Morning Brew Daily - Musk's AI Warning, Bernie Sanders grills Starbucks & Metaverse is meh?

Episode Date: March 30, 2023

Episode 28: Neal and Toby discuss the letter penned by Elon Musk and other tech giants calling for a pause on AI developments and experiments. They also breakdown why things got spicy between Sen. Bernie Sanders and the Starbucks CEO. Plus Disney and Microsoft are out on the Metaverse, what does that mean? Neal shares his favorite numbers from this past week and also... How does a billionaire die without anyone knowing? Learn more about our sponsor, TaxAct: https://www.taxact.com Learn more about our sponsor, Fidelity: https://fidelity.com/stocksbytheslice Listen Here: https://www.mbdailyshow.com/ Watch 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 am Neil Fryman. And I'm Toby Howell. Toby, I finally learned what it felt like to be Steph Curry on a basketball court or Michael Phelps in a swimming pool last night. Because we played trivia every Wednesday night. That should probably not come as a surprise to anybody. And we were humming. Yeah.

We were humming. I've never felt that in the zone. So we were tied going into first. We were tied at first place, going into the tiebreaker question. And we didn't. We didn't pull it out. it out. We didn't pull it out. But I'll give it to our listeners and feel free to email in with your response. But the question was, what year was the New York Philharmonic established? Not even that

really interesting of a question, but we didn't get close enough to score victory. So we got these really crappy cans of canned cocktails. The second place prize was so much worse than the first place prize. Anyway, it was a great time. It felt really good. We're getting questions left and right. But yeah, New York Philharmonic established what year let us know. And if you get it right, you know, come join us next week. Yeah, we need you. We need you. What are we going to talk about today?

The decline of the metaverse is one topic. Bernie and Starbucks are clashed yesterday on Capitol Hill. And we tried to crack the case of a mystery multi-billionaire. I love our last story. It gets me excited just knowing we have this awesome last story. But to start off the show, we're going to talk about AI. once again because it was once again in the news. So some powerful and concerned individuals from the tech community probably binged a few too many science fiction movies last night and kind of woke up

really scared and ready to rein in AI. So a group including Elon Musk, Apple co-founder Steve Lasniak, politician Andrew Yang, as well as more than a thousand others signed an open letter to AI labs, urging them to immediately pause production of AI models more. powerful than GPT4 for at least six months. So I'm going to read a quick quote from them and then we'll talk about it. This does not mean a pause on AI development in general, but rather a stepping back from the dangerous race to ever larger unpredictable black box models with emergent capabilities. Sounds a little scary.

I think this is actually a very momentous document. This is a very, a document that they will look back in a couple of years and be like, this is when we realized what we had unleashed. This is what Jamie Wilde, one of our writers, called a Frankenstein moment. Yeah, that was well. It just seems these people are, these are AI experts and leaders who think about this all the time and way more deeply than you and I do. And they are saying we literally can't do any more development of large language models past where we are now because we will be stepping into the abyss. That's just crazy to think about.

They were saying we literally can't work on this any longer until we figure out, like Trump said, what the hell is going on. Right. I mean, honestly, I have a very different opinion on this because you're saying it's a historical document that we'll look back on. But I'm not going to lie, we've literally had this exact same thing happen back in 2014. So I did a little bit of digging. And a very, very similar group, including Stephen Hawking, Elon Musk, Steve Wozniak, wrote another joint letter at this conference in Argentina saying the exact same thing, warning about AI in 2014. But did they say stop?

Do it literally put your pencils down? Did they say that? They didn't say put your pencils down, but it's like very, very similar sentiment of just saying like, hey, listen, AI could be an existential threat to humanity. Honestly, theirs was geared a little bit more towards military AI because this was around the rise of unmanned drones. But it is similar. Like, it is a little bit of history repeating themselves.

But yeah. Yeah. We've been on Twitter looking at the. discourse around it. And a lot of it has been, can you slow down a technological advancement? And has that ever happened in human history? Right, because there's probably at this point, there's hundreds of thousands of people working on open source solutions, arrivals to chat GPT. The Chinese are working on it. You think they're going to look at this letter and say, oh, you know what, Elon Musk and Yuval Noah Harari say that we should stop development. So we are.

And I am sympathetic to a lot of the criticisms. I just think this is a moment historic document in general. I'm not saying that I agree because it spawned so many substacks and think pieces. And there were a lot of criticisms for it. Many of them focused on the fact that this letter focused on very far out existential questions when there are actual practical things that we need to fix right now. And they didn't discuss that. Things like transparency in what these language models are being trained on.

So they also focused on the six-month timeframe saying that was super arbitrary. So what happens after six months ends? And then also they were saying, did you watch the TikTok hearing and see our lawmakers not quite understand Wi-Fi? What makes you think that in six months they're going to come together with a proper regulatory framework to sort of, yeah, oversee what's going on in AI? Probably more symbolic than anything, as these open letters often are. Start a conversation. Right. It did start a conversation.

This morning we were just reading responses to the letter and then responses to the responses to the letter from, you know, Todd or Cow and all these great, great thinkers. So it's honestly a fun time to be a substack writer and someone just covering the AI space right now. Before we move on, I've been preaching this from day one. And despite all the existential risks, pausing development, if you get good at asking chat GPT questions, you will make so much money. So Bloomberg had this article yesterday talking about AI prompt. engineers and how much they were making. And now companies are offering up to $335,000 a year for prompt engineers, AI whisperers to coke the best answers out of chatbots. You don't need a computer science degree. You can be an English major, a philosophy major. If you are good at getting the

best answers out of these chatbots, then you will make so much money. We're in the wrong industry, Neil. We're in the wrong industry, Neil. Please stay with me. All right. All right. So let's move on. Being a Starbucks CEO must be really weird. Because one day you are working on infusing olive oil into your coffee. And then the next day you're testifying in front of Congress about union busting. And so this is what I'm talking about. In-term CEO, Howard Schultz, who's the face of Starbucks, really brought it to prominence and has been coming back as CEO, you know, in random stints. He was on Capitol Hill yesterday in a hearing about the company's illegal, perhaps illegal, pushback against this big unionization drive

that's been happening at its stores. This hearing was billed as a heavyweight prize fight against Schultz and Senator Bernie Sanders, a workers advocate who's been putting Schultz on blast for months. He hates his guts. And this hearing did not disappoint. We have a little clip of Bernie. The past 18 months, Starbucks has waged the most aggressive and illegal union-busting campaign in the modern history of our country. The man can spin a phrase and can spin an angry tirade at corporations for sure.

Yeah, I mean, looking into this story, my chief question honestly was like Starbucks has clearly been union busing, right? Like they've been firing employees associated with unions. They've been shutting down stores entirely associated with unions. So even though it's very, very hard for any of these hearings to actually have teeth and actually punish these corporations, it does seem like overall, most people are saying like yeah Starbucks you've been union

right and I think a judge actually ruled that they were engaged in egregious and widespread misconduct so there was actually some court proceedings but just to zoom out just to catch people up about what's been happening at Starbucks I think it was 18 months ago the first Starbucks

unionized and now 300 stores out of I don't know the figure so I'm not going to say you know no I don't know thousands 300 have begun to have voted to unionize. And this is seen as perhaps the largest, you know, most widespread labor organizing campaign in the past few decades that we've seen. And Starbucks has sparked different organizing campaigns at Trader Joe's, at REI, at various other retail outlets. So it was

seen as sparking, you know, a broader conversation around unions. And Starbucks, Starbucks CEO Howard Schultz pushed back, obviously. And he said, look, we are a really good employer. We pay our, we pay our workers 1750 an hour and then with benefits like free tuition at Arizona State, paid parental leave, stock grants, it amounts to $27 per hour. So it's, it's better than minimum wage. I mean, that was kind of his main point. He's like, hey, listen here, I'm, I'm doing the, we're doing better than most of you talking to senators are doing for your constituents in your state and that we're paying them above minimum wage. So yeah, obviously he's going to fire back and say like we're treating them.

Well. Shultz got a lot. So the Democrats were hammering Schultz at this hearing and the Republicans were coming to his defense and actually one of the Republican senators got into it with Bernie on a really kind of funny exchange about Bernie's wealth. And I think you got an all-time record here. You've made more misstatements in a shorter period of time than I have ever heard. Please correct. If I'm worth $8 million, excuse me. Excuse me. I'm worth $8 million. That's good news. to me, I'm not aware of it. That's a lot. Sometimes it feels like he's doing an impression of the SNL, impression of himself. You know, he was just like, I got to get this line in. He was very excited to get that last line in. I think he is pretty wealthy. Yeah, I mean, senators are always a little wealthier than they let on. But yeah, that's unionization. I will say you touched on the fact that Starbucks is kind of inspiring this unionization movement, just to zoom out even

further. Interest in unionization is kind of out of all-time high. One in 10 workers in the U.S. is a member of a union. And the number of unionized workers grew by approximately 200,000 in 2022. So yeah, it's definitely growing fast. Yeah, but I think that might be public unions because union membership rate among private sector workers fell to 6%, which is a record low in 2022, from 6.1% in in 2021. So overall, I just came with some data to just shut you down right there. So maybe Starbucks needs to be like a public sector business. It's another thing where you see a lot of headlines about something,

but actually unionization rates are going down. And you see, compared to what's happening in other countries that we've seen recently, with France's unions kind of paralyzing the country. And then what happened in Israel this Monday when the union called for a strike, there's just union power has absolutely. rapidly diminished from the 1950s to now. There's unions for you. A nice rossess of the Starbucks CEO.

Had to get that line in there. Okay, Neil, I'm actually going to steal a Wall Street Journal headline here to introduce the next story because, frankly, I wasn't coming up with anything better. So I'm just going to read it. The metaverse is quickly turning into the meh tiverse. I think you could have come up with something better. I know, but I liked it. and the MEH toverse.

It was good. So shout out to the Wall Street Journal for that. So the big thing, Drive the News, is that Disney has been conducting these rounds of layoffs, and one of the casualties has been its entire Metaverse division,

and it's far from the only company kind of pulling back from the Metaverse. So Microsoft shut down the social virtual reality platform that I bet you never knew existed back in 2017. I was a power user. I know. And then even Zuck, who literally renamed the company Meta,

is focused way more on AI in his latest earnings call than the Metaverse. So, Neil, I know this pullback from the Metaverse doesn't exactly surprise you. No, because do you remember that they called for a six-month pause on Metaverse development? Oh, my gosh. No, they did not need to do that because it was slowing down. It is striking to have these stories back to back. Yeah. No, this is, to me, it's further proof that the Metaverse was just a low-interest rate phenomenon.

And then when the Fed hiked rates, tech companies had to do some belt tightening. and they looked at, you know, they spread out their papers and they're like, okay, let's examine all of the business units and see how they're performing. And then they looked at this one particular one that was called the Metaverse. And it was like, well, okay, we're spending $2 billion on this. It's bringing in absolutely nothing. The fruits of our labor here might not be seen for another 10, 20 years. Easy decision just to put that on the chopping block.

Yeah, it is interesting. I mean, we mentioned AI. We mentioned AI in comparison to the Metaverse. and one of the quotes at the end of this article on the Metaverse was basically saying, like, change isn't that fast. It's from Matthew Ball, who wrote a book on the Metaverse, big proponent. Front of the Brew, we like Matthew Ball, but he's kind of hung his hat on the Metaverse. And saying change isn't that fast when we literally are just talking about AI where they're trying to rein in change because it is so fast.

So if this was a true technological paradigm shifting advancement, I don't think we'd be seeing entire business units cut. this pullback like we are? Well, one thing I will say, and for some reason I'm going to take the bullcase on the Metaverse here, is Apple. They just announced yesterday that they are holding this worldwide developer conference, which is this big event in the summer that the iPhone was introduced and things like that. This year is supposed to be really important because they are releasing a mixed reality headset that will cost $3,000.

So, you remember yesterday we talked about how Apple going into Buy Now, Pay Later, legitimize the sector. and when someone like Apple, a lot of smart people working there, is going to release a mixed reality headset, you kind of also are thinking to yourself, okay, maybe there are some legs. If Apple thinks there's some reason to invest in this space. So, you know, as Apple goes, maybe Apple's wrong,

just like Zuckerberg has been wrong so far. Yeah. But I don't know. I feel like it's going to happen. I feel like we are going to live in virtual worlds. The hardware just is really bad right now and expensive. there's no way you're paying me to put on a headset. The Neil Bull case.

It always convinces me. That was a very soft. Soft bull case, yeah. All right, before we jump in the next story, we're going to take a quick break. 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.

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to study and play with select Windows 11 PCs. eligible students get a year of Microsoft 365 premium 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, terms at AKA.m.m.m.S. College PC. Toby, you can't seem to go anywhere on the internet without seeing coverage of succession, but it appears to be getting a ton of disproportionate attention relative to its viewership. And that's my segue into Neil's numbers. I realized I never.

It's my favorite segment. I didn't even... You got too excited. I got too excited to get into it. But yes, this is the Thursday segment, Neil's numbers, where I give various stats that I found while reading the news. And Toby's jaw just drops and hopefully yours will too when I say them. All right, back to the spiel.

So yes, Succession gets a lot of attention. But when you dig into the actual details of how many people are watching it, there aren't that many people watching it relative to other TV shows. So the season four premiere last Sunday got 2.3. million viewers, but compare that to Yellowstone, season five premiere last November, got 12.1 million. So it shows there's this coastal elite thing going on, and I know I may be part of it, but I'm at least self-aware, where the media is obsessed with succession due to the subject matter. Meanwhile, six times as many people are watching Yellowstone, and it doesn't get, you know, even a fraction of

the coverage. Yeah, it's such an echo bubble. I truly have never seen either of them, one episode of either of them. So I am so far removed from both of these echo chambers. So I am not contributing to the problem, this coastal elite problem, as you mentioned. But yeah, I remember getting, I got a push notification on my phone that Succession dropped. That's crazy. I've never watched it. So, yeah, but you're totally right. Like, it's about media. It's about media. The writers write it for Twitter. Right, right. And so that's what I think is, it's going to give it a not-a-long-shelf life. I think Succession is making itself into, here I am going off about Succession. when no one people, when people don't watch it.

Okay, I'll call myself off. I want to watch Yellowstone. It seems really good, actually. Okay, on opening day, today's, here's my second number. Opening day, baseball, one of the best days of the year. Possibilities are endless. Possibilities are endless. You've got to do a baseball stat on opening day.

So here's one that captures the transformation of the New York Mets. Because I think a lot of people who don't follow baseball hasn't really seen what's been going on with the Mets. used to be this hapless franchise. They hated themselves. They were all disappointed and frustrated. But the payroll this season for the Mets is $370 million, which is by far an MLB record and $160 million more than the second place team, the Yankees.

And they also have to pay another $100 million luxury tax on this bill. And the reason the Mets have been spending so much is because they got a new owner, Steve Cohen. You know what Steve Cohen is? It's a hedge fund guy, yeah. Hedge fund billionaire, who was loosely inspired Bobby Axelrod on billions, which I think a lot of people, maybe more people watch billions than succession. So Cohen took over this franchise in 2020, has just been literally unloading his paycheck, kind of transforming the game and giving new life to the Mets.

About time. If you're a billionaire, what else are you going to spend your money on other than just making a badass sports team, basically? This is what I think every billionaire should do. Jeff Bezos might buy the commanders. This is the thing that you're supposed to do when you're a billionaire. I'm glad one of them is finally busting the bank, breaking out the pocketbook, and just spending to win. Yeah, people are saying that other, there should be a salary floor, like forcing other billionaires to pay as not as much as Cohen, but spend as much as going to increase, like, enough to increase amount of parity in MLB or else the Mets will just like the floor. Would you rather have another...

Go Phillies, by the way. Another yacht, or would you rather have a winning baseball? Or would you rather have Justin Verlander? Yeah. All right, number three, egg prices. Remember when all we were talking about was not AI, but was soaring egg prices? We recently learned its effect on the companies that sell them. Turns out high egg prices were pretty good for business.

CalMaine Foods is the largest egg producer in the country. It recently said that its revenue doubled last quarter, which is great. But listen to this. Profits grew seven. 118% because of higher egg prices. So egg prices were $3.30 in the quarter ending February 25, and that was about double the average a year earlier from $1.61. Oh, my gosh.

718% profit. I don't think that's like chart breaking. That's like the, that's the AI version of eggs. AI eggs somehow came to the egg business. It reminds me of a Ramco, the oil jump, the oil company that just recently scored 161 billion in profits because of higher oil prices. Kind of the same thing going on. Yeah.

All right, let's move on. I can't believe I butcher the opening to that. I will do a good job with this next story. Toby, if you are in, I know you're not, but if you're an 18 to 35 year old dude living in the UK who likes the party, Amsterdam does not want you. So the city is rolling out an online ad campaign called stay away. Very clear, very clear messaging. It's urging young Britishmen to book their next stag party, which is what the Brits

call a bachelor party in another city like Scottsdale. It's doing this to fight what it's saying is hordes of British lads coming into the city for sex and drugs and they end up peeing in public, getting into brawls and just being super annoying for local residents singing you'll never walk alone. That's such a funny detail. This ad campaign was hilarious. It was so over the top. The music behind it made it seem so epic. It shows a guy like getting put into jail. And it's so interesting because they're basically saying do not, yeah, stay away. do not come to our country, which is odd for a city that relies on tourism. Yeah, they're just so swamp.

They're slammed. It's over tourism is the issue. They actually called it over tourism. Around 20 million visitors visit the city every year. That is a lot of. Right. And I think the population's 800,000, almost 900,000. So, yeah, if you go to Amsterdam, you're more likely to bump into a tourist.

I just think this is a misguide. I think the tone is wrong. It's a little misguided because you're just creating animosity between. British fans, British people, but Brits are going to come to your country at some point because maybe you're hosting the World Cup or England's playing the Netherlands in Amsterdam. And then you think they're going to be nice to you

when they come in. I think they're just going to run train. Final note is that is very similar to what's playing out in Miami right now. I don't know if you've been paying attention because it's the different other coast of Florida than you grew up on. But Miami after spring break has been super violent. People have been killed. And the Miami Beach

mayor is like, we're going to just have to stop spring break from happening. Yeah. I've in there during spring break. We were there together a few years ago. Oh yeah, it's not fun. It's like carnage-inducing. So I'm on your side, Amsterdam. All right, Neil, that was a fun story, but I have an even more fun story to end it.

This is actually involving the IRS, which I don't think anyone has said the words fun story IRS on a news show before, but we're going to make it happen today. So basically there's this guy who was working at Wharton, Penn Wharton, as a budget analyst, who spotted this massive, massive tax bill and the U.S. Treasury's daily reports of government transactions. So on February 28th, there was a deposit of $7 billion in the category of estate and gift taxes. And we're about to toss a chart up for our YouTube viewers

that shows just how big of a outlier this was. We'll also tweet it out if you want to check it out if you're listening on the pod. So basically, everyone's like, how does this happen? Like, how do you have a tax bill at this large? And essentially, it's an estate tax, which happens when someone's estate is passed on after they have died. So everyone's like, which billionaire died? Right.

Who was it? And so, Neil, who do you think? What billionaire? They probably had to have a net worth of $35 billion to have a tax bill this high. So what are your... Right. So they paid that tax. They have to have $35 billion.

So I was looking up all of the billionaires who, you know, are worth about that much. I found a couple. So the industrial tycoon, Scrooge McDuck. was worth $44 billion in 2011. So this could be what he's leaving to Donald. Maybe, you know, he wrote down some assets. Then we got Daddy Warbucks from Annie is worth $36.2 billion. I don't know what he's been up to, but definitely in the same range.

And then smog from Lord of the Rings is worth $54 billion. The dragon? You said he's not a dragon. Oh, he's a Wivern, actually. Yeah, you're right. Yeah, so Smog, the Wivern. Yeah, Wivern. He's worth $54 billion.

Who knows when he accumulated his fortune? inflation could be hit hit he did not you know put his assets in the right place and he could be down to 35 billion so those are my three possibilities do we do we have any sense of who it is i know honestly it's not as exciting as the three that you just mentioned but the one option that we truly think it may be i'll let you take his my voice oh my god what happened i don't know i got a little something in my throat i think it is uh sheldon adelson who is this uh crypto magnate or no casino magnate i hope toby's okay over there. Oh yeah, so they think it's Sheldon Addelson who died in 2021. He was a big Republican mega donor and helped make Vegas what it could be or what it was over the past

few decades. Good? I think I'm good now. Well, at least we're done with the show, so you can just go grab water. Take his home, Neil, please. All right. Thanks for joining me, Toby, and for everyone on listening and watching. Make sure you email us at morningbrewerdaily at morningbrew.com. We got some great emails. Keep them common. As always, major kudos to our team in the control room. Super jazz for opening day. The show's producer and editor is Emily Milliron. The show's technical director is Lonnie Fiscus.

Our supervising producer is Bryce Belloff. Our amazing audio engineer today is Kelsey Jones. Hair and makeup got signed by the Mets. 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. Great to hear your voice again.

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