Morning Brew Daily - Meet the New OpenAI Challenger & GenZ Investors LOVE Crypto

Episode Date: June 21, 2024

Episode 349: Neal and Toby discuss ex-OpenAI co-founder Ilya Sutskever starting his own AI company that will prioritize safety vs. profits. Should OpenAI be concerned about a rivalry? Then, climate activists just painted Stonehenge with orange paint in the latest episode of defacing historical landmarks across Europe. Next, US car dealerships are scrambling as a widely used software for transactions has been hacked, not once, but twice. Meanwhile, GenZers and millennials who have money to spend are investing alternative assets vs. traditional assets. Also, Amazon is ditching its plastic air pillows in boxes and replacing them with loads of recyclable paper. Lastly, a harrowing escape from war-torn Ukraine featuring 2 beluga whales traveling by…car? Download the Yahoo Finance App (on the Play and App store) for real-time alerts on news and insights tailored to your portfolio and stock watchlists. 00:00 - Olive Garden staying strong 2:30 - New AI sheriff in town? 7:20 - Climate activists paint Stonehenge 10:20 - Car dealerships hacked 14:10 - GenZ investors skip traditional assets 18:10 - Amazon replaces plastic pillows with paper 21:10 - Beluga whale rescue Get your Morning Brew Daily Mug HERE: https://shop.morningbrew.com/products/morning-brew-daily-mug?utm_medium=youtube&utm_source=mbd&utm_campaign=mug 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 for your daily show. Freyman. And I'm Toby Howell. Today, Gen Z and millennials have a very different investing strategy than older generations. Call it the anti-Warren Buffett. Then Amazon has found a new packaging material to replace those fun little plastic air pillows, and it's a lot more environmentally friendly. It's Friday, June 21st. Let's ride. Happy Friday, everyone. You know, a big theme in recent weeks has been restaurants from Applebee's to McDonald's, slashing prices and offering discounts to lure customers back. McDonald's $5 value mill goes on sale next

week. But there's one chain that is holding out Olive Garden. The head of the OG's parent company said of slashing prices yesterday were not doing that. Even at a time that our competitors have ramped up discounting, says he's playing the long game and doesn't want to get into a race to the bottom

that could hurt everyone's profits. What do you think, Toby? Not only is Olive Garden keeping its prices steady, it's also going to continue to emphasize it's never-ending first-course items in its marketing. So it looked at Red Lobster's endless strip deal right in the face and said, not today. We're going to continue to provide those unlimited breadsticks.

And for that, I thank them. Meanwhile, Olive Garden is part of a bigger parent company called Darden Brands. But the company that is outpacing Olive Garden is becoming the gem of this portfolio is Longhorn Steakhouse. I've never been, but it sounds like a delightful. Do they have some sort of like unlimited breadsticks type appetizer? Because they should. Now, let's hear a word from our sponsor, Yahoo Finance.

Today, I want to talk about stock market group chats. I'm sure if you're listening to Morning Brew, Dale, you probably have a group chat with some friends where you send charts of Nvidia back and forth and say, dang, should have bought a little earlier. I hope you're celebrating a rather than ruining. But yes, if you have a group chat with your friends where you're dropping, investing takes, consider introducing Yahoo! mix. If you can bust out trusted news and analysis plus real-time market data and quick succession from Yahoo Finance, you'll be on your way to becoming the group leader of the group chat in no time. Neil, the group chats were in together are usually just us trying desperately to find some way to watch the Euros, but let's head to Yahoo! Lock in and get some ideas flowing. I like the sound

of that. If you want to make your group chats a place for high-level stock talk, head to Yahoo! or download the Yahoo Finance mobile app. It's time to refresh your yard during spring backyard days at the Home Depot. Get low prices guaranteed on propane grills starting at $179 like the next grill three-burner gas grill or get $50 off a select Weber Spirit grill and bring big flavor to your backyard. Then set the scene with Hampton Bay string lights that bring it all together. Shop spring backyard days for seven days at the Home Depot. Now through May 6th. Exclusion supplies, see Home Depot.com slash price match for details.

Breaking news, another former OpenAI employee has defected to start another AI company. That headline on its own isn't exactly newsworthy, but it is when that former employee is Ilya Seussinger, the man at the center of the coup that briefly ousted Sam Altman from OpenAI back in November, and the company's founding aims to produce superintelligence in a safe way, which was also the issue at the center of that November dust up. The new startup is called fittingly safe super intelligence and it speaks to the growing

concerns around the need to build AI with safety baked in as the main priority. Before Sutskiver left open AI, he helped create the so-called super alignment team there which was supposed to help ensure that whatever tech they built would do no harm and wouldn't lead to, you know,

the end of human civilization as we know it. But that approach was at odds with Altman's push to commercialize the AI tech, which led to the eventual departure of Ilya from the company. Ilya is a bit of a mythical figure in the AI space, and for months there was this meme going around that asks, where's Ilya? Well, even though the details are still murky, we now know where Ilya is and what he's working on, safe super intelligence. How did the AI industry all of a sudden just become like Game of Thrones with factions being formed, alliances shifting, and they're all

after these dragons, which is super intelligence, which is intelligence, artificial intelligence, that is smarter than humans. We've heard a lot about artificial general intelligence, which all of these startups and companies, including Microsoft, Google, OpenAI, are after. And super intelligence is even one step beyond that where these machines are smarter than humans. And the big problem to solve there is figuring out a way to make sure that's safe. One of the big things that this new company is selling, because right now they haven't really explained what exactly that they plan to do with this new company that they've started. They're selling focus because they put out this press release that calls out all the external

pressure these AI companies face at companies like OpenAI, Google Microsoft, to produce and go through multiple product cycles, produce something that they can commercialize, make money. They said, we're not going to mess with any of that. We're going to have one singular focus, and that is to avoid distraction by management, overhead, or product cycles. We're going to focus solely on building safe, superintelligence. How they're going to commercialize that? They haven't explained whatsoever, but their big thing that they're selling is we are focused on this one mission.

The thing is, these guys are not going to have any problem raising capital. If you have a startup, if we have a startup more like, we're only going to do this one thing that we don't even know it exists and no one can really describe it. And we're not going to do anything else or release any products. we would probably have a lot of problem raising money. But as you mentioned, Elia is such a legendary figure in this space, just a very respected researcher. And he brought on two other guys, Daniel Gross,

who's the former Apple AI lead and Daniel Levy. These guys are an absolute, Daniel Levy, who also he worked with at Open AI. These guys are a dream team. I mean, Kevin Durant probably wants to get over here because they have many problems to solve, but raising capital is not going to be one of them because any investor who's looking at where to put their money in the AI

space is looking at these three guys and they're like, wow, they are absolute studs. Yeah. So the trick and the thing that will make this company successful or not is if they can achieve this safe super intelligence, one of their big approaches is rather than trying to apply guardrails or these safeguards on the fly to AI tech as you're building it, they're going to try to bake it into the very code base itself. And so that's one big difference where open AI is trying to put these things out in the wild, figure out if it's going to lead to any catastrophic things and put safeguards on top of it. They're going first principles thinking,

going from the very start and trying to bake safety into that superintelligence. Meanwhile, another person who defected from OpenAI, who Jan Leika, who worked with Ilius Utskever on the super alignment team and left Open AI because he didn't really like it at all. Move to Anthropic, which is another very well-funded AI startup backed by Google, Salesforce, and Amazon.

And you can see the arms race continuing, because yesterday Anthropic released its most advanced model yet Claude 3.5 Sonic, Claude is one of those chatbots that competes with Gemini, that competes with Chachybt, and Anthropic is saying that is showing that this chat bot competes on par with those other models. So, I mean, this space is heating up, very Game of Thronesy, very political, very dramatic, and we'll only see what happens going forward. Stonehenge is always in the news this time a year. to the ancient monument in England to celebrate yesterday's summer solstice.

But the stone formation has been in the spotlight for a different reason entirely. Activists from the UK group Just Stop Oil sprayed part of Stonehenge with orange paint in order to raise awareness around climate change and the UK's continued production of fossil fuels. The two protesters were arrested Wednesday and drew widespread outrage for defacing one of Earth's historical treasures. UK Prime Minister Rishi Sunak called it a disgrace and his rival in the upcoming of election said the action was outrageous. But just stop oil was not deterred.

They continued to escalate their protests yesterday when two members broke into a London airport and sprayed orange paint on a jet they thought belonged to Taylor Swift. Disclaimer turned out to not actually to be Swift's jet. Toby, extreme protests against climate change have been on the rise this year, disrupting sporting events, artworks, and plays.

Activists seem to think the media attention they get from it is worth the wrath from the public. Yeah, it is a very interesting game that they are playing because you've definitely seen these videos on social media and the response is always overwhelmingly negative because you're just seeing these people defacing sometimes monuments defacing sometimes private property and you just have this very visceral reaction to them but to them they are living on the edge of what's called the activist dilemma in the sense that you have to choose between doing very moderate actions that would just totally

get ignored by the media or very extreme actions that are definitely going to garner negative attention and may be kind of productive to general feelings towards those protesters. But to them, that is a risk they're willing to take because if no one is talking about them, then no one's talking about me. And we are. We are right now. Let's talk specifically about what they want. Let's move past the sort of the action themselves and talk about the cause they want the UK to stop approving new fossil fuel projects. Rishi Sunak recently announced that 100,000, new North Sea licenses had been granted, and he said he would award them further for oil and gas exploration in the North Sea. He wants to be net zero by 2050. Who knows whether still

be in power? I mean, he definitely won't be empowered by them, but that's the roadmap. He said, and he said we still need oil and gas to power our future. Either way, we're going to have to rely, we're going to have to get some of our energy mix from these sources, why we should do it domestically instead of rely on foreign, you know, foreign countries to provide us that energy. So that's basically what they're after and they're taking this to it, very extreme measures that has upset a lot of people, including druids and pagans who came out against this as they were going to Stonehenge to celebrate the solstice. Right. There is one thing that I don't really want to mess with. It is a mythical kind of monument that a lot of people say there is some

sort of energy around it on the summer solstice. So I understand that a lot of odds was on Stone and that's why they picked it, but man, I do not want to mess with the druids and the pagans if they say that this is something where a lot of energy is going to be concentrated at this time of year. You may not have heard of CDK Global before, but if you're listening to this in a car or I've ever ridden in a car, then you have more than likely benefited from this niche software product. CDK provides everything from online scheduling to e-signing tools to around 15,000 car dealerships across North America. and it's also been the subject of two major cyber attacks on Tuesday and Wednesday. CDK is the lifeblood of daily operations for car dealerships. Without it, you get stories like a BMW store in Manhattan that was forced to pause, all new business, including cars servicing, and new appointments because of the attacks,

or the Philadelphia dealership that told Bloomberg, its employees have been rendered unable to even print out a repair order because of how reliant they are on CDK. you often hear about healthcare companies for casinos experiencing large-scale cyber attacks, but not often car dealerships software providers. But look at how disruptive it's been. I mean, the past few days, you can't have bought a car in the United States. It seems like thousands of dealerships have gone offline because of this cyber attack.

It hits CDK, which provides pretty much everything for car dealerships. It's essentially their operating system. They took themselves online to figure out what was going on with this cyber attack. It's led dealerships into chaos over the past few days, and it couldn't come at a worse time because this is the summer. I mean, Wednesday was a holiday where a lot of people were probably shopping for cars. The summer is the height of the car shopping season and for car dealerships to be taken offline like this. And even for things like service or just scheduling appointments, they couldn't do and they had to rely on sticky notes and spreadsheets and get out that pencil and paper, which we're seeing a lot of companies used when they were hit by cyber attacks.

That is what has been happening in the past few days, and I'm not sure whether they're going to be able to get it up by the weekend. Yeah, one Hyundai dealer wrote on Reddit that service is dead in the water. We are still selling and showing cars, but doing paper contracts. I feel like a caveman. This software is just so integral to everything that they do. People can't look up customer data, and so you can't do anything from service changes, you can't schedule appointments or anything like that. Some dealers said all we're doing is oil changes, because that's literally all. we can do, you come in, it's very analog, you just change the oil. So you don't often think about

car dealerships as a target for cyber attacks, but they are an attractive target because think about the vast amount of customer, sensitive customer data they have on file, you have the credit applications, customer financing information, you have the insurance information. So there's a meaty amount of stuff right there. Right now, it's unclear of whether this cyber attack is related to ransomware. I don't know who's behind it or what they want from it, but all we do know right now that it has been very debilitating. Meanwhile, when you see posts about the, you know, the car dealership hack online, a lot of the comments are not exactly flattering towards car dealership. There seems to be a lot of animosity towards this. And I think it's because people

see them, some people see them as a unnecessary middleman that is monopolized the retail market. And there's been a lot of regulation from governors, from states around the country that sort of require them to exist. Some new, some new car upstarts like Tesla and Rivian are trying to circumvent them and sell cars direct to the customer. But, you know, last, last year, I remember Ron DeSantis of Florida signed a law that required legacy automakers to sell through dealerships to protect the franchise model. So there is a lot of animosity. I don't know if they're, you know, I don't know if they're garnering as much sympathy as another, as another industry that has been hit by a cyber attack.

Up next, Gen Z and millennials have way different investing habits than older generations. Own it all. Pay off your home, travel for life, drive a Ferrari. In celebration of the world premiere of the Monopoly Big Board Buckslaught Machine by Aristocrat Gaming, Yamava Resort and Casino at San Manuel is giving one person a $1.6 million dream package. The biggest prize in Yamava's history. Club Serrano members can earn daily instant prizes and secure a spot in the finale May 29th.

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slash college PC. Our typical Friday segment, Stock of the Week, Dog of the Week, is being swapped out today for a broader look at the investing habits of young people,

and it's very symbolic because the youth, they're out on stocks. According to a Bank of America study of wealthy Americans, nearly three quarters of millennial and Gen Z investors say that it's not possible

to achieve above average returns by investing only in stocks and bonds. Compare that to only a quarter of older Americans who have that view. And you realize, there's a wide generational gap in how people think about investing. When you ask young people about the growth opportunities in investing, their top three are real estate, crypto, and private

equity, and they're putting their money where their mouth is. About one-third of their portfolios are dedicated to alternative investments and cryptocurrencies. Meanwhile, older generations are putting just 6% into these categories. And just to be clear, this survey talked to high net worth individuals or people with more than $3 million in investable assets. So, they're not the average, Joe, but it still highlights a real paradigm shift, which is that the future of wealth is running through alternative investments. Yeah, the old 60, 40 portfolio, 60% stocks, 40% bonds is very much dead and gone. Stocks now comprise only 28% of younger investors' portfolios. That's compared to 55% for older investors. And you see the flip to where's that

money going. It's going to the alternative investments, the cryptos of the world, because Crypto comprises 31, or alternative investments and crypto, comprised 31% of younger investors' portfolios, just 6% for older. So definitely generational shift. If you look into the psychology behind why this is happening, think about what millennials have gone through in their lifetimes already. You've had the dot-com boom when they are first entering kind of consciousness, when they understand what's happening in the financial markets in 2000.

Then you have the financial crisis in 2008, 2009. Then you had the market going south in COVID in 2020. So you've had three very traumatic, very impressionable financial events that happen in your investing timeline. So of course, you're going to be a little more skeptical of traditional stocks and gravitate more towards these alternative assets. I don't buy that. You don't buy that at all? I don't buy that at all. Why, if that's the case in 2008 was precipitated by a huge housing crash, why would their top investments be in real estate or why would they view real estate?

as an interesting alternative investment. I think this has to do with just the access, right? In 2000, Bitcoin didn't exist before 2008. There's all of these apps and ways to access alternative investments now that there were when, you know, our parents were coming, we're investing. And that is, they could just do stocks and bonds. We can do crypto. There are these platforms to invest in fractional shares of real estate. You can do, you can buy fractional shares of old cars and collectibles and all of these different ways. to invest in it. So I think it's the widening of the investing sphere that is driving this, rather than these traumatic events. I mean, if you go back to 2008, the S&P has been up over

500 percent since them. It's returned 10 percent annually. I mean, if you look at that, that seems like a very attractive proposition to stash your money there. So I don't know exactly what's behind it, but I don't think it's necessarily this trauma from previous crashes. Part of it also comes down to the fact that they're just young people as well. So older generations have a bigger timeline, a broader data set, if you will, to look at how stocks have performed. They also have just more calibrated expectations when it comes to investing. Younger people are more likely to take on risk. And so, of course, they're going to gravitate towards these riskier assets.

This is something that I think we'll see reflected going forward. Young people are always going to want to be interested in kind of the more fringe, more alternative assets and old people are going to be a little more stead and a little bit less inclined to do that. So if we're still on the show in 40 years, I think we're going to be having a very similar conversation about younger generations. You know, those plastic air pillows that come in Amazon packages that make a really loud noise when you pop them, will get your last satisfying punctures in because yesterday Amazon announced that it's removed 95% of them from its packaging in North America and will replace them with boring paper filler made from recycling

recycled materials. It's Amazon's biggest step yet towards a less plastic-filled future, and says the change will help remove nearly 15 billion plastic pillows annually, which, good Lord, we order a lot of things on Amazon. Amazon hasn't publicly announced a goal to phase out all plastic from its operations, but in 2022, it did reveal that it used 85,000 metric tons of single-use plastic shipments worldwide, which was actually down 12% from the previous year. given this latest commitment, that number has likely fallen even further. Neil, I know some people out there are going to be sad about the lack of pops you're going to get in, me included, but I'm sure we're willing to get over it for the sake of the planet.

Whenever you hear about Amazon packaging and when they make a small tweak to their packaging, something like this, it just brings to mind the scale of Amazon. I mean, the amount of plastic in the form of air pillows that they ship out would circle the Earth more than 200 times. they send 5.9 billion packages a year, and that equates to 16 million a day. So a small change like this can have a very big impact, and it's why a lot of nonprofits and a lot of shareholders at Amazon are urging the company to make these changes to make their packaging more environmentally friendly, because small change in one Amazon package times $5.9 billion over the course of years going to make a big, big change. Yeah, it makes a huge different. Part of it, when you make a

packaging change, though, is that you need to make sure that this new packaging performs and keeping the item safe. And it looks like they've been performing by many measures even better than the plastic air pillows because they likened if you, they likened to the paper wrapping to the crumple zone in cars that absorbs the shock of collisions very well. So the pillows on the other hand, they are almost trampolines that jostle the things around. Then eventually they can only take so much and will pop. The paper crumpled paper will never pop. And so it is a better material. for protecting your items. And Amazon says, even though it might cost a little bit more than the plastic pillows,

we actually end up saving money with the amount of items that aren't broken in transit and the amount of machinery that we're going to put in that is less costly than the plastic pillows were. So even though on the surface, the paper does cost more than the plastic, they're going to save money over the long term. I never do. They were called plastic pillows. It makes so much sense, though. Now that I think about it, did you pop those? I, oh, they're so loud.

They're like super bubble wrap, so I always like popping those. Yeah, well, so Prime Day is next month, and Amazon said that you will not get any plastic pillows in your Prime Day packages. It's going to be a less loud Prime Day. It's going to be a less loud Prime Day. Let's wrap up the week with a feel-good story about the dramatic rescue of two beluga whales from a war zone in Ukraine. Over a heart-thumping 36 hours from Monday to Wednesday, the two.

Two whales, Plumbier and Miranda were whisked from their aquarium in the battered city of Kharkiv and sent to their new home in Valencia, Spain, home to Europe's largest aquarium. Not that any of you thought airlifting two belugas out of a war zone and across a continent was easy, but this evacuation was insanely complicated. In fact, it's been called the most complex marine mammal rescue ever undertaken. To plot out the details, experts were called in from as far as Atlanta and SeaWorld, and the planning took months. But desperate times call for desperate measures,

and the whales did not have much time left. Their diets were depleted. Medicine was scarce, and Russian artillery has been exploding so close that it caused ripples in the waters. In the end, though, this story has a happy ending. The whales were saved. Credit to everyone involved for making this happen.

It is a feel-good story. There were so many logistical parts of this operation where it could have failed. So the transport crates that the Ukrainians had were too small, so their solution was to drain the water from them whenever they were lifted, which obviously makes it less likely to break, but also now the whales are in dry land. So it increases the timeline right there. And then also the Moldovan

airport didn't have any heavy lifting cranes to move the whale, so they had to bring in this special cargo plane. And then if that wasn't enough, too, the Italian Prime Minister was flying through the airport at the exact same time, which added another additional precious hours to the trip. So I can't wrap my, I can't even book a flight for myself. I cannot wrap my mind around just how many logistics went into this operation. And you might be surprised to think like that, there are beluga whales in Kharkiv, Ukraine, or really anywhere else in certain like random places that aren't necessarily close to their natural ecosystem. But critics are accusing this place, this dolphinarium in Kharkiv of sort of abusing these animals.

And they not really, they shouldn't really be having them in captivity in the first place. So the people, the animal rights activists are pointing to this and saying, look, they should have never been here in the first place. Never mind the war zone, but there are over 3,500 cetaceans, which are the group of animals that includes whales, dolphins, and porpoises that are living in captivity globally. And they wanted to highlight the plate of these two whales to say none of these should really be in captivity at all. Busting out catations on a Friday. That's a good one day. All right. I think it's time to wrap up our shows for the week. as always for listening and we hope you have a wonderful weekend. If you've got a slow summer Friday ahead of you, send a note to Morning Brew Daily at

Morningbrew.com. Let's roll the credits. Emily Milliron is our executive producer. Raymond Lou is our producer. Olivia Graham is our associate producer. Yuchinawa Ogu is our technical director. Billy Minino is on audio. Hair and makeup is looking for anybody with a lakehouse to invite them. 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 on Monday. Spring is the season everyone refreshes everything except their blinds. People put it off because they think it's complicated. But at blinds.com, we've spent 30 years proving it's not.

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