Morning Brew Daily - Everyone Hates Google’s AI Ad & Who's Boeing's New CEO
Episode Date: August 1, 2024Episode 378: Neal and Toby recap the Fed meeting and whether signs of a rate cut are still looking good. Then, Google launched an Olympic ad promoting Gemini AI which left a bad taste in everyone’s ...mouth. Then, Boeing hires a new CEO to turn things around for the struggling company. Plus, another wearable AI device goes viral, with a simple necklace that you can talk to…and that’s about it. And finally, Neal shares his favorite numbers from the week featuring a train dispute, the best cities for young grads, and Harvard’s fencing elite. Checkout https://beehiiv.link/morning-brew-daily and get a 30 day free trial and also 20% off 3 months with code BREW Get your Morning Brew Daily T-Shirt HERE: https://shop.morningbrew.com/products/morning-brew-radio-t-shirt?_pos=1&_sid=6b0bc409d&_ss=r&variant=45353879044316 Listen to Morning Brew Daily Here: https://link.chtbl.com/MBD Watch Morning Brew Daily Here: https://www.youtube.com/@MorningBrewDailyShow Learn more about your ad choices. Visit megaphone.fm/adchoices
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Good morning Brew Daily show. I'm Neil Fryman.
And I'm Toby Howell.
Today, Boeing hired a new CEO and all we have to say is good luck.
Then an AI necklace that's always listening wants to be your friend, but it could be a flop.
It's Thursday, August 1st.
Let's ride.
Holy moly, it's August.
Life comes at you fast and summer goes by even quicker.
But there is a lot to look forward to this month.
definitely begin brainstorming your fantasy football team name,
get your taste buds prepared for PSL season just a few weeks away,
and start thinking about what you're going to get me for my birthday,
probably the most important thing on this list.
Toby, what are you looking forward to?
That's literally all I got in August,
because both you and my girlfriend have birthdays in August,
and I know that it's Leo's season because of that.
So happy Leo season to you, Neil.
That in the Premier League starting, of course.
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Well, after months of asking Jerome Powell,
are we there yet?
And him sternly responding, no.
It seems like our destination is finally on the horizon.
and interest rate cuts look like a go in September.
At yesterday's Fed meeting, Powell kept rates unchanged from where they've been for the last
12 months.
But he also said that if current economic trajectory holds, quote, a reduction in our policy
rate could be on the table as soon as the next meeting in September.
That would be a huge relief to anyone who's avoided buying a home because of a 7% mortgage
or looked at the interest rate on their car loan and thought, this has to be a typo.
The Fed's benchmark interest rate has been at a 23-year high since last July with the goal of cooling the economy and bringing down skyrocketing inflation.
It's taken a while, but those elevated rates appear to be doing their job.
Inflation is down to 2.5%, just a hair above the target 2%.
So inflation isn't a major concern for the Fed anymore.
What it is worried about is keeping Americans employed, and there have been several indications that the labor market is slipping.
So the Fed thinks the timing is right to cut interest rates and release its tight grip on the economy to prevent further slippage.
If keeping interest rates the same was an Olympic sport, Jerome Powell would be Simone Biles.
The man has just been very consistent with his messaging, his communications.
So he's basically saying if data continues to give the central bank confidence, that inflation is slowing.
We're going to pencil in.
We're going to almost pen in.
He's doing his crosswords in pen now to put that rate cut on.
the horizon for September. But let's talk about the labor market because that's kind of the start
of the show of this latest Fed meeting because employers aren't hiring at the same pace that they
have in recent years. It's become a lot tougher if you're unemployed to find a job again.
Wage growth is slightly cooling. Demand for labor is falling a little bit. And the unemployment rate
is actually at its highest point in more than two years. It's still just 4.1 percent, so it's not
bad. So that all sounds pretty dire. But remember, the labor market has been running very
very, very hot since the pandemic in 2020. So it's been a byproduct of this rate hiking cycle that
the labor market was going to cool. But remember, part of the Fed's responsibilities is to keep
the labor market intact. So we're definitely seeing a shift in focus from the race against
inflates into now, all right, are we torpedoing the labor market too much? Let's take a broader
look at here and make sure that we're keeping Americans employed. Right. And some of those labor
market indicators, such as there were 1.2 job openings for every unemployed worker in June,
which is down from two during the peak of the pandemic. So we're back to a pre-pandemic labor
market, essentially. Those indicators actually have some commentators, some former Fed officials,
saying we should have cut rates now. Like, this should be the rate cut at this meeting in August
in July, rather than waiting to September. They fear that there is a cycle of unemployment
that could happen, should these interest rates stay elevated and that tight grip on the economy
that the Fed is holding just becomes too tight and it sends unemployment up to essentially
recessionary levels. Some people say we're not there yet. The Fed and Powell clearly do not think
we're there yet, but he thinks that waiting past September would send the job market down a cliff.
And Jerome Powell has been very vocal about this being a highly unusual economic cycle because
we are looking at both slowing inflation, but also strong GDP growth. Remember, the GDP growth came in
very healthy at 2.8 percent annualized rate in the last GDP reading. So Powell literally called
that a historically unusual development. He said that this is such a welcome outcome for people
we serve. What we're thinking about all the time is how do we keep this going? And this is a part of
that. So he's definitely trying to, I think he's a little confused because in all of the recent
monetary policy history, you raise interest rates, the economy clues, it doesn't grow at the
rate that it was before you raised rates, but that has not been the case here at all.
Actually, growth accelerated in the last GDP reading.
So it's going against conventional wisdom, but Jerome Powell's kind of saying, hey, I'm not
going to complain if we're still seeing this growth even in this high rate environment.
And meanwhile, whenever you have a Fed meeting, you always take a look at the stock market
to see how the markets reacted to what Powell said.
and they had an actually insane day.
The S&P 500 and the NASDAQ both posted their best days since February.
And, you know, we shaded some AI companies yesterday.
I said Nvidia was down 7%, which it was.
But it said, and I'm going to take that personally.
And then it was up 13% yesterday.
It added a record $329 billion in value,
which was the single day record for a company adding market cap.
So, Nvidia just completely went ballistic yesterday.
Meta also did well.
after it reported its earnings, investors weren't scared about how much it's spending on AI.
So the stock market really responded well to the Fed's comments and it sent AI companies that had been hurting way back up yesterday.
If you've watched the Olympics in the past week, you've no doubt been inundated by athletes hawking products for all sorts of brands.
Tech companies in particular have used the spectacle to unveil their AI products to a global audience.
And it's going about as well as trying to chase down Katie Ledecki in a 1500.
An ad from Google especially is taking a lot of heat.
It features a dad using its Gemini chatbot to help his daughter write a fan letter to one of her favorite Olympians.
The daughter is an aspiring runner and star 400 meter hudder, Sidney McLaughlin superfan,
who wants to one day meter on the track.
But where Google was hoping you'd see Gemini helping the dad get the words just right as the ad in tones,
a lot of viewers see the sp as a dire and tone-depth warning about how AI is sucking humanity,
out of things that should be heartfelt and handwritten.
People on Reddit called out the dad for lazy parenting,
while others wrote think pieces about how dystopian it all felt to outsource
what could have been a moment of connection with your child to a chat bot.
Neil, the think pieces are pouring in,
and it speaks to the difficulty tech companies are having,
marketing their AI to people in a way that doesn't feel black mirrory.
Totally. I mean, we've seen this over and over again
of companies very much struggling to pitch their AI services,
to consumers through ads.
Obviously, one of the biggest examples of this
was in the spring when Apple
had its new AI
commercial and it showed it crushing
it showed it crushing
all of these things of
artistic expression like musical instruments
and then a new sleek iPad
emerged and people responded to that
very negatively. It took that ad
off there and apologized. It looks like
Google is in the same boat here. They turned
off comments in the YouTube
version of this ad. People did
like it at all. And it does speak to a lot of the fears that people have about AI is taking their
jobs or AI is just stripping out the humanity. And it's painting a future that we just don't want.
I think a big tonal shift that people recognize in this ad is that it went from just helping you
at work to now helping my daughter, which just changes everything entirely because that's a much
more personal relationship than you have with an Excel spreadsheet, for instance. So it's one thing
for AI to help you offload some of the more tedious parts of your job. But if you're offloading
like emotional connection, then that feels like everything that we've been warned about, about
this AI age that we're in. And Google is very careful here. They try to hedge what they're saying
by Gemini's just helping you get a draft started with a little help from Gemini. They're using
these phrases to show that this is just a starting point. It's not an ending point. But still,
not difficult to get to a conclusion that a kid might use Gemini and use it as an ending
point because, I mean, let's face it, humans are lazy, kids are lazy. So if you type in,
write me a fan letter to Sydney and it just spits out a fan letter for you, you're probably
just going to copy and paste that. So that's why a lot of people just were zeroing in on this
ad in particular because of that kind of emotional connection at this, at the heart of this ad.
I have a counterpoint, and that is that a ratings company that surveys people about advertising
and commercials say that this one was actually one of the strongest ones of the Olympics so far.
They felt the biggest connection to it. They said it told a strong story with a lot of emotional
ties. So, you know, it may be a vocal minority that are that are irate at this ad.
And most people were just like, yeah, this is like a pretty compelling story.
My final take on that is outsourcing emotional labor. Outsourcing personal writing is bad.
And I feel okay saying that.
Well, companies are definitely having trouble pitching AI in their commercials.
There are many jobs I'd probably turn down rodeo clown, bomb disposal engineer, and also up there is the CEO of Boeing.
Luckily, a guy has signed on to take the role.
Yesterday, Boeing announced that Kelly Ortberg will be its new chief executive after Dave Calhoun steps down,
and he'll be tasked with engineering one of the biggest turnarounds in the history of corporate America.
Boeing is not in a good place.
It's under heavy scrutiny for its safety practices following a mid-air door panel blowout on an Alaska
Airline 737 Max 9 in January. Regulators are breathing down its neck. It had to cap production
of its best-selling plane, and its balance sheet could be mistaken for WeWorks. It burned through
$4.3 billion in the latest quarter. So into this dumpster fire steps, Orrberg, who was hired
following a month's long CEO search. Is he the guy for the job? Many aviation experts say,
yes, absolutely. Orkberg is both an outsider and an insider. He was the CEO at Rockwell.
Collins, a Boeing supplier. So he knows the aviation biz in and out, but he hasn't worked at Boeing
itself. So maybe he could bring a fresh set of eyes. Good hire, Toby?
I mean, all the power to you, Kelly Orrberg, the market was clearly desperate for a change
here because the stock actually finished up yesterday. That was despite revealing that it had
finished Q2 with a loss of $1.4 billion up from $149 million loss the previous quarter.
and just the losses that Boeing is dealing with, they burn that they're burning right now.
It does remind me of peak we work days in a sense.
The Wall Street Journal calculated that its total losses since 2020 is nearly $25 billion.
So he's stepping into the dumpster fire of all corporate dumpster fires right now.
It seems like definitely investors wanted an outsider.
They wanted someone to bring a fresh perspective in.
Wall Street kind of sees him as this savvy dealmaker.
that's kind of the brand that he has created over his career because he's made deals with
airlines, he's made deals with the government, with the Pentagon. So I think that they're
hoping that, one, he can kind of reinstitute Boeing's good name amongst their major suppliers,
but also he is a culture guy, like the Wall Street Journal, said that he regularly walked the
production floor at his previous company, which I think could be like the biggest feather in his cap
because Boeing clearly has got some culture issues. I think they want to see.
someone on the floor amongst the factory floor.
So maybe that's where Orkberg will shine here is just changing the culture.
Yeah, and one thing I think that is also an advantage for him is that he is an engineer.
He started his career 1983 at Texas Instruments as an engineer.
Maybe he even created Block Dude, which would be amazing.
But the main criticism of Boeing had been that it shifted from its engineering prowess
to more of a shareholder focus.
So they're hoping that Orbra can bring that engineering acumen, that focus on safety and, like, building that Boeing had perhaps turned away from in recent years.
But, you know, he's got a really long to do list.
He's going to have to oversee all of those cultural changes.
He's going to have to finish contract negotiations with the company's largest union, which they're locked in right now.
He has to complete the acquisition of this merger that Boeing is doing with its biggest supplier spirit aerosystems.
He has to stabilize production, lead the development of new planes.
and he starts next week.
I'll take Palm Disposal expert as an easier job.
All right, up next, we got Neal's numbers on deck,
and it's ready to hit dingers.
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If you didn't like the AI software that big tech is peddling, may we interest you in some AI hardware from a startup instead?
Friend is the latest wearable AI enabled assistant to hit the market and the internet is going crazy over it.
It comes in the shape of a necklace and will run you $99.9.
But rather than focusing on making you more productive,
friend just wants to be your friend.
It is always listening to you while you go about your day.
Then when you want to interact with it, you press a button on the pendant.
Say what you want to say and wait for its response that is forwarded to your phone.
For instance, if I was wearing it now, I'd press the button and ask it,
how do you think I just did explaining all that?
And it would reply, you did great, and your parents are definitely proud of you.
Friends founder Avi Schiffman sees Friend as a way to combat the loneliness crisis by giving everyone an AI companion to have close by.
But Neil, this got strong reactions when the launch video dropped on X.
Some people loved it.
Some people invoked the inevitable black mirror comparison.
What did you make of Friend?
Friend is a very interesting little device because of what its founder says it's intended to do.
It is not supposed to take any of your tasks off your plate.
It really is a companion and someone to be in a relationship with you.
And he's very explicit about that.
He says, this is a toy.
A lot of the other AI hardware that has come onto the market has been sort of to replace your phone.
And it can tap into your apps.
You can listen to music on it.
It really is meant to be a replacement of the phone.
And this is not going to be a replacement of the phone at all.
It is meant to be sort of a symbiotic relationship with your.
phone because it'll send you text messages through your phone. So it really isn't just a
totally different category than the AI hardware we've seen. So I don't know what's going to happen.
All I do know is that the concept of developing relationships with software, with AI, with artificial
beings is a thing. I mean, there are these startups called replica and character AI that are
hugely popular. They have some of the most popular apps in the AI space where people are just chatting
with bots of various characters and they're developing relations with them. People talk about
their AI boyfriends and AI girlfriends. Clearly this is a thing. And if this can tap into that
sentiment, then it could be successful. Right. A couple of things I think it also has going for it as a
product. It's $99. It's no subscription fee. It is in Schiffman's own words, he does view it as an AI
toy rather than this game-changing device. That, like we saw, the human
main AI pin tried to make itself out to be as that replacement for its phone. So I think that
people, they'll either like it or they won't. And since it's only $99, I don't think it's going to
make or break people's kind of like entire budget. They're not replacing their phone with it.
Part of what we have to talk about, too, is the marketing that went around this launch. The video
went, the marketing video went very, very viral on X. It had 19 million views last time I checked.
And it also created this intense debate because the friend.com URL that Avi bought, he paid $1.8 million for that domain.
He only raised $2.5 million total for his company. And we do have to include a disclosure here that Morning Brew's co-founder and CEO Austin Reef invested in this round.
But it set off this intense debate on, is this a responsible use of cash to spend $1.8 million of the $2.5 million you raise on a single domain name?
So that set off an entirely separate debate about stewarding cash.
How much is it domain worth?
Right.
And so then people started doing like the acquisition cost of like, okay, you paid 1.8 million.
You got nearly 20 million views on X.
Was it actually a good marketing spend?
So there was just a ton of discourse around it, not even just centering on the product,
but also just how the product marketed it itself.
Right.
And there are so many critics here too.
I mean, they talk about the loneliness epidemic.
61% of young people say they are seriously lonely.
is, do we really want to ameliorate that by giving people technology to create more relationships
with technology instead of people? Critics say it's giving like, it's like giving a starving person
junk food. So there's a, you know, there's a lot of backlash to what Avi Schiffman is trying
to do with, you know, trying to establish friendships between people and robots instead of people
and people. I did see also some people talking about their, who take care of their elderly parents.
and they're like, this feels like a meaningful device that could be created to cater towards the elderly as well,
because you can, whatever, you can make the decision or the argument that it is not the best use case of technology to create these symbiotic relationships with an AI companion.
but if they are lonely as is right now,
if they're not interacting with humanity as much as possible,
why wouldn't they benefit from a device that they can interact with that is always on,
that can pick up on the context of what you've been talking about throughout the day?
So it's definitely polarizing.
I can see both sides of it for sure.
And we saw it with just how big it exploded on X.
So we're only going to see more of these devices.
And I'm not on the waiting list right now, but I might be after that.
You should get one and give your review.
I'd love to hear that.
Okay, welcome to Neal's numbers, the segment where I share three stats from the week's news that will award you the gold medal in knowledge.
First, people get ready. There's a train stat coming, and it's an encouraging one, too.
Rail travel in the U.S. is booming. According to the Wall Street Journal, Amtrak is on track, get it, to set an annual record for ridership.
As of June, 24.1 million riders suffered through spotty Wi-Fi on Amtrak trains since the beginning of the fiscal year.
last October, which is an 18% increase from the year earlier.
So what's going on?
It's probably due to a number of factors, including more government spending on rail upgrades,
people finding that it's a more reliable way to travel than car or plane, and there's just
no better feeling than listening to some moody music while looking out the train window
and pretending you are in a movie.
And it's not just Amtrak hauling more passengers.
Brightline, the privately owned rail service in Florida, tripled its revenue in a year
after introducing its Miami to Orlando high-speed route.
Rail travel is still a rounding error compared to cars or even planes in the U.S.
this is a wild stat.
More people fly at U.S. airports on a single summer day
than took Amtrak trains in or out of Boston South Station for an entire year.
Still, if you're a train geek, there's reason to be hopeful.
There is absolutely reason to be hopeful.
And I know our European listeners are listening to us say, like, oh, trains are great.
And they're going, yeah, we know that.
We've known that for a long time.
But yes, America is very much still a car and honestly, plain-driven country.
It's not surprising.
Trains are amazing.
Like, you love trains.
We love trains.
We use them all the time.
But I do just want to give a big shout out to Uber as well.
It is a big unlocked.
Oh, I did not see this coming.
You didn't see it coming, but I was just thinking about you take these trains, and it's a very rigid
ending point.
And so you need the kind of capillary action that Uber provides to spread out to go to
your actual destination.
So it's just getting me thinking, like, in a country as sprawling as America and car dominant,
you still need that last like, you know, mile, two mile delivery.
So just shout out Uber in our train.
I have no idea that was coming.
Well, hopefully if you end up at a station in a large city, you can take public transit from there instead of Uber.
I do want to shout out that it's not just confined to the Northeast Corridor, which is what you typically think of.
When you think of Amtrak, that DC to Boston, a cellar route.
The number of riders on the Cascades route, which goes from Eugene, Oregon to Vancouver in the Pacific Northwest, has risen 48% in the last year.
And then Amtrak's Pacific Surfliner Service, which rungs along the coast of Southern California, is also up 34% in ridership.
So there is just broad-based increases all around for people riding Amtrak.
There's been a lot of delays recently, though, this summer, I got to say.
All right, next is a stat for all those young grads struggling to get your foot in the door at a job.
you might just be looking in the wrong places.
ADP released a list of the best locations for new college grads to find work,
and they are, drum roll please, Raleigh, North Carolina at number one,
followed by Austin, Texas, Baltimore, Atlanta, and Charlotte.
Notice a pattern? Mid-sized southern cities are teeming with entry-level jobs
and at the same time are affordable.
To create the list, researchers put cost-of-living adjusted wages against hiring rates
for people who typically had a four-year degree,
And the cities that came out on top have similar characteristics.
They have a cluster of tech, health, and financial firms, plus a bunch of universities.
The Raleigh area is just the perfect example of this.
It's home to the famous research triangle of Duke, NC State, and UNC.
And as far as those young grads are concerned, they are not getting the red carbon treatment
from the job market.
As firms have cut back on hiring entry-level roles, the unemployment rate for American workers
between 20 and 24 is now higher than it was before the pandemic.
Yeah, it kind of piggybacks on the job market conversation we were having earlier in the show.
What these stats and what these cities represent to me is it really comes down to the question of,
do you want to have no money in a really great city or do you want to have more money in a mid-tier city?
And I know that comes off as like derogatorily, but this is some of the people that the Wall Street Journal talked to said that exact same thing.
is like, yes, I could go and try to make it in New York and just spend so much money on rent
and on cost of living.
Or I could go to Raleigh.
I could go to these southern cities and just have my money go much, much further.
So it's a conversation that people have had forever, basically.
Young people have had forever.
But now we're clearly seeing this shift towards these southern and warmer climbs.
Totally.
And let's look at the cities on the other end of the spectrum, the worst ones for young grads,
because we just got to find out who they are.
Salt Lake City, Seattle, and Portland ranked last.
But they're doing well with Amtrak, so I guess positives and negative to both.
All right, my final number is that there's an entire American Olympics team that consists of members from a single college.
That team is the men's Sabre Squad and the school is Harvard.
Yes, the Cambridge School not exactly known for its athletics is a fencing powerhouse.
And all four guys on the Sabre team are either alumni or incoming freshmen.
In fact, Harvard has more fensers at the Olympics, eight in total, than most countries do.
One match between American Lauren Scruggs and Canada's Jessa Guo was also a battle of Harvard Senior
versus Harvard freshmen.
But if we're looking at the school that contributed the most Olympians in Paris right now,
you're going to have to fly across the country to California.
USC has produced 58 athletes from 22 countries at the Olympics,
followed by Stanford, Michigan, UC Berkeley, and Florida.
I mean, Harvard hasn't exactly been a powerhouse.
in this event either because before the eight current Olympians, they had a total of nine Olympic
fences in the entire history of the Olympics and only five since a World War II. So it's really been
just this upswelling of talent in the program. And I was reading into it a little bit. And the
justification is that fencing is a very cerebral sport. People call it chess with swords. And so like
you do have, it tends to be some people from a small college outside of Boston who do well in it.
So I've been trying to watch fencing, though, and maybe you need to go to Harvard to understand it because there's different, like, if you use an EPA or a saber, you can touch people in different places.
So I don't know.
Maybe that's why I didn't go to Harvard because I'm clearly struggling with the rules a little bit.
And on final note on the Olympics, there's just one more bonus number here.
The United States has become the first country to top 3,000 Olympic medals in both summer and winter games.
that was due to Bobby Fink, silver medal in the men's 18-800-meter freestyle.
He became the 3,000 medal that a U.S. has gotten, and no one else is even remotely close.
Second place is the Soviet Union, which doesn't even exist anymore has an existence since 1991.
They have 1,200 medals.
And then third place is Germany with just over 1,000.
So, congrats to the U.S. on 3,000 medals.
And congrats to Bobby Fink, man.
Get a tattoo, 3,000th medalist right there.
Let's wrap it up there. Thanks so much for starting your morning with us and have a wonderful Thursday and start to August.
For any feedback on the show, you can send an email to Morning Brew Daily at Morningbrew.com,
and it's totally cool if you use Gemini to write your message for you. We don't care.
Let's roll the credits. Emily Milliron is our executive producer. Raymond Liu is our producer.
Olivia Graham is our associate producer. Euchenna Wa Ogu is our technical director.
Billy Menino is on audio, hair and makeup just wants to be your friend.
Devin Emery is our chief content officer and our show is a production of Morning Brew.
Great show today, Neil. Let's run it back tomorrow.
