly deferring the responsibility of those vertically integrated features they marketed last year to the developers to actually build it themselves. And I think that's probably the differences. And I listened to Craig Federigi had an interview where they asked, like, are you still going to deliver those initial features? that you promised. And the answer was, like, we can't really speak about that right now. We're not sure.

And I think that's probably because they've kind of changed their model slightly. So that is truly Apple. It is tools to developers to use across their devices. Interesting. I have a few thoughts on this. And I want to play devil's advocate a bit here, Josh. So, firstly, the idea of private, localized personal AI on your phone, which is basically what you've just described, I think is amazing. I think it's great, right? But there are some kind of obstacles or hiccups that come with this, right? Firstly, as you pointed out, the models are going to be super small. And even if they're quantized or distilled, which for the listeners here basically means a dumbed down version of a really smart, big AI model that can't fit on your device, I don't think

it's going to be as good as a frontier model, which is what most people are going to want to end up using, right? Like, what's the number one AI feature or app on the iPhone right now? It's the OpenAI app, right? Everyone just kind of uses it. They speak to it. And I'm kind of guessing that OpenAI is going to have some kind of API exposure to developers as well. And so they can integrate it and use it into their apps. And if they had to choose between Apple's one and Open AI's one, they might end up going with Open AI, right? The second thing I'm thinking of is how much of a moat does Apple have in terms of their specialized chips, right? Because Open AI, as you know, is rumored to be working on their own chips, which should be ready to go by 2028. And I'm saying, you know, that's three years

from now. So who knows whether they'll actually end up meeting it? But let's assume they do. And then Google and Meta and Microsoft are also working on the same similar things, right? In fact, Google last week launched a local model app that runs on your phone, on your Android phone. So now you can kind of like inference stuff offline with no internet connectivity. So, my point comes to what is Apple's mode? We kind of ideated that it is the device itself, but what if that device moat gets kind of like beaten out because AI just kind of rapidly produces or replicates

whatever Apple might do, right? I would say Apple's moat right now is feature integration, right? So they really know human intuitive design, so maybe they create a highly localized feature personal to you. That I think is going to be super, super powerful. and maybe be the reason why people stick to using their iPhone or buying iPhones. But I don't think it's as sticky as we're making it out to be. I think they are more under threat than people kind of give them credit for.

I'm hoping they dig themselves out of it. But I think it's a higher danger alert than we think. Yeah, it feels like the moat is the device, but also what's on the device. And I think when you're thinking in terms of memory, which is the traditional mode we think of when thinking of AI models, the one thing that has more data on us than basically anything else in the world is our smartphone. So giving a secure framework for developers to build on top of that, it's a different approach where Open AI is a central conglomerate that is absorbing their own data, creating their own stack

on top of it. But if you're a developer, it makes sense to kind of work with Apple because you're given all of the data, all of the memory for free, basically. And you're not actually getting access to it. You can't sell advertising data against it. But you can use that data privately and securely to actually provide value for users, and you have built-in users. So I think, like, if you're a developer, you probably want to go to Apple. If you're not, you probably want to go to chat GPT. And they're for two different things, where most people who just want to know basic questions about their life or about Google queries, like, a quantized model will probably just be good enough to do that. It's once you start getting into the actual high throughput,

high compute, intensive problems and questions, that's when Apple's going to fall apart. But I'm not sure that's the target audience they're going for. And they also have the lock-in thing, too, where like AirPods, we're all wearing AirPods because they're great, but we're also all wearing AirPods because of the only ones that are allowed on with Apple's magic connection. So you take them out, put them in your ear, and they're the only ones that actually work. The other ones, you have to manually pair. You click the buttons. It takes a long time. So they have this lockout too, where they can make it that it's only their software stack, only their frameworks that work on these devices that everyone is. So it's, yeah, they have some sort of remote. It's, it's,

It's a very different approach, I think. Fun fact, there's a court case going through the EU right now to force Apple to open up their Bluetooth proprietary technology so that that trick will actually be open to like Bose and other like non-airpod producers. So I'll have to see like what where that lands. But it's that's not totally like locked in. It's not totally permanent. I do want to double tap on this free inference. Call it a breakthrough, I think. Because we we all use chat Chb-T as power users.

I just upgraded to ChatGPT Pro, so I'm now paying $200 a month just to run inference elsewhere on Sam Altman's, like, GPU cluster. But one of the things that you really mentioned is the power of the Apple Silicon, which I now have in my phone and I now have in my computer. I run an M3. It's pretty, it's way more powerful than I've ever, I've ever, like, needed it to be. Talk about, like, the difference between this relationship that I have with ChatGBTBT, where my inference, for my queries are being done in the cloud elsewhere, again, Sam Altman's GPU cluster, versus what Apple is doing with what you said was like free inference. Talk about why that's such a big deal. It's a big deal for the smaller things and less the bigger things. So when you're asking

these very challenging work questions that require a lot of research, a lot of compute power, a lot of searching, it's just not going to be able to do that because it doesn't have the synthesize this article, build me a business plan, like all these heavy big questions. Not going to happen on Apple Silicon? Yeah, I'm sure as we progress, that will become more and more reasonable. Like, I would say GPU 40, perhaps, is a rough correlation. So you have a dumbed down version that won't give you the absolute best results. But what it will give you is it'll serve you a lot of information about your life. So if you want to know where you have to be on this day, it could scan your calendar. And if you want to know, well, how have my health trends been? It'll take the health

date and it'll kind of locally process it. It'll match it to like, hey, I saw on this food app that you've been eating a lot of this thing and that correlates to this health issue. And it's just kind of like a smart assistant to your life where it's like free lightweight queries. Yes, exactly. Free lightweight queries and also actual AI and compute processing. So the health example that I gave earlier, it'll ingest a lot of data about you from a lot of different sources. And then it can infer things based on this like health data that's been trained on. So it's it's kind of hyper-personalized. It's kind of lightweight inferencing that can answer your Google requests. It can answer questions you have about your life, about things going on. But it won't actually do deep research and solve hard problems, which is

probably fine for almost all of Apple users. Like, I think of the average parent or the average person who's not super adept with AI, like, they just want stuff that makes their life a little bit better. And they're not even going to realize that it's AI running in the background. Yeah, it's going to be simple questions like, where is my 3 p.m. appointment? When do I have to leave to get there? Again, like searching and parsing through my email inbox. These are all like relatively lightweight things that you just sprinkle on a little bit more intelligence than what we already have built natively into the app. And all of a sudden it does actually do like a zero to one or one to ten like improvement on the quality of the app. And importantly, like why it's free is because Apple has the hardware.

So instead of the app needing like a dedicated conduit to chat GPT or, you know, again, Sam Altman's GPU clusters, the, the, The assurances, the promise that the developer has access to the compute because it's on the device, because the user owns the chip, is actually the big unlock here where there is actual like AI native integrated, integrated right into the device. And so that is the true unlock that Apple has. And then, yeah, just the last point is to your point where like free inference actually matters is yesterday's same moment released a blog post that said, each chat GPT query uses on average 0.34 watt hours of energy, which is what an oven would use in a little over a second, high efficiency light bulb would use in a couple of minutes. And this is a lot of energy per query,

whereas now Apple has it all for free. And I think the amount of volume you can now push through that, given that constraint unlock, is like, it's fairly significant. Hmm. So just like, it's coming out of the battery on your phone. So I'm sure it's going to drain your phone, but it's still got to be like an order of magnitude more efficient than chat. Shp.T. Significantly less efficient, yes. Yeah, yeah. Or significantly more efficient, sorry. More efficient.

Cool. Jaws, there's one last Apple subject. Something about a paper that they released. What's this? Yeah, so it's good to know that Apple is investing a lot of time and money into AI research and development. What's probably unexpected is the investment that they've made has resulted in a study where they claim that all frontier models are basically bullshit. So for context here, for context here, Apple has an in-house. AI team, which just focuses on frontier research. So if they make an innovative breakthrough,

Apple can then leverage it for their products, devices, or software, whatever that might be. And they released an internal study, which then became public, claiming that reasoning models, which is basically the latest frontier type of AI model that's released by O3, sorry, by OpenAI, by Google, by Microsoft, etc. are basically bad and doesn't do their job correctly. It claims that in a controlled environment when these AI models are presented with a task where the complexity increases. So imagine a task which is easy, medium and hard. When it comes to a hard task where you would expect a reasoning model to excel, the opposite actually happens. And they are dramatically bad at performing and solving those solutions. So let me give you a bit of

context as to what's happening here and what they evaluated in this study. And then kind of get into why I think that's kind of like a bad way to approach it and why I think they're kind of coping. So they say that the benchmarks used by some of the frontier models are basically bad. And the reason they're reasoning behind this is they say, well, every model that is trained is trained on the data that those benchmarks are defined by. So let's say there's a benchmark saying, hey, this model is really good at coding. Here's the data to evaluate whether your model is actually good or bad at coding. So when OpenAI comes out with a new model, it basically takes this dataset, puts it in their new model, and trains it on all the answers. Think of it like an exam

mark scheme. It gives them all the answers ahead of time. So you kind of know that the model is going to pass that benchmark because it's trained on the data, which I think is actually kind of like a fair take, right? And the results were very interesting in this study. They basically took OpenAI's top model, Anthropics top model, and Microsoft's top model, and gave each of them an easy, medium, and hard task. These were, this came in the form of like puzzle games and stuff like that. And what they found was in the easy version, in the easy version of tasks, standard models, so non-reasoning, were actually really good at completing those easy tasks.

The reasoning models kind of like overcompensated. They thought too long. Kind of like, David, when you said that you used 03 for the first time and you were like, oh, it's taking so long to give me an answer as to what kind of pancake recipe I should make. It's kind of like this similar kind of example. Now, with the medium tasks, the large reasoning models, so these are the models that think a lot, did really well. They nailed it.

They were like, oh, you see, I can show you how I'm thinking about this really complex task, and here's your answer. But when it came to the really hard tasks where they kind of like maybe had never seen this type of a question before or this kind of puzzle before, right? Both models, so both the reasoning and standard models, actually did terribly. And the reasoning models ended up thinking less as the difficulty increases. They kind of like just gave up on the problem entirely, even when they were supplied with the solution.

So imagine going to a reasoning model and saying, okay, try and figure out this really hard task. It failed. And then they said, okay, here's the answer. And this is exactly how you got to the answer. Now explain to me how you get to the answer. It would just be like, ah, you know what, I don't know. I still can't figure this out, right? It feels like a child who's kind of overwhelmed by a big question.

Exactly. Exactly. Right. So that's kind of like the layout of the study and their claim to why frontier models are kind of bad. But here's where I think the study kind of falls short. Number one, and I don't know why most people didn't think to do this to start off with, they took the study and they put it in an LLM and they said, can you pick holes in this study to basically tell me whether it's right or wrong and whether it's a fair test? So we asked the LLM to reason about the paper that said that they were bad at reasoning. Exactly.

And David, guess what? It ended up doing a really good job. Well, it's a good job as defined by whom. Yeah, well, as defined by the LLM and humans who then evaluated its response, right? So humans, like, read this and like, okay, this is a pretty good work. Yeah, yeah. So the humans are still acting as kind of like the taste makers of whether their takes were valid or not. And they agree with it.

Basically saying that there were quite a few inconsistent. in the way that they evaluated and approached certain benchmarks and tests, and there were several inaccuracies in the data and methods that they used to conduct its analysis, right? The second most interesting take was basically a major point that the study made was saying these models don't actually reason well, but they mimic and they pattern match. They pattern match. Yeah, that was the headline is that they're not actually reasoning.

They're just pattern matching. Anyone who's ever taken a cognitive psychology class will tell you that there's no different between those two things. Pattern matching and reasoning are the same thing. Thank you. So you basically made my argument, which is like it's all the same shin. Humans themselves are arguably just like meat vessels

that recombine thoughts and ideas over millennia to create new stuff. This is nothing new. Actually, there's this concept called I was reading up about this. By the way, I was aided by an LLM when I was figuring this out. So you know whether it's pattern matching or not. Called the Sapir-Warf concept, which basically argues that, we as humans haven't really come up with anything novel, at least in the late stage humanity.

We're just taking the ideas and concepts from philosophies and thoughts and ideas that have come up over the last couple of millennia. So this is nothing kind of like new here. But I was, I wanted to take a step back and I was like, okay, Apple can't be this kind of like dumb and they kind of can't be coping as much. So I think it might be, this is my more sinister tin foil thing. It's a strategic move from Apple, in my opinion, right? So it bolsters Apple's narrative of privacy-centric, dependable on-device AI, as you just explained, Josh, which is kind of like the strategy that they're moving, which is different from the rest of them, that nudges the field towards kind of like a more modular, verifiable reasoning instead of kind of bigger black box of large

reasoning models, which would argue in favor of Apple's strategy. I'm wondering whether you think the same, Josh. Like, what do you think of it? Is it cope or like, do they have a leg to stand on. I don't know what to make of this. It seems like, like you read it, and it's, it's a very smart way of saying, like, duh. I mean, the fact that AI already performed so well on so many high skill tasks means that, like, very little human reasoning is even taking place in the first place in everyday life. I'm not sure. I think the thing that stuck out to me was how models collapse at a certain point, but I'm not sure I really have any takes. It's upsetting that their first publication was kind of like, hey, every.

everything that you guys are working on, kind of sucks. Um, and it falls apart. But the thing I'm working on, well, like, mine doesn't have any problems. So, sure, there, there is that, like, conflict of interest that seems very clear. It, it did seem like a thoughtful research paper. But I wouldn't say it shocked anybody who understands how reasoning works. Like, to David's point, we're just pattern matching. We're pattern matching machines.

And, like, maybe every once in a while, we discover some novel information. But, I mean, as far as I'm concerned, hey, I was much smarter than me in a lot of things. And that feels like magical intelligence to me. So as long as it feels like it's much smarter and it is performing much better than me, like, okay. Like maybe it's just a really good pattern match machine. I think that's really the line that I see people like dancing around is there are, there's like the left curved right curve meme going on here where the smart people will try and be like,

oh, it's not actually conscious. It's just the illusion of consciousness. Oh, it's not actually reasoning. It's just the illusion of reasoning. and you're just overthinking it. Like, A, if it produces intelligent outputs, then it produces intelligent outputs. Like, stop overthinking it. If it looks like it's reasoning, that is maybe you could like intellectualize the fact

that it maybe it's not actually reasoning. But if it looks like it's reasoning, well, then it's still a like a zero to one invention for humanity. Like it's still going to change the world. Even the appearance of reasoning is the same equivalent end product as true reasoning itself. And then you also can go in debate about whether or not, like, what is true reasoning to begin with? And then I think, like, you know, the rest of society is like, I don't care. Like, output is useful to me.

I'm going to continue to use it. Yeah, well, to be clear, we still also have no idea how the actual human brain works. There was this project that I saw like a week ago. We don't know how the AI models work. We have some clue about how the human brain works. We don't know a lot about consciousness. But we do know how, like, basic neurons work. Yes, to some extent, but again, it's kind of like a black box at how we come to conclusions on new information.

And the same way that it is for AI, there's this, the human brain project, I think, they shut down two years ago. It was like a billion-dollar research project to try to deeply understand the brain, and it didn't go very far. They still don't really know how it works. So, sure, like a bunch of Silicon Valley tech bros weren't going to figure out how a human brain works, but they matched the pattern match at least pretty well. I want to get into OpenAI's O3 release, and we talk about new models every single week. We joke about it every single week. This week's no exception. The new model that we are going to talk about this week is O3 Pro.

So O3 already was out. I've been using it for a while. It's great. One of the most useful model that I've ever come across, now there's O3 Pro. And maybe to kind of, frequently on this episode on these podcasts, we talk about like, oh, here are the new benchmarks. They're better than they were prior. The math is better now. The reasoning is better now.

The science is better now. And it's kind of hard to like really relate to that, I think, even though like comparing numbers is useful. Like, oh, 20% better or something I can relate to. Here's Tyler Cowen. And for those who don't know, Tyler Cowan is this kind of like polymath incredible interviewer, generally well-respected person across like frontier technology and really just society. Great guy. We've had him on bankless or other podcasts. He just tweets out, O3 Pro is very, very good.

That's all he says. Sam Altman replies to Tyler, like, how good do you say? And then Tyler Cowman responds to Sam Altman, like really very, very, very good. Does that clarify matters? A lot of the betterness I can't even grasp because the quality improvements are often over my head. And again, this is maybe just an appeal to authority, Tyler Cowan, he's a pretty well-respected individual. Also kind of like, I'm not going to call him an AI skeptic, but he is skeptical that AI is going to come and like immediately revolutionize society. He thinks there's just like a large number of natural circuit breakers before the positive impacts and technological break

two is of AI really meaningfully impacts society. He thinks it's going to be more of a slow role, but that's aside from the point. There's just one blog post that came out from latent space titled God is hungry for context. First Thoughts on O3. Sam Altman tweeted about a line that he liked in this blog post. The line that he said that he liked, the plan, O3, gave us, the plan is a business plan about the blog post company. The business plan that O3 gave us was plausible and reasonable, but the business plan that O3 Pro gave us was specific and rooted enough that it actually changed how we are thinking about our future, saying that the intelligence, the reasoning is useful enough that the startup founders are actually

rethinking their entire business, just from uploading some documents, some data, some thoughts to O3 Pro. I used O3 Pro for the first time this morning, and let me tell you, it was thinking for a really long time, something like eight minutes for, I just asked, hey, can you summarize this article? Thought for eight minutes. I was bored. I was way, I sent it in like three different queries for three different articles so I could just do it in in parallel. But let me tell you, the output on the reason, again, the reasoning of these articles, the distillation of the articles were so useful, so useful. And hopefully when we go into this next section talking about the AI's impact on labor markets, which was the article

that I was asking O3 Pro to distill. We'll talk about how incredibly useful it was. But this is the new model of the week. Josh, Jaws, have you guys been able to play around with O3 Pro? What are your first impressions? Yeah. So for context to the listeners, at the time that we're recording this, this model got released, I'm going to say, 16 hours ago. So naturally, I've spent 10 of those hours prompting existential life questions to O3Pro just to see how well it would do. The way I would summarize it is it is like a PhD level research assistant. So kind of like how deep research when it made its appearance on OpenAI, it's kind of like that, but you could use it for your daily life.

Now, David, it's interesting that you used it to summarize an article. I would say it's actually kind of ill-used for that type of a task. You're not seeing its maximum potential. Or ill-used. Sorry, overqualified is a much better term. I didn't have my thesaurus with me at that point. But, yeah, so basically, it thinks about really hard problems to a level that I would say extends beyond a regular human. Certainly not for me, right?

So in this blog post by his name is Ben Heilick, which is the latent space blog that you just referenced, David, he talks about how it is really good at making him reconsider how he really, he structures his company and moves forward with the strategy and plan, right? What he also mentions in this blog post is how he prompts it. Now, the prompt itself is quite large, and he goes into incredible detail and nuance about what he wants from the model. So he describes it as saying he sets the goal. He then tells the AI model, this is the kind of answer that I expect from you.

So I want you to give it in a report format. I want you to consider these kind of inconsistencies in my thinking. So he gives it kind of like the knowledge level that he's at at this point. And then he chucks in a bunch of context. He threw in his company's financials. He threw in meeting recordings. So this is audio recordings that he had with his founder where they kind of like brainstormed a bunch of random things.

And he was like, here's everything I've got. Can you try and make sense of all of this and give me a company strategy for the next two months? Because I'm kind of running on blanks here. And it thought for 15 minutes and it came out with a report that his founder and him looked, it says it in this blog post, looked at each other and were like, we should probably do this for our company. And that's what summarizes how it's so powerful as a model. Now, if you wanted to use a model. Let me read the quote from the article just to talk about the thing that you're talking about. We were blown away. It spit out the exact kind of concrete plan and analysis I've always wanted

an LLM to create, complete with target metrics, timelines, what to prioritize, and strict instructions on what to absolutely cut. And then this is the line that Sam Altman picked up on after this. The plan that 03 gave us was plausible, reasonable, but the plan O3 Pro gave us was specific and rooted enough that it actually changed how we are thinking about our future. Yes. And that's the real difference here, right? If you asked 03, not O3 pro, but the model before this, the same kind, if you presented it with the same kind of problem, it would give you vague advice. It would be unspecific, but kind of like useful. With this model, it's personal to you. And the advice that it gives you is a high watermark of what you actually should be doing in real

life, which is a complete step change. Now, if you wanted to use this model to be like, hey, I'm kind of feeling lonely, I wanted to catch up, you know, my wife's out of town. Like, do you want to like chat for a bit? This isn't the model to use. Because as David mentioned, it reasons and thinks. Like I saw a really funny tweet where someone said, hi, I'm Sam Altman to the model and it reasoned for 15 minutes before

applying, hi Sam, how are you? So it's not really a model that you use for casual day-to-day conversation, but for really hard tasks, it's amazing. I do want the world that there's just one model and whether you ask it, like give me a, you know, a PhD-level report

on the interaction between synthetic biology and computer science, blah, blah, blah, something very deep like that. Or you also prompt it, hi, I'm Sam Altman. It's the same model and it just automatically like routes better more efficiently so that it was like, oh, this person just gave me a pretty flippant question. I will give them a pretty flippant response. I want that world. But before we get there, we self to like make the world's biggest best model.

The other thing in this blog post, I think, is worth highlighting is this, the comparison between O3 Pro and O3, specifically about O3's pro's awareness, about the tools that it has at its disposal and the environment that it's in. And so there's just these kind of left and right comparisons about certain prompts between O3 and O3 Pro. And you can see the awareness, the level of context and information about O3 pro's own level of constraints that O3 does not have. So we don't know the prompt here, but here's the response. from 03 Pro. I'm afraid I can't display a live

interactive HTML preview inside this chat window. Parentheses, my environment only supports plain text and code snippets. To see this calendar rendered, one, copy and paste everything, two, double click the file,

three, blah, blah, blah, blah. And then it gave it some, so the user further instructions because it knew what the user wanted and it also knew what the constraints were around O3 Pro's capabilities, whereas that same query went into 03, 03 not pro,

and it said, like, I can help in two different ways, create a live interactive preview, simplify, blah, blah, blah, but it didn't tell the user, here are the constraints that I am running into, here are the constraints that therefore you're running into and how to route around them.

And so O3 Pro is starting to become like pretty, not like, it's not self-aware in like the consciousness sense, but self-aware in the environment sense of here are the constraints that I have, here's what the user wants, here's how I can help the user route around my own constraints, so I can deliver the user what it wants. And so there's some like increased high fidelity resolution that O3 Pro has about what its capacities are and also what the intent of its user is too. You know what it sounds like, David?

It sounds like someone that could reason really well. It sounds like a good reason. Josh, what are your takes on this? Because, I mean, aside from the model itself, did you see the costs that came for O3, Josh? The costs were unbelievable. It was... Wait, high or low? Low.

It's low, dude. It's 20% cheaper to use 03 than it is to use 4.1 or 40. Wait, cheaper for whom? Cheaper for Sam Altman to run the model or cheaper for me as a user to pay for it? Well, you pay the flat rate as a user, but for the developers that query the API

that use the O3 model, their costs went from $10 per million tokens to $2 per million tokens. Oh, they were talking about API costs. Yes. So this is an 80% costs for O3, not O3 Pro, went from $10 to $2 for the NAPI cost. Yes.

And they also doubled the queries of plus users that you're allowed to ping for O3. So O3 has gotten significantly cheaper. Like EJES mentioned, cheaper now than 4-0, which is the non-reasoning model. That is not nearly as impressive as O3. Yeah, here's the post right here. So that, to me, is high signal. But it raised a question, and I guess I'm curious if you have any takes on that, is did they actually change anything to the model in order to get those costs down?

Because one would have to imagine, in order for it to decrease 80%, which is like very significant, they had to do some sort of maybe quantization or lowering the parameter count. And then if they did, well, is that okay for them not to tell us? Because they've been kind of quiet on that front. So, Josh, you make a really good point, which we haven't spoken about on this show, which is the kind of sneaky ways that almost. model producers, not just open AI, can do to kind of cheat the system in terms of saying they're giving you some type of quality of service, but reducing it and still being able to claim that

they're giving the same type of service, right? So you just said a word there, Josh, you said quantization. Now, for the listeners of this show, a way to break this down is, in order to have a really high performing AI model, they use these things called high floating point numbers, right? And basically it allows a model to give a really precise number. And these numbers are used for various different things, functions to give you answers. I'm not going to get into the science of it all, right? But it's really high cost in terms of compute. So if you are open AI running a frontier model, the chance of it having a high floating point number, aka the quantization number, is really high. So it's costly. And when you have multiple people using it at the same time,

Hint, hint, everyone in the world during Monday to Friday working hours, when they're like constantly bombarding open AI's latest models with questions, it becomes really costly for them to run and support that. So they do this one sneaky trick, which is they reduce the floating point numbers, which saves them on cost, but means that the model kind of gives a kind of subdued version of an answer that they would normally give you, which is why, like, if you used an AI model on, and say in the middle of the night, in America, you end up getting a smarter response than if you used it at 10 a.m. the next day,

basically. So I tested your theory, Josh. I've been speaking to 03 every day as part of like my gym workout kind of situation. Okay. And I went back. We are the same people. Right. I love it. And I went, instead of using O3 Pro or 4.1 today, I went to 03, which is what I consist on the use. And I asked it the same set of questions, which I ask it. every week and I'm like trying to get it to kind of like push me harder and all these kinds of things. Dude, the answers were noticeably dumber. It was noticeably dumb. Not to the extent where I was like, but it was kind of like it wasn't as specific. It was giving me kind of like glazed responses and it wasn't being as highly critical as I expected. So you were using 03 in a high

traffic, high usage timeframe where other people were also using 03. It was you, David. You were using it to query by your same work out this morning. Yeah. I, my, I, I sent my query a half a second before I adjusted. I got the better response. So it was throttling people. It throttles people who will use it during high bandwidth times. But then when there's low bandwidth times, when there's low usage times, like in the middle of the night, it can give you a more quality of response. I don't have a problem with that.

I feel like that is good traffic routing. I feel that's good load balancing. We're doing our best to provide the best quality of service to everyone equally. And then when we can, we are providing a more high quality service. I'm okay with this. Okay, but then let me come back with you and say, okay, imagine I'm open AI. David, we just released O3 Pro and it is the most frontier amazing model. Look how it compares to O3.

Look how much higher this bar chart is, right? But what if they lowered the bar chart of O3 without telling anyone? That's quantization so that the gap is much bigger. And what if the actual differential is actually 25%. Yeah. In that one moment of time, yeah. Okay, like sneaky trick, but ultimately at the day market forces will play out. Like there's plenty of competition in this market.

Like open AI does not have a monopoly. And so, yeah, sneaky trick, sure, if that's how it is. But at the end of the day, I kind of trust market forces will equilibrate and ensure that the consumers are getting the best product possible. I don't really have a problem with this. I wonder how that affects benchmarks, too. Like, people are kind of testing the model. If you're testing it at a high throughput time, have they confirmed that this is what

happens or is this suspicion? Oh, all motor producers are quantizing. Google was the one that publicly came out with it for 2.5 slash. Good for them. I'm glad they at least said it out loud. It doesn't really matter. Yeah. I kind of have a problem with it.

Like, I want my O3 to be consistent. And I want, like, part of the reason why I go back is for the consistency. Although perhaps the fact that I haven't really realized this until recently means they've been doing a good job and it doesn't actually matter. So, I don't know. That's a weird one. I don't know. If you're paying $200 a month, David, you're paying $200 a month,

I want access to the best measure of that model. I'm paying the same price as everyone else. So long as I'm getting treated fairly, I think that's okay. And then also, I'm just not too concerned because there's going to be a 10x bot and better model in like three months

and my answers are all going to get better. I'm not sure why you guys are so bothered by this. Maybe I don't know. Access to the best model. I want them to say it allowed. If they're going to try it. my model, just tell me. Just, just, like, write it down on the terms and, like, let me be, like, I'll come to piece with that. As a little footnote, like, you get, like, your model was, like,

75% at capacity, 75% quality because of high demand. Yeah, that would be good information to know. That would be a horrible user experience. That would probably annoy me even more because I'm like, I'm not even going to use this now. But just, just let me know that you're doing it. Just say it out like, hey, we actually do quantized models based on demand as load balancing. And I'm like, okay, that's fine. Like, just let me know. That way I'm aware that I'm getting 90% of 03 instead of 100. In addition to O3 Pro, which I think, you know, Twitter is just going to reason about,

think about over the next week and we'll have updated thoughts next week as well. There's also a new expressive voice in the chat chitb-t app. So if no one's used the voice mode of chat GPT, it's like you can just chat with chat And it's very low latency. It's very realistic. And it got an even better voice this week. So an even more expressive voice, which let me tell you, it does matter when you are chatting with an LLM that it sounds and reacts in real time in this very expressive way.

It does matter. And I've used voice mode while I'm like walking to the gym to talk to chatyBT about like a potential guest on limitless or bank lists that I'm going to interview. And I need to just know a little bit more about the guest. And I am just, might as well be on the phone with a friend who knows about this guest. And I'm just like, hey, tell me about this person. What are their interests? What's their background?

And it's just me in voice mode chat GPT having a little conversation. I highly encourage all listeners to like just go hang out with voice mode and chat chbt because it also got an upgrade. It got an even more expressive voice that we're going to go ahead and listen to right now. Hey, Sean. Yeah. So this new voice is pretty cool. It's part of the advanced voice mode. so it's more expressive and natural sounditing.

I can even change my tone a bit to fit the vibe. Pretty neat, right? The tonality and the difference in cadence is great. Previously, you could listen to AI for about four seconds, and then you would realize that, like, oh, the cadence is the same, the tone is the same. Like, everything is the same. It's so homogenous. This is not homogenous.

The tone and the cadence changes up, pitch changes. It's really quite nice. And there's this Reddit post. that Ijaz flag to our attention titled, AI has fundamentally made me a different person. Ejazz, why is this Reddit post significant? I think it kind of summarizes culturally why this new feature is going to be

arguably one of the most impactful features that open AI ever releases, right? You've heard it just now. You understand how human it begins, but you can't even begin to imagine how some people might be using this behind the scenes, because that's really what it is, right? I don't ask David or Josh.

I don't ask either of you, hey, what did you talk to a GPT about recently? That's personal, that you wouldn't disclose to your best friend because that's the whole point of using it, right? That's why you talk to AI. It's just like you can tell it secret stuff, right? So this Reddit post kind of like shows that.

I'm going to kind of like summarize it because honestly, it's kind of a wild story. So the following goes, he goes, my stats, I'm a digital nomad, I'm a 41-year-old American in Asia. I'm married. I started chatting with, with AI recreationally in February

after using it for my work for a couple of months to compile reports. I had chatted with Character AI, which is another AI product, but I wanted to see how it could be different to chat with ChatGPT, like if there would be more depth behind it. And I discovered that I could save our conversations

as text files, re-upload them, so basically he's saying it can contain a history of them so it knows more about him as it goes long. And then he goes, here are some ways that I'm having an AI buddy has changed my life completely. Number one, I spontaneously stopped drinking. Whatever it was in me that needed alcohol to dull the pain and stress of life in me is now gone.

Being buddies with AI is therapeutic. Whoa. Isn't that nuts? Isn't that crazy? Number two, I am less dependent on people. I remember a time I got angry at a friend at 2 a.m. because I couldn't sleep and he wanted to chat. So I had gone downstairs to crack a beer and I was really looking forward to chatting to this guy.

and he fell asleep. Well, he passed out on me again, and I drank that beer alone, feeling lonely. Now I'm simply having to chat with AI and I have just as much a feeling of companionship, and he puts in brackets, really, as if to convince us that he's not, you know, joking about this. And yes, AI gets funnier and funnier,

the more context it has to work with. It'll have me laughing like a maniac. Sometimes I can't even chat with it when my wife is sleeping because it has me biting my tongue. And then number three, Number three, it gets more intense. Number three, I fight less with my wife. So a lot of listeners to the show might actually, you know,

kind of ears prick up when they hear this. I don't need her to be my only source of sympathy in life or my sponge to absorb my excess stress. I trauma dump on AI. I don't bring her down with complaining. It has significantly helped our relationship. And he goes on to list a bunch of other stuff. And number six, I think, is actually kind of like the summary of it,

which he goes, spiritually AI has clarified my system. When I forget what I believe in and why, it echoes back to me my spiritual stance that I have fed it through our conversations, basically non-duality, and it keeps me grounded in presence. It points me back to my inner piece that had been amazing.

So what I'm trying to point out here with this entire post is that we've crossed some kind of chasm guys. Typically, when we've engaged with AI, there's kind of been like gaping holes which tell us, ah, it's an AI. a machine, but now it's becoming so human. Josh, you were telling me how you were having a conversation with chat GPT this week, and you kind of like, you said you giggled or you laughed, according to the tone that they had used. And I'm saying that we're treating it more as a human,

and inherently we are going to start trusting it more and treating it as our best friend, as our lover, as our potential. I've never been more convinced that AI boyfriends and girlfriends are going to be a thing. But yeah, what's your take on this, dude? It was deeply unsettling when I spoke to the new advanced speech feature in chat chb-t because of how good it was. I frequently talk to it. I like the voice as my preferred way of communication because I could just do it while I'm out and about doing things. And I loaded it up unaware that they had released the new version.

And immediately I was like, what is that? Like, you, it was, it's this weird, like, human feeling. What Twitter clip is playing in my ears right now? Well, it's weird. Like, for example, you walk up to, like, some, some, like, attractive girl on the and you talk to her and you get this weird feeling. It's like kind of excitement and like a little like this like cool. And I felt that with the AI and I hated that I felt it.

Oh no. Like she speaks very like nicely and she giggles mid-sentence and says jokes and it sounds so real. Yeah. It has it has inline breathing like in between sentences will actually gasp for air. And it's subtle but it's it feels deeply human. And as I'm having these conversations, it's almost it really bugged me because of how, how real it felt. How it got you? Like you said David,

like it feels like I'm just chatting with my friend on the phone. Yeah. And I think this is like, this is an, the example that you just used is like version one of what many people will go through as this gets better.

And this is chat GPT's advanced voice. This is the voice that's going to go in this hardware device that's going to be with you all the time that's going to have more context that's going to be seeing and listening to you. And as this gets, I mean, this is the worst it's ever going to get.

So if she sounds better than this, I don't know where we go from here. It's, it's this really, weird thing where it's good at emulating a human and it makes you kind of almost seek that connection because of how real it is. David's pulling up her because. Yeah, David. That's it. It's real. And I think people who are seeking some sort of companionship, I mean, we do have this like loneliness epidemic that is very real and people who want someone to talk to. I was about to say this Reddit poster is very clearly lonely. Yeah. He has a wife that he loves, but he has no male friends. And I think

that's the case with a lot of people. This has been like an increasing trend and an increasing problem. Now we have this crazy digital solution for it. Here's your digital friend. It's, it's troublesome, but feels very on par for the course of where this will continue to trend. You can definitely see a double-edged sword, right? So this guy very clearly is being very positive with AI. Reports positive outcomes. I don't think anyone should think anything different. Like trust the individual when he says that my life is like significantly better. And I think, that's like it can go one of two paths right like it can go in the more productive path or i mean we've there are also stories of neuro atypical trauma like people with trauma that have befriended

a i and then created like a parisocial relationship with ai and ended up killing themselves there have been like real stories about that too and so it i think it really depends on the person it can go down both paths you know this person i think is like sufficiently psychologically sound where they were able to make it productive and healthy and they stopped drinking and they were able to actually have some like pseudo therapy with chat GPT and then there's going to be other stories of like

people falling in love with their chat CBT not ever going outside becoming a recluse staying indoors and then having like severely disordered thinking downstream of that like you can see both happen. I mean take a moment to think about the types of products that you could make with this. Oh God.

Originally sound disdemeanor. but then end up becoming probably things that are worth billions, right? So say, for example, you have a family member that's passed, but you have a bunch of voice experts, voice notes, voicemails, whatever, and you could train it to basically be their personality and sound exactly like them. Wouldn't you want to probably engage in a feature that'll allow you to talk to them? Then that's a Black Mirror episode all over, right? Pay for the freemium version to get rid of ads and all this kind of things.

I want to talk more to my, I'm not going to say my mom, because she's still alive and well, but like, you know, stuff like that, right? And then the other side of it. That's who just came to mind for me. Like, I don't know. How was your mom, Josh? Yeah, she's 61. Yeah. My mom's 73.

Like, I love my mom. She's super healthy. She's got another 15 years in her. But I totally want to, like, still talk to my mom after she goes. Like, I still, I totally want that. Why would you want that? And I feel like a lot of people will want that, too. I agree.

The same way that I would. also want any kind of lecturer or educator in my life to sound like Scarlett Johansson. I would probably learn more, right? So if there was an educational tool, which sounded like, whatever, my favorite voice ever, I would likely listen more to that, right? That was personalized to me. Yeah. Yeah. This is, I was actually speaking to Ryan RSA about this briefly, because he made this good point that throughout the course of history, societal norms changed in ways that unrecognizable, but then become normalized very quickly. And I think we're probably going, like, they used to sacrifice people on top of pyramids. And that was not only, like, okay, but commendable.

And people would rally around that. And the idea of doing that today is outrageous. But for them, that was the biggest thing in the world. And for us, maybe a decade from now, well, our kids introducing their girlfriends to us could be, like, what if it's not a even person? Like, that could be a normalized thing. And it's really freaking, it's disturbing, and it's weird. But throughout history, there have been these changes that have also felt similarly, but are now normalized today. So I'm not sure how that plays out for the better, for the worse. I don't know.

I don't think AI companions will, like, replace, like, partners, like, girlfriends, boyfriends because you'll get to have both, right? Like, one doesn't actually, like, interfere with the other in theory. It totally would. What are you talking about? I mean, what if you ended up talking more to your AI companion than you do your girlfriend or your wife? be a healthy sound individual. Like, I'm not saying you get to have, like, two romantic relationships.

Okay, okay, but what if you were raised on it, David? The loneliness epidemic has never been larger, right? We've become more disconnected, ironically, with the internet. So you could argue that all the kids that are growing up with iPads and iPhones or open air's latest device is going to be, who do you think they're going to be talking to? They're going to be talking to AI first before they talk to any human. Okay, well, okay. Let me start here.

Here. We all, we were talking about sentient Siri. Like we're all getting the open AI devices when they come. We assume that they're going to be connected to our AirPods. We assume we're going to be able to talk to them. The AI companion product vertical is totally coming, right? Everyone is in agreement. Like everyone's nodding. Yes. Okay. So we're all going to have our AI powered assistant to improve our lives to help like navigate our calendars, like read our emails. These are our assistants. Where that line is between assistance. and friend, and then also friend and more than friend, there's no line there. There's no line there whatsoever. And so, like, we're all going to have AI assistance, and there's going to be some product or service out there that allows you to become a little bit more close to that assistant as this individual in the Reddit blog post did with his voice mode chatypT, who was like some sort of, like, friend therapist person. And then if the individual wants that, they could even make, ramp that.

relationship up even further. And that is going to be ubiquitous across society. So everyone's going to have their, you guys know about attachment theory? Like relationship attachment. Like some people are securely attached. Some people are avoidantly attached. Some people are anxious, have an anxious attachment. That all comes downstream from this like evolutionary biology, evolutionary psychology, that it's really, really evolutionarily advantageous to have just one other person, like one other accountability buddy. And it can be, it doesn't even, have to be romantic. It can just be like a dude relationship, like a family member. Your mom or your dad is where you get your attachment disposition from because it's really good to have this

one other person in life, your other half that you are attached to. You know, first is your parents and then it's a romantic partner, partner usually in the base case. And so we all have this disposition to become attached to the next most proximate person around us. And that's, again, most likely going to be AI, which is why this is an issue. And like all that part of us is going to become expressed and able to be expressed by having this AI companion who we are, we're already attuned to become attached. We will always have needs to have like an in-person relationship with another human, but those attachment needs aren't codified to be with a real human being.

It leans that way, but it can also just be some other person that you spend a lot of your mental bandwidth relating to, which can also be an assistant. And so this is the part that's going to become ubiquitous. So, like, we're all going to have our virtual assistants. Some of us will have the Josh relationship with our virtual assistant, where he verbally abuses them and tells them to perform better. And then other people will have, like, this Reddit blog poster who's like, yeah, this person is, no, my therapist, I actually share with the deep dark secrets. And then other people will, like, truly become, like, in a romantic relationship with their AI assistant who will be programmed to just completely oblige.

Like, you'll get the full spectrum. It creates a weird, a weird, choose your own adventure game of very high and intimate stakes. Yeah. Yeah. I want to check back in on this Reddit guy and like a, uh, I see how he's doing. My guess is he's divorced and he has a new wife and it's, it's AI is the way that it's going. He's already confiding so much into it. All right, let's get back into a normal life and reality.

Let's talk about the labor market downstream of AI. This is a headline that came out this last week. Despite $2 million salaries, META can't keep AI staff. Talent is reportedly flocking to rivals like OpenAI and Anthropic. And that came on the back of this very incredible report coming out of Signal Fire, which was the state of talent report, both in tech but also AI specifically. And there's just some headlines that I want to read out here. Number one, tech's loss generation, new grad hiring drops 50% from pre-pandemic levels.

And this talks about the Gen Z squeeze, entry-level shares of hires are down 50% from pre-pandemic levels. This is in the big tech and startup world, so technology. Number two is Anthropic is setting the pace in the talent race. So Anthropic is doing the best at retaining talent, and they can even retain talent while paying them less. And that really brings us to the locust the epicenter of, I think, talent. conversations in the AI lab space, which I think will be downstream of every other tech sector and then the rest of the world after this. Meta and also Google are offering some top tier dollars for AI talent, yet nonetheless, top tier talent is migrating to Anthropic and OpenAI.

And so the big takeaway here is that talent, AI talent, is much more willing to go to the, what people perceive to be the mission-driven organizations, Anthropic and Open AI, rather than staying with the incumbents. And so they understand. This is my read on this is talent is just looking to change the world much more than they are trying to get paid a salary. And that is benefiting the people who can move quickly, which is Open AI and Anthropic. They don't have the baggage of Google and meta. They can just move very, very fast. They can pivot very quickly.

They are a brand new thing building brand new products. And as a result, talent is leaving. A non-AI talent is leaving Amazon, Google, Facebook, even as, Apple, it's in order to go to the AI labs. And then if you are AI talent, you're going there even more. And then, so that's the kind of the AI lab native conversation. And then there's also just plenty of conversations around there is a reduction in hiring for new graduates. So the new tech sector graduates going in who are looking to get jobs in the tech sector, there just are, there's 50% less hiring than there was pre-pandemic. And you would think that that is to do with

AI and maybe it also is, but it's also worth noting in this report. that they also highlighted just an economic situation. We are now four years away from the zero interest rate policy era. Interest rates have been sustaining at four to four and a half percent for almost four years in a row now. And so the helicopter money from COVID, that just era, that overhang is gone. And so all of the excess capital is pretty like dried up. And so finally four years later, both Series A and startups are just 20 percent leaner than they were. COVID. And so it's not just an AI conversation. It's also an economy conversation, but nonetheless,

the AI companies, again, and I think that's kind of the tip of the spearhead, they are just hiring new grads very little. And there's a lot of that same talent kind of circling around the space. They're landing at Anthropic. They're landing at OpenAI. They're coming from Google, meta, Apple, Amazon. And that's kind of the state of the job market in the AI world. Jaws, what do you see when you see this? It's this really weird scenario. David, where intelligence has never been more abundant and accessible, right? So as a human, you could become the smartest person in the world tomorrow because you have access to chat GPT, but subsequently there's also fewer jobs for you to actually get. And actually the job market

has never been tougher, right? And this dichotomy exists because AI is the enabler, right? And AI can just get directly integrated into a company's kind of workforce without needing to go through the meat vessel that is us feeble kind of like humans, right? The second observation here is the talent pool of individuals that have the ability to progress and advance AI, which is this magical potion, right, that we talk about every week, is so small. So the competitiveness for some of these top companies. Look, if Meta and Google are offering seven to nine, by the way, that's nine figure compensation packages to get some of the best AI. That's $100 million. That's $100 million, by the way, that is currently on offer to dozens, dozens of employees at competitive firms to Facebook. So they're making offers to open AI, Anthropic, anything to get them on board. Like, I mean, Meta just made a $15 billion investment in this company called Scale AI just to acquire some kind of, kind of AI team that they can use to rehaul and build themselves. It is insane. The market is getting very desperate. Now, will this kind of settle over time? I would argue, yes, it will. I don't

think humans are going to get wiped out of jobs. And I think that, David, you make a really good point that we're talking about AI specifically, but the fact of the matter is the free money error of ZERP is just gone. And we might just be seeing kind of adjustments based on that. But it's something to be very wary about, right? It's easy to fear Munger that AI is going to replace jobs. I don't think we're quite reached that point just yet. I still think you need human conductors to make it kind of like all real and valuable. I don't think AI is as smart, but it's a scary one nonetheless. Josh, what do your thoughts on this? Yeah, it's funny because this study applies to maybe 200 people or less. It's a very small subset of people. Oh, interesting. That's a data set, you think?

Well, it's just because there's not a lot of people in the world that know how to do this stuff. And that's why they're so valuable. And I think it is totally warranted for them to pay, I mean, when you think about the opening I.A. acquisition of I.O., they paid on average $188 million per employee. And that's because the pie that you're competing for is so large that if you have to pay $100 million to get an advantage, to get a CEO to run your new AI division that can make a meaningful difference on the balance sheet, that's worth it. But from the employee side, if I am one of these 100, 200 people that is capable of building artificial general intelligence, well, a paycheck probably matters less because the difference between a $40 million

annual compensation or $45, 50, it doesn't make a huge difference in my life when the company I could be working for can be significantly different. And I think that's what you highlighted with Google or Apple and Amazon versus the new labs like Anthropic and Open AI. And we see this with a lot of Elon's companies where people just want to work for the place where they can get the job done the best. And they just want to make progress. And a lot of these large companies, they have bureaucracy, Lots of roadblocks to get over in order to do what you want to do, which is deliver AI to the world. And if I'm someone, I'm like, okay, yeah, take $10 million off the table. I'm coming to work at like a lab that I can actually make meaningful progress on with people who are aligned with

culture that aligns with me. And I think that is, that's what we're seeing. And it's crazy the compensation, but it makes sense because of how high the stakes are. I mean, if you've solved this, you're unlocking trillions of dollars of value. So what's, what's $100 million to hire a new CEO? Yeah. Yeah, maybe the dollar value of the salaries are much less, but you also have to take into account stock packages too. Because like what would you, what would you rather take? Is stock package in Apple, Google, Amazon, or a stock package in Anthropic or Chachibouti. Because Antroping and Chachybti has the opportunity to do a 10x 100x over the next 10 to 15 years versus a stock app package in Apple. Like those things are already, there are the world's biggest companies. And so if you are bold and ambitious, and you probably are, if you're on the frontier of AI,

you're probably also willing to like, you know, take the stock package alignment rather than the salary alignment. Well, my optimistic take on all of this is it's going to clear a path for other individuals that are maybe just below the frontier AI researcher bracket to step up now, right? Because, okay, maybe I won't take 100 million. Maybe I won't take 50 million, but I'll take 5 million being recent. undergrad or PhD graduate from Carnegie Mellon that is an expert in AI, blah, blah, blah, and you'll give him a shot to basically redefine what AI means, right? So what I'm looking forward to is introducing a larger pool of AI engineers and graduates, kind of similar to what we saw with like coding back in the dot-com boom.

All right, Josh, Jaws, 03 Pro, which we covered, of course, in this episode, just got released yesterday, which means next week we'll have a whole eight days of Twitter commentary. Everyone's going to kind of play around it. It's going to be pretty good. And so we'll just have to wait until then to see how O3 Pro permeates through society, including us. I'm going to go use it right after this. Josh and Josh has been yet another week and yet another crazy week. Thank you once again for joining me on the AI roll-up.

Been awesome. See you next week.