Morning Brew Daily - Sam Altman Launches 'Worldcoin', Who College Admissions Are Snubbing & Neopets' New Era

Episode Date: July 25, 2023

Episode 110: Neal and Toby discuss Sam Altman's newest crypto project that requires users to verify their identity by scanning their eyeballs. Plus, the guys break down new research that shows why the wealthiest are much more likely to be admitted to the nation's top colleges. Also, an update on the strikes going on in Israel and why Neopets are finally making a comeback. Finally, why Spotify is upping their price and which soccer superstar is being offered a 1-year deal for... a billion dollars. 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. On today's pod, a blockbuster new study exposes how elite colleges favor the wealthiest kids in their admissions policies, and Spotify just did something it hasn't done in 12 years. Then WorldCoin, Sam Altman's dystopian eyeball-scanning crypto startup is officially open for business. Plus, the Saudi League is at it again, this time bidding an absurd amount of money to try and land French soccer star Killion Imbape. It's Tuesday, July 25th.

Let's ride. All right, Neil, so I was talking to my mom yesterday, and she was telling me how she's perfected the art of referring people to the podcast. So obviously, she likes to spread the good word, but a lot of people just kind of smile and nod and say, oh, that's nice. Your son does a podcast. But she says she started to take their phones and manually enter in Morning Brew Daily to YouTube or wherever they listen to their podcasts. And apparently it's dramatically increasing listeners. So if you've been wanting to get people on the MBD wagon but have gotten lackluster results, Mama Howell says, get your hands on their phone.

Highjack a phone. She should write a LinkedIn post, I think. It would go viral. Yeah, thought leadership on referrals. But yeah, thanks, Mom, for literally taking people's phones and spreading the good word. All right, Neil, let's dive into our top story of the day where Sam Altman's crazy eye-scanning crypto project, WorldCoin, is officially rolling out its services globally. This is the company that has been going around and using a basketball-sized eye-scanning orb to build.

a database of people's identities. The idea is that in a world where it's getting harder and harder to distinguish between humans and robots, using biometric data to verify people is the future. So once verified, users can be issued some of the company's crypto token called Worldcoins that Altman and Co. Envision as sort of this universal basic income for the human race. Neil, there are so many buzzwords here and so many potential ways for it to turn into a dystopian nightmare. But remember, WorldCoin has actually landed $250 million in funding from the likes of A16Z and others. So now that it's here, what do we think about his new venture? I know that everyone listening to this is probably thinking, how can I sign up? I can't wait to

get my iris scanned. The problem is you can't do it in the U.S. yet. There's no regulatory approval here in the U.S., but I think in, you know, a bunch of other countries, 95% of the world's population. You can literally download their wallet on your phone. and then head to an iris scanning orb, which I don't know where these, are these going to be like in the middle of mulls? No, the way that they've been doing it is hiring people to go around

in like infiltrate communities and hold the orb and like convince people to do it. Yeah, it's very dystopian. Like the orbs themselves, anytime you have to look into an orb, you're going to get like, have you looked into an orb? No, dystopian nightmare fuel.

It's like brings up Hal from, what is that from Space Odyssey? Yeah. But yeah, I also just think it's super ironic because obviously Sam Altman is leading open AI, which is kind of kicked off the AI era. And one of the key problems they're trying to solve with WorldCoin is a thing that's become harder to do because of AI, which is determine who is a human and who is potentially an AI, like chatbot.

So he's kind of like attacking the problem that he's creating with his other startup. So it's very interesting that he's working on two of these like paradigm shifting projects. He has his fingerprints everywhere. Yeah. But there is some sort of thing. theory behind, it may sound crazy to people why anyone would want to do this, but there is some sort of theory behind what they're trying to do at WorldCoin, and that's because there's this big authentication problem in the Web 3 Cryptosphere where it's called Sibyl attacks,

where a hacker can infiltrate a network and create multiple fake accounts. You're not actually a person, and then take over, you know, a particular thing and scam everyone. Right. So that is kind of the problem they're trying to solve. I don't know whether it makes sense to collect a bunch of irises. iris scans, but, you know, they do, you know, some crypto experts look at this and say, hmm, you know what, I guess this is one possible solution to protect this major problem that we

have with these decentralized applications. Right. And so a lot of people have been saying Worldcoin's not innovating on the token side. Like the crypto token they're issuing doesn't differ from any of the other tokens like Bitcoin or Ethereum out there. They're innovating on the authentication side, which is, yeah, tying your identity to your eyeball. Although whenever you have like biometric data at play, there's obviously security concerns.

And so a lot of people are saying when you're building these databases of identities, like obviously that's susceptible to being hacked and stuff like that. But then World Coin says we delete the data, like we delete your picture as soon as we scan your eyeball. All that's on file is just like your iris hash, which is a set of numbers that are associated with you. So they're saying like it's going to be secure. Like no one's going to be able to, I don't know, hack into the orb and steal your identity. Yeah.

But again, it just makes people nervous. Because, yeah, hardware, as the Ethereum co-founder of Italic Boutarin wrote this blog post this week, criticizing WorldCoin with a few points. And one of them was saying, look, any piece of hardware always has a backdoor. No matter what you build, no matter how secure it is, there's always a backdoor that you can infiltrate. And it appears, I mean, WorldCoin has been signing up people in developing lower income countries for years now.

And there was this massive investigation by MIT Tech Review, which exposed that they used deceptive marketing practice, collected more personal data than they acknowledged. And they didn't obtain consent, maybe violating privacy laws like GDPR. Right. So this is going to be an uphill battle for Sam Altman to begin with for a long time. Are you getting your eyeball scant? I don't know. I mean, I'm not actually that scared that someone's going to steal my Irish hash data, but it just doesn't seem like something necessary to do. Because my big thing is, in order for WorldCoyne to have any value, people have to start trading like the token and agree that the token has value in itself. So that's always the big hurdle with these cryptocurrencies where you're trying to create value out of thin air and you kind of need everyone to agree that a WorldCoyne has. a value in order for it to have any value. So that would be my hang up. But so far, they say they've collected 2 million users. The goal is to get 2 billion users signed up to the platform by the

end of 2023. So we'll see. Say what you about Sam Altman. He swings big. He swings big. All right, Toby, we've now got empirical evidence to confirm what was long suspected. The richest Americans have a greater chance of getting into elite universities just by virtue of them being extremely rich. Call it, call it affirmative action for the 1%. We know this because of a groundbreaking piece of research that was released yesterday by an all-star team of Harvard economists, including Raj Chetty, who's been dubbed the Beyonce of economics because he churns out banger after banger.

I'm not lying. Look this guy up. He is. I did not know that. He's a legend in economic circles. So Chetty and his team utilized a unique data set of federal records of college attendance, parental income taxes and standardized test scores to show how the top 1% have a better chance of getting into 12 of the most selective universities, even when they have the same standardized test scores and academic record as another applicant. So here are the main takeaways.

Children of families in the top 1% were 34% more likely to be admitted to elite universities than the average applicant with the same SAT or ACT score. Children from the top 0.1% were more than twice as likely to get in. And I'm sounding a lot like Bernie Sanders here. And overall, 16% of the students at elite colleges come from the top 1% of the income distribution. 16% come from 1%. By the way, the college we're talking about are the kind that you have to found and sell a company in high school to get into in the first place. Eight ivies plus Stanford, Duke, MIT, and the University of Chicago. Yeah, I mean, this study was a lot of people were just saying it was groundbreaking because they finally got to peek behind the curtain of the emissions data of these elite institutions.

And yeah, what they found is something that everyone kind of knows deep down. Like, obviously, to get into the elite schools, it helps to be in the 1% income bracket. But just to see how stark the numbers were and how much the curve accelerated, the higher you got up the income bracket was crazy. I also think that the athlete numbers were extremely interesting because, like, yeah, one in eight elite college attendees were from the top 1% were recruited athletes. compared to just one in 20 admittance from the bottom 60% of family incomes. And so basically what that's saying is rich families have the ability to put their kids into youth sports. Youth sports costs a lot of money. And if you excel at sports, you have a much better chance of getting admitted to these elite institutions.

Right. And so, yeah, I mean, I totally, I totally saw it. Like, I attended a school. I was an athlete. And you look around at some of the athletes and you're like, man, I don't know if you, would have gotten in here without your athletic background. The researchers did identify three sort of systemic things that allowed the top 1% to get in at a higher rate than everyone else. One of them is legacy admissions. They said that was the biggest by far, which we know some colleges

are phasing out like Wesleyan last year, but the majority still have. Then there was this private school angle where these guidance counselors at places like Andover have just a really good relationship with the most elite schools and they're writing, you know, the best cover letters for you. There's a tight relationship. So if you go to a private school rather than a public school, that's a huge leg up to get to these elite universities. And then the last thing is this recruitment of athletes, which gives them a much higher chance of getting in with the same test scores. Yeah. So what are the solutions here? I mean, get rid of legacies, get rid of recruitment of college athletics and also put this was interesting to me put less emphasis on the resume

fluffer stuff like volunteering or being a national honor society because that is kind of what gives the wealthiest top 1% a leg up then people were just like well i'm you know of a middle class background and i just like crank through test scores like i'm so good at academics yeah i don't have all this you know president of whatever right and that is more heavily weighted at easily university. Yeah, that's my big takeaway, is that the middle class is kind of like the missing middle in this case because, yeah,

people who, yeah, went to a good public school but don't have the opportunity to do these yeah, like crazy extracurriculars. They were less likely to be admitted than the richest or even some of the poorest students with the same test scores. So yeah, there's this graph that's going around that shows

the admittance, the average, yeah, the average admittance rate for people buy income with the same test scores. And you see like a bump on the lowest incomes, a dip on the middle incomes, and then this huge spike in the highest incomes. And so that was everyone's big takeaway from the study. It's like, dang, it's like really hard to be just a middle class. Middle class person at a public university. They get chip the most. Yeah. All right. Let's head to Israel, which is in chaos right now as mass protests swell and major businesses are striking and threatened to shut down large swaths of the economy. Here's what's going on in a nutshell.

Yesterday, lawmakers approved part of a judicial reform plan that Prime Minister Bibi Netanyahu Far Right government says is important to rein in what it considers a judiciary that oversteps its authority. But opponents, which include the powerful tech industry, major CEOs, economists and central bankers, military leaders, and intellectuals like Yuval Noah Harari, he always comes up, warned that these changes would dismantle the only checks and balances Israel has left and would send Israel on the path to dictatorship. Since January, when this plan was announced, they've staged mass protest to try and put a stop to this plan, but BB and his religious-sla nationalist coalition went ahead with it anyway.

Now, who knows what could happen, but it won't be good. Former Prime Minister Ehud Olmerit said in a TV interview, I quote, We are going into civil war and a group of 150 of the country's largest, companies, including bank, shopping centers, gas stations, went on strike ahead of the vote. Yeah, the population is not on board with these reforms, to say the least. Yeah, we've seen these massive, massive protests, like 250,000 people across a few days. You mentioned the 150 large companies, which is a sizable amount in a nation like Israel. And then also the Army reservists vowed to not show up to duty if the law was passed. That's a big deal. Which, again, makes a lot of

people very nervous, especially like the U.S. who has like military interests, military ties with Israel. So yeah, it's just pretty crazy how widespread the invocal the opposition is to these reform. Imagine if this happened in the U.S., you know, Google, Microsoft, all of the companies. We've seen them come out against Supreme Court decisions or political debates, but they usually just write, you know, an angry worded letter. These people are like the biggest tech companies, and you've heard of them. This is Wix. This is Monday.com. This is Lemonade, the insurance company. They're giving their employees off of work so they can go protest.

Because the problem is if you don't have checks and balances anymore, then you don't create a structure, a regulatory structure that people feel, that foreign investors feel confident in investing in. Yeah. So that's their worry is that, you know, foreign investment, which is really a key part of the Israel startup ecosystem because they don't have super rich, wealthy investors. I mean, they have some, but nothing like Silicon Valley. So they need Silicon Valley to come invest in their companies.

And if they're like, well, Israel's on this path to dictatorship and we have a judiciary that could step in, you know, whenever they want and kind of overturn laws, then we're going to see investment dry up. So you're seeing 70% of startups in Israel saying that they're going to move their operations, at least some of them abroad because of the uncertain regulatory situation there. Yeah, it's just, it's brutal because Israel is a startup nation. It has the highest number of startups per capita. So whenever you have the startup founders saying,

listen, we're just going to piece out if this passes. That's a sign of concern. All right, Neil, before we jump into our 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

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When you want savings, not surprises. It matters where you stay. Hilton, for the stay. All right, Neil, we are back with another edition of Toby's trends where I, a young and vigorous Gen Zier, educate you, a cultured and discerning millennial, about a trend I've had my eye on recently. But honestly, today's trend actually comes from the Y2K. era, so you might actually have a better grasp on it than me. And that's because today's trend is all about Neo-Pets, which is relaunching this week after a year's long period where it was kind of on

life support. Remember, Neo-Pets were all the rage in the mid-2000s. Users peaked at 25 million in 2005, as everyone wanted to take care of their little virtual pets. But eventually, the shine started to fade off, user numbers started dropping, and Adobe Flash was discontinued, which led to the near death of the Neopet community. But as of 2020, there were still around 100,000 daily active users, and some of them were passionate enough to keep the site afloat, despite it running out of loss. Recently, new leadership team has stepped in. They've raised $4 million in funding earlier this year, and now they're ready to re-roll out

neopets to the world with a new site and mobile game. Neil, I'm sure a lot of the people listening had a neopet growing up. Were you one of those people? No. You weren't a neop. I was busy playing flight simulator. My thing was not neopets. But do you think in our current social media era where people are watching, you know, NPC live streamers, they want to take care of a virtual pet? Is that something that could thrive in 2023? I think there's always a market for neopets. And you know what actually gives me hope of saying that is Roblox.

Because Roblox is like the most popular social network with kids right now. We've talked about it on the show before. And I think what it does, it allows people to, like, affect their environment. It allows you to build up, like, your own kind of, like, world in a virtual community. And Neopets offers that same thing where you can create your pet. You can, like, yeah, upgrade it. Like, what do you do with them? Do you, is it a game on top of it, or is it more of just, uh? There's a few games. Like, it's kind of like Pokemon where you have, like, these characters and they can exist in different worlds. Um, but yeah, I mean, 25 million users in 2005. is nuts. So obviously there was always going to be rumblings that neopets would come back. And also,

I think the funniest part of this relaunch is they have a new brand ambassador. And it's John legend of all people where I think they're just like going down like, what's the most famous person we can get that doesn't cost the most money? And I think John Legend was right in that, in that sweet spot. Again, it's neopets. Like they only have a certain amount of cash on hand. But yeah, neo pets are back, baby. Neopets are back. All right, moving on. Did you know Toby that's Spotify hasn't raised the price of its premium plan in the U.S. in 12 years? That is actually crazy. Well, the streak is over because yesterday the streaming service announced it was raising its

subscription by $1. So now you get to listen to the entire library of recorded music of history. Ad free for $10.99 a month instead of $9.99, which it's been priced at since 2011. The price bump comes at a time when Spotify is facing heat from investors in the music industry to boosted sales and payouts to artists. and to bring its prices more in line with competitors, Amazon, Apple, title, and YouTube music have all bumped up their prices by $1 to $1099 per month.

So, anything. I think it's so funny because Spotify said in their announcement that the market landscape has continued to evolve. And what I think that's code for is that literally every single other music streaming service bump their prices $1. It's amazing how in line all the prices are across the... They're all $1099. Every single one is $1099.

Obviously there's difference with like family plans and some of student plans, but I just think it's very funny that everybody went from 999 to 1099 and now Spotify's like finally falling in line. This is a brutal business. It is really low margin. I can't imagine that you can become a really big profit driver doing music streaming because the more you grow, the more you're paying out per stream, right? Yeah, it is brutal. And yeah, Spotify has never made an annual profit. I didn't not know that. Yeah.

That's insane. Entire existence as a company. I do think, though, that Spotify users are pretty, I hope I'm going to use this correctly. I'm going back to my... Elastic? No, no, price inelastic. Which means that demand will stay the same, even if the price changes. Absolutely.

We were getting... Like I said, we could listen to any piece of recorded music in history for $9.99 a month. They were subsidizing us for years. Well, I also just think that Spotify has a good. grip on you. Once they have their talents in you, once you've signed up, you have your playlist. You have the AI kind of knows your taste. And so like sometimes I'll just toss on a Spotify song and it will start playing songs that it knows like I will like. And so I do think it would be a lot of effort to move to, say, Apple Music, where the price is still going to be

the same just because Spotify's raising prices. So I think, and Spotify said that, they say they haven't seen a ton of churn. So I would expect them to maybe bump prices. end shortly because they got to make a profit at some point. I think we've seen this with Netflix, too. They've raised prices a bunch recently, and they don't see a huge amount of churn. I mean, they did the biggest price increase of all, which was kick you off your account. Right. And they, you know, they bumped up their sales a lot.

Spotify is reporting earnings today. They need to fix some stuff related to their podcast business, which they've invested hundreds of millions of dollars in, and it's going really badly. Hey, Spotify, if you're listening, we'll take a little Joe Rogan deal. We'll go for half of Joe Rogan, $50 million. All right, Neil, for our last story, it appears the delicate balance of the global soccer scene is once again in question. Al-Hilal, a member of the Saudi Arabian Premier League, has submitted a $1.1 billion bid for Kiliun Bapai, who's one of the top three players in the world.

Neil, let me just say that number again. 1.1 billion for one player for one year. Okay. Yes, the offer is just one year and includes a $332 million fee to his current club PSG and a one year $776 million salary for Mbabe himself. Just for context, Cristiano Ronaldo is currently making $214 million a year in the Saudi League. I'm quite literally in shock from these numbers, and I want to give a few more contextualizing examples just to show how big this offer.

is. It's more than the entire valuation of the MLB's Miami Marlins. It is more than Kellogg's earnings over the last four quarters. It is more than the entire MLB payroll in 1997 and well over the entire GDP of the nation of Samoa. Those numbers are courtesy of the Action Network. But Neil, holy moly, this is bigger than anything we've ever seen before, even in this era of mega sports washing deals. I think the way you know that it's a big deal is you had all of these NBA players saying, hey, Saudi Arabia is starting a basketball league. So Janice, Antecoompo, LeBron James, a bunch of other NBA players started tweeting and Instagramming yesterday after this number came out.

And they're like, this is absolutely crazy. Like, I would literally leave my sport and go play to do this. I know. Everyone was kind of like laughing because, yeah, Janice posted this Instagram was saying, like, I look like Mbapi, like come sign me. But then everyone was kind of nervously laughing from the background because it is feasible that Saudi Arabia just launches an upstart basketball league says Janus will give you yeah, $200, $300 million a year, come play in our new league. So again, and then you had LeBron

jumping in too. So I know that the NBA was kind of like, ha ha ha, like very nervous about this, though, because we've seen it with Liv. They can, they can literally create an upstart tour because they have the funds to do so. So they were joking, but there was definitely some truth. Do they have the money? Like, I really want to peek into their finances. I know they make a bazillion dollars from oil, but to pay an athlete $1.1 billion for one year? It's crazy. It's true. That number is mind bogg.

He's got to take it, right? I mean, again, obviously there's like the moral side of things, but if someone offers you $776 million for one year of your services, I don't know. $24 per second. Yeah, it's crazy. Apparently, PSG, his current club, already accepted the bid because they're like, yeah, we'll take $330 million for him. so it's up to Mbapé if he actually does want to join.

So would be a shocker if he doesn't. I know. Seriously. All right, we have to wrap it up there. Hope everyone has a wonderful Tuesday. If you want to write in and let us know why you didn't get into your first choice college, our email is Morning Brew Daily at Morningbrew.com. Emily Milliron is our editor and producer, Samantha Velas, and Raymond Lou, are our associate producers.

Yuchinawa Ogu is our technical director. Billy Minino is on audio. Hair and makeup had to take their neopet to the vet. 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. Pay off your home, travel for life, drive a Ferrari. In celebration of the world premiere of the Monopoly

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