Morning Brew Daily - ChatGPT Goes to Congress, Tesla Ads Coming, & Liberating Taco Tuesdays

Episode Date: May 17, 2023

Episode 61: Dynamic duo Neal and Toby recap OpenAI's CEO Sam Altman's trip to Congress, asking for AI to be regulated. They'll also cover Tesla's annual shareholder meetings where Elon made some big announcements, including advertising for the first time. Then, Taco Bell's crusade to free "Taco Tuesday" and available to all. Lastly, the latest jewelry heist that rocked Europe comes to a close. Learn more about our sponsor, Brex: brex.com/brewdaily Learn more about our sponsor, Fidelity: https://fidelity.com/stocksbytheslice Listen Here: https://link.chtbl.com/MBD Watch Here: https://www.youtube.com/@MorningBrewDailyShow Learn more about your ad choices. Visit megaphone.fm/adchoices

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pwc.com slash U.S. slash brew AI. That's pwc.com slash us slash brewaI. Good morning, Brew Daily show. I'm Neil Freyman. And I'm Toby Howell. On today's show, we'll discuss

the battle brewing over the phrase taco Tuesday. That's not a joke. And we will talk about the notorious German thieves who've been described as a cross between Oceans 11 and Mr. Bean.

Then I'll take us through some sound bites from Elon Musk Tesla's shareholders meeting before jumping to the sports world to see how much money Victor Wembeyanama stands to make as a presumptive first pick in the NBA draft. Neil, it's Wednesday, May 17th. Let's ride. Neil, yesterday was a big day for sound bites and clips. We had a lot of certain tech CEOs talking to the news and the Congress.

So let's jump into the first one. Sam Altman did kind of the tech CEO right of passage yesterday and appeared before Congress. but it wasn't quite as spicy as some of the grillings we've kind of come to to see. Still, we got plenty of sound bites, so I'll take us through some of them. First off, Senator Blumenthal opened the hearing by playing a fake AI-generated recording of his voice, reading an opening statement written by ChatGPT, with the goal of kind of saying, oh my God, look at how good this thing is. This thing is really scary.

And then we also got kind of this general sense that a lot of the lawmakers were desperately trying to get out ahead of regulating AI because they knew they kind of missed the boat when it comes to social media. So we kind of had this existential dread bubbling up. And then Sam Altman obviously pushed back on some of their lines of questioning. First, he likened the AI boom to the rise of photo editing software like Photoshop, saying that people really quickly developed an understanding that images might be Photoshop. So kind of giving the everyday person more credit and that they can discern what is real and what is fake. But then he also had some of his own ideas around regulation.

The first being that he thinks that lawmakers should create a new agency that kind of doles out licenses in an effort to kind of ensure that AI companies will stay compliant with certain safety standards, kind of like maybe the Bar Association, how they give out licenses to practicing lawyers. So there was a lot. What else kind of stood out to you, Neil? Just like the kumbaya aspect of it. It's really weird to see a tech CEO not be on the other side of a grilling. Last month, we had the TikTok CEO, and he was considered basically an enemy of the state. And I think you just saw that the lawmakers here were actually kind of at a loss for how to regulate AI,

because it is very complex and complicated. And they were just kind of looking at Sam Altman and being like, yo, like, what's your path forward here? What are your thoughts? because where this technology is moving so fast and creating rules around something that is evolving, you know, from Dripy Pope to, you know, creating, like now there's auto-chat GPT, which creates its own models of itself. It's just like replicating and cloning itself gets a little scary. So they, you could just sense, like, a sense of tension and looking to Sam Altman for answers.

And he's like, oh, hell yeah. Like, I'm, you know, I just got $10 billion. from Microsoft, and you're asking me to create the rules for myself? He's like, sure, I got ideas. Yeah, it was definitely a different vibe from past. Like, every time Zuckerberg appears, it's like extremely hostile. The TikTok CEO, extremely hostile. But yeah, Sam Altman was kind of guiding the conversation a little bit.

And we actually have a clip of him kind of acknowledging the dangers that AI poses that will play for you right here. I think if this technology goes wrong, it can go quite wrong. And we want to be vocal about that. We want to work with the government to prevent that from happening. But we try to be very clear-eyed about what the downside case is and the work that we have to do to mitigate that. See, I think that's a masterclass in kind of buttering up Congress right here. Acknowledging the danger saying we want to work with the government on this thing.

Like, of course, that's what Congress wants to hear. And he gave him what they were looking for. You know who also said that? Who did? Three initials, SBF. Did he say that? Yeah, he was a regular on Capitol Hill. He was beloved by lawmakers because he would go on Capitol Hill when CZ of Binance, you know, in this crypto world, the Binance guy hated government regulation.

And the SBF was like, I'm going down to Washington and I want to be buddy, buddy with all these lawmakers. And he said, regulate us, regulate us. And so you just, you know, obviously I'm not accusing Altman of being a fraud, Jillant criminal. but you did see CEOs in the past say the same kind of thing play nice when they actually want to write the rules of the road that they'll be going to be half to adhere to. I know. And it is similar to crypto in the sense that you can, you get the sense that lawmakers don't quite understand how to regulate this thing.

So that's why potentially that they are, yeah, looking to Sam Altman. And especially the thing that I wanted to see a little bit more push on from lawmakers was what to do with the source data that these models are trained on. And to be fair, some senators did push on this point. But I think that's the biggest thing that could, I don't know, tank the AI industry if they say, listen, we know you're scraping the web. You're using, especially like to train your image algorithms,

you're using artists work without their consent. If they just say, like, hey, you have to be more transparent about what data sets you're training your models on, that could really like hamstring the progress of AI. So that was one thing that I think lawmakers potentially could put their foot down on. Yeah. And that was notably absent from what Sam Altman proposed. Exactly. Yeah.

So again, love the sound bites that we get out of these things. Just one last final thing on this is that another one that was going around the interwebs was Sam Altman revealed that he has zero equity in OpenAI, which is kind of wild because this company is potentially one of the more impactful ones of the modern age. And he said, listen, I'm doing this because for the love of the game, basically, no equity stake in the company that he's building. So again, this is why he was kind of getting pats on the back from some of those lawmakers. Nah, the tide could turn very quickly. For sure, for sure.

Okay, Neil, let's move on not to be upstaged by Sam Altman. Elon Musk also produced a couple of clips of his own yesterday. So it was the Tesla annual shareholders meeting yesterday, which means we got a sneak peek. into what the automaker has planned for the upcoming year. Here are some of the highlights. First off, Elon said that Tesla will finally deliver its first cyber trucks this year, which has been a long time coming and even said that once production is scaled, they'll be able to produce up to 250,000 to 500,000 units.

Okay, but delivered to who? I know, I know. Like, will anybody buy it? I think people will buy it. People have been on the wait list for so long for these things. That the FOMO, I just think is outrageous. Where in which state do you think people will buy this the most? Is it going to be like a southern I think it's Texas? Southern like Texas F-150 kind of vibe or is it going to be like a California

Northern California? That's a good question. I can see it in Texas for sure. Elon actually did say that he plans to drive a cyber truck on a daily basis which seems like a pretty impractical thing to do but hey he's the CEO. He also kind of noted that he thinks the model Y will probably be the best selling car on earth this upcoming year, which has some chance to actually happen, but obviously might be a little bit of him buttering his own company up. And then he did tease some future models that potentially could be released. He only revealed the silhouette of one, but people think it could be a $25,000 hatchback that he actually mentioned back in 2020. And so people, anytime you get a silhouette of a car, people start getting a little anxious and excited.

So that was a win for people. And then finally, here's some of the biggest headline news that Tesla is kind of famous for traditionally shunning advertising. They don't spend any money on those car commercials that you see constantly. But yesterday, Elon said they might try out a little advertising and see how it goes. So a lot to unpack there. Anything that stands out from kind of those announcements. Everyone always comes back to advertising.

I'm just thinking about Netflix recently. For years, they were like, we are not doing advertising. We're never going to do this. And then, you know, finances get a little tight and your growth slows. And you're like, okay, I guess we got to get some new, got to gin up some demand here. And that's what we're seeing with Tesla. I think we talked about it a month ago where they used to have production problems. They couldn't make enough cars to satisfy the demand for them.

That has flipped in the past few years. where they're making plenty of cars. They got their production all set, but they need to get a little more demand for their cars right now. And they, you know, just like every other car company on the planet, they're going to have to spend some marketing dollars.

I mean, the auto industry spent $17 billion on advertising last year alone. And so it was the fifth largest advertising spending sector overall. Yeah. And for the biggest company, I mean, first of all, it's very impressive that they got this far without advertising in general, that they're the biggest auto maker.

by a long shot without spending a dime on marketing spend, and just Elon being, Elon on Twitter is their marketing. But I guess that's slowing down. I can't wait to see a Tesla ad too. Oh, that's a good point. So there was also an elephant in the room, though, because this is a shareholders meeting,

so shareholders get to ask where the direction of the company is going. And a lot of them was like, listen, are you done messing around on Twitter? Do you understand how damaging it was to the brand? They cited that the brand took a huge hit in terms of like the positivity around it. And then also before Elon Musk brought Twitter, Tesla shares closed at 228 per share. On Tuesday they closed at $166 per share. So that's a pretty big loss in value there.

And so he did straight up get asked like are you are you planning on either reducing the time you spent on Twitter or even are you planning on stepping down from being CEO of Tesla? and he basically said, yes, I'm kind of done messing around on Twitter. He just hired the new CEO. And then also he has no plans of stepping down from Tesla, though. So there is no succession plans in place if people do want them out. We'll see what happens there. But I think this is the juiciest soundbite. He was asked about OpenAI and ChatGPT.

So connecting our first and second stories here, he must said that he's the reason OpenAI exists because of his past investment and support for the company. And so this, like, just deepens his rift with Altman even more. And so he does not really like Sam Altman. Right now he thinks he sold out to Microsoft because of that $10 billion investment into OpenAI, which Musk originally said was supposed to be this nonprofit that's working towards artificial general intelligence, right?

So even after that happened, Microsoft's CEO, Sadia Nadella, push back on must being like, bro, we don't, we don't control open AI. That's a Sam Altman thing. I do love the little battle we have going between the two. And he did slide in the line that Tesla has by far the most advanced real world AI. So the jab. That is debatable. I know. Of course. You can say anything he wants. This is shareholder day. But yeah, definitely interesting to see like the parallels between Sam Altman and Elon Musk and their soundbites. All right. Huge retailers, Home Depot and Target. earnings this week and what have we learned? People are gravitating toward the bottom of the pyramid

of Maslow's hierarchy of needs. The nice to have stuff is getting replaced by the need to have. Let's start with Home Depot. So I'm ready to declare the COVID-era home improvement boom, dunzo. It's over. Sales fell in the first quarter at Home Depot, and it projected its first annual revenue drop since 2009 this year. And that's because people are just not redoing their kitchens or doing their patios like they had been for the past few years when everyone was at home. And the company said the pace of those big projects has just slowed down considerably. It's not a complete shutdown of home improvement. So professionals such as contractors and electricians, which account for half of all Home Depot

revenue, which is an interesting stat in of itself. They said they're still have backlogs and they still have business. But it's just more of this piecemeal thing where maybe you're just doing like a little bit Your counter and you're putting the marble in or you're just doing like a little patio furniture, but you're not like gutting out the whole thing. So that's what Home Depot is seeing in this space. Yeah, they did mention that there's kind of been this shift in consumer psyche for sure. Even though Home Depot, first of all, fantastic business because yes, you have that professional side that supports half your business.

But then also like your core customer are typically homeowners, which are typically more economic resistant to headwinds. So, first of all, great business. I also, another thing that stood out to me is that so even though that we're seeing a little bit of a damper on that COVID-era boom, the boom that Home Depot has gone through over the last decade is crazy. Their annual revenue was $70 billion in 2009. Last year, $160 billion, and they haven't increased their store footprint all that much. So that means the same amount of stores is making $90 billion more.

just an absurd increase in business over the last decade for Home Depot. I mean, I think a lot of the prices for their goods have gone up, but also they probably just got a lot better at online shopping, you know, delivery. And it's just, I remember we were talking a few, like a few weeks ago about how there was zero Walmarts in New York City proper, like zero. Zero. And I just Google this morning, there's about 10 Home Depot's, including one right around here. I kind of want to go.

So Home Depot is like, they're not just a suburban thing. They've kind of taken over the urban market, too, which is actually tremendous. Who's lugging a two-by-four down Fifth Avenue? We'll find out. Let's move on to Tarje. Also not great earnings over there. Sales didn't really grow at all because same things. Customers bought less discretionary goods, which are those non-essential stuff, and bought more necessities, like groceries and everyday things.

So we're seeing just like a gravitating away from, you know, like that fifth candle for your home and more. just like toothbrushes and toothpaste. Yeah, they're diapers. They said that they're ordering more food. They're ordering more of those just everyday items for sure. The general vibe is the consumer's under a ton of pressure right now, like inflation, everything. So there's not enough money to spend.

And so they are spending. Retail sales did increase last month. They're just spending on different things. Right. And it's, they're spending also like the debt load is riding for consumers too. So like they are spending, but it looks like their composition. is changing. Right, for sure. So I like your Maslow's hierarchy of needs reference right there.

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and a year of Xbox GamePass Ultimate, With a custom color Xbox wireless controller, learn more at Windows.com slash student offer. While supplies last, ends June 30th, turns at AKA.m.m.S. slash college PC. All right, I never thought I'd say this for my job, but we've got an IP war brewing over Taco Tuesday. Perhaps one of the best food promotions ever created. Taco Bell, which is a purveyor of tacos, you might have heard of it, asked the U.S. Trademark Office to cancel the Taco Tuesday trademarks held by two small arrivals. in order to liberate the phrase for restaurants nationwide.

In other words, Taco Bell is trying to free Taco Tuesday from its IP prison. So who owns the copyright to Taco Tuesday now? I mean, first of all, I don't know anyone own the copyright, but apparently two people do, or two companies do. You have Taco Johns, which is a Wyoming-based taco chain. It's held a trademark in 49 states since 1989. And then in New Jersey, randomly, there's Gregory's Restaurant and Bar, which owns the copyright to Taco Tuesday over there.

Each of these companies say they're just little Taco Joins, trying to make it in a world of Taco Bell giants by capitalizing on an idea they came up with. But Taco Bell is like, come on. And so it's not seeking any damages or its own trademark, just that it will, just that Taco Tuesday will forever be placed in the public domain. Whose side are you on?

The little guys or the giant corporation? Well, when you phrase it that way, I'm on the giant corporation side here, Taco Bell's side, because I do think you should liberate Taco Tuesday. It's just one of those things that it should bring joy to everyone and no one should own that feeling of joy. I did do some digging, though, and because you called it one of the greatest promotions ever, and they did start it back in the 1980s because they wanted to increase sales on Tuesday, which was their worst day. And so it used to be Taco Tuesday, which was T-W-O-S-day, because they were selling two tacos for 99 cents. So that's what it was. And then eventually they evolved it to actually be Taco Tuesday, how you spelled the day.

And then trademarked it in 1989. So I do love a, although the $5 footlong might have a word. Okay. That is the main difference here. $5 foot long you associate with Subway. Yes. Right? Taco Tuesday.

No one, none of us had ever heard of freaking Taco. Johns before this. And the reason, the definition of a trademark is that it has to come, it has to identify it from a particular source. And so Taco Bell is like, I, no one knows that the source of this is Taco Johns. They surveyed their customers and they said, 86% of people believe that Taco Tuesday is a common name not associated with any particular company. And so it's argued that Taco Tuesday has become generic and informational and you cannot put a trademark on a generic term. I think they're totally right. Like that's just totally true.

I know. But like, we talked about LeBron James. Right. He tried to trademark Taco Tuesday back in 2019 because first of all, LeBron was so cringy, man. Like he, of course he thought that like Taco Tuesday was like his thing. And they, the patent and trademark office said that the phrase was a commonplace term. Right.

And rejected the trademark. So Taco Bell is probably like, you just rejected LeBron. Like, what the heck? reject Taco Johns. Yeah. So I just like if if taco Tuesday is still copyrighted, what's next? You know, like Neil's numbers? No, like 50 cent wings.

Oh, yeah. Like happy hour. Buy one, get one. I don't know. You just got to what this madness needs to end now. And Taco Tuesday, totally on board with Taco Bell saying free Taco Tuesday. Yeah, let's do it. Let's also trademark Neil's numbers as though, because that has some serious IP value right there.

Totally. Some T-shirts. All right. So Neil yesterday, let's move to the sports world, the NBA equivalent of, a mega millions lottery drawing happened, but instead of a million dollar prize, the prize was a seven foot five

French teenager named Victor Wemagnama. So for anyone who's not super interested in the sports world or the NBA world, last night the order was set for the NBA draft. So the actual draft didn't occur. It was just the order was set. And the way the NBA

draft works is that the worst teams from last year have the best chance of landing the top pick. So the three teams with the worst records last year were the San Antonio Spurs, the Houston Rockets, and the Detroit Pistons. San Antonio came out on top and now have the right to draft the best NBA prospect since LeBron James was up for grabbed. So this is a huge get for San Antonio. But honestly, one of the things I like to look at is like how much money did Victor Wembenyama set himself up for last night? and so I just want to look back at like other comparisons of first overall picks

Zion Williamson who was the first overall pick two years ago signed a $44 million rookie deal that was since expanded to a five-year $231 million extension so just contract alone he's looking between like right around $50 million and then also the shoe deal is one of the big money makers for top picks and so Victor Wembeyanama, his agent is saying that they're looking at a shoe deal in the range of $100 million, which would be the biggest shoe deal of all time. The second biggest is, of course, LeBron James, who signed a seven-year Nike deal for $90 million. Which shoe company is going to get it? It looks like Nike is...

Yeah, they just have the deepest pockets. They have the deepest pockets. Nike still is the... We just saw air, actually, the movie about signing Jordan. They still just have the rights to all the biggest players. Do you think his shoes are going to be so big that people won't be able to relate to his sneaker? Because he has like, you know, size 15 or 16 shoes. And they're just like, well, I don't, that's like not even my body.

I mean, they do come in other sizes, but I do kind of see what you're saying a little bit. But yeah, so overall, like Victor Remenjama set himself up for right around $150 million, which he was going to get no matter who drafted him. But it's kind of interesting to put into perspective, a 19-year-old. And it'll go farther in Texas where there's fewer taxes. And San Antonio is pretty, you know, relatively cheap real estate compared to if he was in, you know, the NorCal or the New York area. That's actually such a great angle. You're sitting there hoping that like, all right, low taxes, low taxes, less taxes.

Maybe, but then you have to, you know, no shade against San Antonio, but it's not exactly the most happening place. Yeah. Before we move on, the other two times the Spurs had the number one overall pick. Hit me. David Robinson and Tim Duncan. Didn't work out too badly. You know Kim Duncan's been compared to? I've heard it.

You two look alike. All right. Our final story. We love a good heist story, right? I love it. All right, so let's get into this high story. So yesterday, a German court convicted five men from a notorious crime family in the heist of a $100 million royal jewelry collection from the basement of one of the most secure

museums in Germany. It was the biggest loot in Germany since World War II and kind of took over the country recently. So this 15-month trial gave us a look at how it all went down. So I just want to walk you through. I'm excited. Take me. Okay.

So one week before the heist, okay? One of these guys breaks into a service room for the power supply for the city of Dresden. All right. This is the setup. At the same time, the other robbers cut a triangle out of a metal grate in the window of the treasure chamber that was out of the site of the surveillance camera. They took it out and then put it back in as if it would never been cut out. So the day of the heist in 2019, they fired bombed that electrical supply station that cut out all of the streetlights to the area. And then they moved in and they entered the treasure vault through the pre-cut triangle and took hammers and just started hacking away at the cases of jewelry and took out a lot.

And this is the craziest part. Two private security guards watched this all happened on surveillance video, but they are not allowed to engage with criminals because they are unarmed. Oh. So they just kind of had to watch it happen. So this note, we're finally at the getaway part. They put the jewelry into a car with stolen plates, drove to a parking garage, jumped into another car in Mercedes while lighting the one they were in on fire.

That garage fire spread to 60 cars in their garage and caused more than half a million dollars of euros in damage. Wow. I feel like I just lived through an ocean's 14 movie right there. So this is just a massive deal in Germany. It's such a brazen heist and they finally convicted these guys. I think they're not going to get more than six years in prison because they entered a plea deal. So it is just kind of a bizarre legal system they got over there.

And a lot of the jewelry will be returned. It's a problem in the 17th and 18th centuries very dear to the Germans. But a lot of it was kind of damaged in the process. Honestly, fantastic heist, by the way. Like setting the fire to distract, cutting the power. Yeah. And then honestly a great look for law enforcement, too. Like they track, they sound like these are professional criminals and that they tracked them down and nabbed them all.

I guess. It took a couple years. I know, but still. And they watched them do it. Okay. I think that's a little bare thing. That's a bad look. They literally watched them do it.

All right, that is our show. Don't steal any jewelry from anywhere. You can always email us and have any questions or comments at morning brewdaily at morningbrew.com. Big thanks to our entire crew who made this show podcast. possible. Bryce Belloff is our producer. Samantha Velas and Raymond Liu are the associate producers. Yuchena Wa Ogu is our technical director. Billy Minino is on audio. Hair and makeup is working from home. Devin Emery is our chief content officer. Our show is a production of Morning Brew. Great show today, Neil. Let's run it back tomorrow.

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