Morning Brew Daily - Vice Media Bankruptcy, Meet the New AI Datebot & Eurovision is Big Business

Episode Date: May 15, 2023

Episode 59: Kyle is back for one more round! Neal and Kyle dive into why Vice Media became the latest major media flameout and what it means for the news industry. Plus the guys wrap up some big headlines around the world from Turkey's Presidential election to why Eurovision is big business. Meanwhile we'll get introduced to a new AI datebot, CarynAI and they'll also preview a huge week ahead filled with earnings and film festivals. Learn more about our sponsor, Fidelity: https://fidelity.com/stocksbytheslice Listen Here: https://link.chtbl.com/MBD Watch Here: https://www.youtube.com/@MorningBrewDailyShow Learn more about your ad choices. Visit megaphone.fm/adchoices

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Good morning, Brew Daily show. I am Neil Fryman. And my New York driver's license now reads, not Toby. Make it official. Today on the pod, we're going to talk about one of the biggest startup flameouts of all time and how a single tweet propelled a book no one had heard of to the top 10 bestseller list on Amazon. Very excited for today's show. We're also going to talk about a fast-rising new sport and it's not pickleball and AI girlfriend.

I don't think I need to say anything more than that. Neil, let's ride. Kyle, it is a graduation season for college students. Very excited. Seeing a lot of robed individuals walking around town, taking pictures, looking all happy. Yes, commencement speaker season is here. Neil, when you graduated college, which was only one year ago, I heard, who was your commencement speaker? So I graduated 10 years ago from the University of Maryland, which was crazy to think about.

2013. My commencement speaker was none other than a Baltimore legend, Cal Ripkin Jr. That's actually iconic. Okay, it sounds cool. Everyone at Maryland was obsessed, obviously, and super hyped. He got up to the podium and said the most generic things possible. Everyone was all hungover and didn't care. So it was kind of a little bit of a disappointment.

Yeah, I mean, I think that's the classic commencement speech is like hangover plus platitudes equals commencement speech. I graduated 2015 from the University of Minnesota. So kind of like Maryland, but a little better, you know. And mine commencement speaker was Olaf. From Frozen. Like, what? The voice actor. Josh Gad?

Maybe Josh Gad. Yeah. Someone's going to have to fact check this for me because it was someone like that wasn't the first star of Frozen. They were like- Is he like curly-haired, dude? I'm not sure. Yeah, you don't remember. I don't remember much.

I thought you meant like an AI avatar of Olaf. Anyway, that sounds fun. You of M represent. Yes. Who was the better M? RM sucks, so you probably won. Yeah, we have a great M. All right, let's get to the news. We're going to start with an industry that's very close to home, digital media. Things are continuing to fall apart over there. The online news company, Vice, filed for bankruptcy this morning and agreed to sell itself to a group of creditors for about $225 million. This will allow it to keep operating and producing content, so it's not completely disappearing. But along with BuzzFeed, which just shut down BuzzFeed news a few weeks ago, there's definitely been this pattern of hotshot digital media companies that were supposed to revolutionize the way people consume news.

Right. In the 2010s, just absolutely collapsing. Yeah, I mean, Vice just raised $135 million in 2021. And at one point, they boasted a valuation of $5.7 billion. And now, like you said, they're basically selling for pennies on the dollars. So they definitely peaked. But they have created some incredible content. For sure.

And, like, I remember getting into Vice because they were the first. first company I remember being like, we're going to send journalists into active, like, war zones or like protests. And they made some really, really good content, some really, really good documentary. So it's kind of sad to see them go this way. It's sad. It's just tough business out there. They raised $1.3 billion in venture capital. This was seen as like the next big media company. I mean, you had Disney buying a stake. You had Fox. Like Rupert Murdoch looked at advice and said, I think this is the future of news. There was a private equity giant TPG that plugged it with $450 million. And Disney was thinking about acquiring it actually for $3.5 billion. The founder

turned it down. That was in 2016. And that doesn't look good. That's very similar to what happened with BuzzFeed. Disney approached BuzzFeed and the CEO there, Jonah Pready turned it down. And now there's a lot of kind of, I told you so. You should have taken the deal. Look what happened when these of these companies stake their claim on social media and Facebook and Twitter and all the other platforms being able to circulate and distribute their content when any little algorithm tweak to devalue news kind of killed their businesses and vice especially I mean just spent so much money on video content yep like you were talking about these very intense documentaries and journalists all around the world this is super expensive they found it very hard to turn to profit and when you

take in that much venture capital you have to have these very ambitious sales targets to hit, and that sometimes can change your incentives and lead to utter collapse like what we just had. Yeah, I mean, I think there's a lesson in here that we can all learn from, and that is if someone offers you $3.5 billion, just say yes and go retire.

But in all seriousness, I do think that there's a lesson for media companies, and that is focus, that you can kind of expand your offering, your portfolio of offerings, so wide that it's really hard, to make them all monetizable. And I think not just great content,

but you also need a business model that supports that great content, whether it's through ads or subscriptions. And I think they just honestly over-expanded. There is an incredible how I built this episode, I want to say with one of their co-founders, Sirouche Alvi, Guy Raz interviews, him,

and it talks about VICE's origin as a Montreal alternative magazine. 1994. And it maintained that edginess, that youth culture, up to a point where maybe they expanded and kind of lost that particular brand a little bit. and advertisers started fleeing.

But digital media companies are still popping up. There is one that is rising from the ashes today called The Messenger. It is launching with $50 million in venture capital. It has 175 journalists around the world. That is huge. And it started by the guy who started the Hill, which is the, you know, the D.C. publication. And within a year, he says he plans to have around 550 journalists, which is the same amount as the Los Angeles Times.

So digital media company is going to digital media. Yeah, I'm curious on how they keep getting investors because I don't think that anyone that's raised a substantial amount of venture capital has ever given a return back to the investors. But we'll see how Messenger does. All right, moving on. Kyle, we spend the vast majority of our time on this podcast

talking about U.S.-based news. That's right. Let's expand. In the next three minutes, let's just grab our passports and those weird plug-in outlets that don't comport with the U.S. That says not Toby, let's do it. And do a quick tour of some major headlines around the world. There are some huge ones recently.

Start with the Turkey elections. That was the biggest story this weekend around the world. Neither the incumbent president Recep Taip Erdogan nor his challenger got 50% of the votes needed to win. So they're going to head to a runoff on May 28th. This election is being called the most consequential in a generation for Turkey and the rest of the world because Erdogan has been doing his best authoritarian impression lately, throwing journalists in jail, aligning Turkey away from the West and more towards Russia. But the top issue of this election was the economy, specifically the botched response to that very deadly earthquake that happened earlier this year, and also inflation and the

surging cost of living. Inflation was ripping above 80% last year in Turkey, and now it's still high at only about half that. But the weirdest thing is that how Erdogan has tackled inflation through very unorthodox economic policy. So remember what happened here during inflation is when there was very high inflation, the Fed raised interest rates because that is seen as slowing down the economy. People stop buying stuff and inflation comes down. Right. Erdogan, for some very, for some reason that no one can really explain, he argued that rates should be left lower to battle inflation. So he kind of took

over the central banks independence and did this very curious economic policy that I don't think has worked out for him. But Turkey is a really big player in the world, $900 billion in GDP, top 10 emerging market. So everyone kind of has there. And Turkey for centuries has been this go-between, between the east and west with all these trade routes. So everyone's watching what's going to happen in Turkey May 28th. Yes.

I really liked Turkey's recent rebrand as well. The spelling, I think this is how people in Turkey had always spelled it. But the state department actually announced we're going to spell it T-U-R-R-R- K-I-E. Yeah. Yeah, we love a good rebrand. Morning Bruce policies, just call it turkey. Let's move on to our second international headline.

Did you catch Eurovision this weekend? I didn't, unfortunately, and I'm now realizing I missed out on the greatest of all time. So it's Europe's extremely over-the-top music competition. Countries compete against one another in this Olympic-style singing Olympics. I guess you could call it. Sweden won this year, thanks to Lorraine's performance of the power ballad tattoo. And if you didn't catch the performance, you can watch it on YouTube. It's all very extra and campy like Eurovision is known to do. But people love it. I mean, you just have to look

at the TV viewership numbers. More than 160 million people tuned in to watch this competition for comparison. About 100 million watched the Super Bowl in the U.S. And then Sweden is obsessed with Eurovision. Check this out. Give me some Swedish facts. When it held its national competition to decide who would compete on behalf of Sweden at Eurovision. Vision, 3.5 million people watch that. And now think about this. There are 10.5 million people watch living in the entire country. Wow. So you have a little more than a third of everyone tuning into this music, singing competition. The other two thirds were at IKEA. And then, so next year it heads to Sweden because they won. And it'll be on the 50th anniversary of the

most iconic Eurovision performance of all time, which was Abba singing Waterloo. And that, Eurovision has a way of propelling unknown stars to fame like Abba and then Celine Dion we were talking about who competed on behalf of Switzerland Yeah, and if if like the Olympic Games are like big overinvested media companies Eurovision is like the small scrappy Startup bootstrapped they spent 13 million dollars last year's Eurovision song contest It brought 90 million in tourist revenues. It's actually quite profitable for cities Neil let's move on to a story that the Wall Street Journal just covered did a big expose on the unfortunate murder of Bob Lee. Bob was the Cash App co-founder. He was a CTO at Square. He actually wrote code for Android and was an investor in companies like SpaceX and Figma.

So a really big figure in the tech industry. This killing, unfortunately, kind of took the internet by storm a few weeks ago. It became a place to really project almost your own thoughts on San Francisco and on the crime and drug policies in the city. Many people started saying this was just a random encounter driven by increased crime in San Francisco. But what actually happened is a little more connected than that. It's been about a month. I really encourage people to go read this article, but it was actually pretty much a second-degree connection who had known Bob and some interesting details in the article about the lifestyle and maybe the risk of the lifestyle that some people in those circles are living. What was your takeaway from this? Yeah, I mean, it seemed like

San Francisco still has this underground culture of sex and drugs, but instead of it being the hippies in the 60s and 70s, just like everything else in San Francisco, it's been gentrified, quote-unquote, taken over by the tech industry. So it's called, they literally call it the lifestyle and you go party all night. You do a lot of drugs. And it seemed like Lee was doing that partying with a bunch of other people at the time of his killing. So yeah. Yeah, I think, you know, he, one of the things I really liked about the article is it said he kept a list of 20 close friends on him. Oh, yeah. To remind him to check in on them regularly just to see how we're doing it. I think it's easy when these articles come out to make it about crime or drugs, but, you know, also like it is about someone's life.

And I think this, in reading the article, it seemed like he was just a really genuine, like, good person, had a big heart. And so obviously, rest and peace to Bob, and I hope all his loved ones are doing okay. Yeah. And we will take a quick break and hit our next stories after this. 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 3-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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While supplies last ends June 30th, terms at AKA.m.m.m.S. College PC. So now let's talk about the story that I mentioned at the top of the show, and that is AI Girlfriend. So Karen A.I. is an AI girlfriend launched by Snapchat star Karen Marjorie. She has 1.8 million followers on the platform. And she worked with deep fake startup Forever Voices, where she spent thousands of hours training her AI chatbot to kind of talk and act like her. then she offered up this chat bot on telegram to her fans. Since then, Neil, more than 1,000 people have paid a dollar a minute to chat with her. She's made about 72K in a week, and she said she was inspired to do this to, quote, cure loneliness. Yes.

Good intentions, but also go get your bag. I do think this is a little concerning, though. When I read the story, it felt like this is another way that celebrity is now going to get scaled, right? It's even a more parasycial relationship. You used to be able to act like a celebrity. You could try to look like a celebrity. You could try to dine like a celebrity. But now you're actually going to be able to talk to a celebrity.

And I do think this is the new frontier of parissocial relationship. I mean, there are only like four Kardashians now. And they take over. Imagine if there were an infinite amount of them. Exactly. And big players have really entered this space. Inflection AI founded by the Deep Mind co-founder. And then Reid Hoffman of Link.

LinkedIn fame and PayPal fame has raised $225 million to create one of the world's largest language models. Brian Chesky even, I just listened to an interview with him, saying how they want to make personalized travel based upon your preferences. And really, again, this concept of tuning a model, training a model for personalized interaction. Yeah, that's Forever Voices guy was like, you are going to have a AI buddy in your pocket in the next five years. Sometimes it may take the The frame of this You know flirty girlfriend It may just be like a travel assistant

But like you will have this personal relationship with an AI Definitely reminds me of that movie her Yes Which which seems more pressure on every day I think it's because we had Siri then And we were like okay Siri kind of sucks or Alexa Like these are not good AIs Like they don't converse with you

They're not conversational And then now that GPT4 has come along much better at understanding human speech and interacting with you. But like this this sex part of AI is going to become massive. I mean, there's already million, like hundreds of AI sex bots that you can talk to online that I have not I have not tried, but I may try for reporting. Yes, yes. But if you're still using Siri as your AI girlfriend, it is time to upgrade. But Karen, I said it actually, there's a huge risk to like, she basically cloned her

But you can't control AI that well. We've seen that they can go off the rails. And she said it went rogue a little bit and started sending users sexually explicit messages. And she's like, well, I need to figure this out because this is my reputation at stake. This is like Karen AI. Like my name is Karen. So there's a huge risk to replicating yourself. Right.

Yeah, a huge downside risk for creators. Also, the U.S. Surgeon General just did this big report on loneliness as a serious mental health issue in America. And while some of these companies say this. This is what they're focused on solving. I'm not sure I really buy that. I think they're trying to make lots of money, obviously. And I do worry that just the ease of maybe a relationship with AI is going to take us away from forming long-term relationships with real people,

which I think are kind of fundamental to a happy life. Neil, how long until we get an AI version of you that we can just like send an article to and it puts it in the morning of your tone? That sounds kind of nice, a lot less work for me. But we hope Karen gets her bag. She said she's expecting $5 million in revenue a month from this chat bot. Let's move on to our winners of the weekend where both me and not Toby are going to pick who won the weekend. Mine is a Twitter user by the name of Bigelis, Dickless Wolfwood.

And he has established himself as the kingmaker of the book world. Whatever he touches turns to gold. And so here's the story. Last Sunday, Mr. Dickalus, who is just a 22-year-old. anime fan commanded his followers to read this book. He just wrote, this is how you lose the, the book is called This Is How You Lose the Time War. Came out in 2019. No one had really heard of it or remembered it. He just tweeted, read this, do not look up anything about it. Do it right now. I'm very extremely serious. And so people took him very seriously, scrambled to buy the book. It since shot up to

the top 10 of the Amazon bestseller list and absolutely flabbergasted the book's co-authors who were like, what is happening. And then they realized what is happening. And then they were like, what is happening? So it just kind of shows the power of book talk, which is happening on TikTok, and this obviously happened on Twitter, but the power of a book to go viral and

one anime influencer can just say one tweet about a book and it will sell a lot of copies for you. Right. Amazing story and it makes me really sad that I picked the name Not Toby and didn't go with Bigelis Dickless. That is an incredible name. My winner of the weekend, Neil,

I'm very excited about this one. It was a big racket weekend. And what I mean by that, my winner of the weekend is this sport called paddle. That's right. I'm talking about a different sport than pickleball. If you haven't heard a pickleball yet, you either haven't seen a park in a year or you're not on a texting basis with my mom because this sport has been booming. This sport has been booming in the U.S.

It's all Dory Hagey talks about. Pickleball had 8.9 million players in 2022, which is basically double from 2021. However, we know the U.S. always has its own thing, right? We have Fahrenheit. Everyone else has Celsius. We have yards. Everyone else has meter. We work 20 hours a day. Everyone else takes all of August off This sport is no exception. We have pickleball. Everyone else in the world is playing paddle This and it's arriving in the US now. It is a fast-paced hybrid of tennis and squash

Contested on a glass walled court. It has 20 million players worldwide and there's over this step blew my mind There's over six million active paddle players in Spain. There's more than 20,000 courts in the country making it the second most popular sport behind soccer. And projections say there could be as many as 40,000 courts in the U.S. in about 10 years. But what really held to paddle secure the W is this weekend, Puerto Rican rapper, Daddy Yankee, bought the league's eighth franchise in Orlando. So if you want to impress your hipster friends, it's not pick a ball anymore. It's all about paddle.

It looks super fun. We were watching some clips that are going on behind us now. I bet you no one who's watching on YouTube. Just paid attention to what you were saying because it is a mesmerizing sport. It's way more fun to watch than pickleball. So I'm pretty bullish on all racket sports because you can play them for the rest of your life. Right. So we'll see.

Now, you know, pickleball versus tennis people were fighting in the U.S. Now it's going to be paddle and pickleball. I'm hoping there can be a truce. All right. Let's get on to a quick preview of what to expect from the week ahead. I think I've said this for the past five week ahead segments, but there's going to be debt-sealing negotiations. The risk of a default is looming next month. and Biden and GOP leaders need to figure out a solution to raise the debt ceiling, or we will

default, and I'm running out of ways to say the stock market will collapse. But so I'll say the stock market will collapse. We also have retail earnings, which is always fun. Walmart, Target, Home Depot. They always give some insights into what people are buying and how trends are changing during the pandemic. They were like, yeah, we can sell. We sold all of the home good stuff and then people shifted to more experiences.

So we'll see what's going on in 2023. Yes, Target is a Minnesota-based company, so it's always good to invest in that. Shout out to Target. In the sports world, we have NHL and NBA playoffs, Preakness on Saturday. Obviously, horse racing is in a bit of a controversy right now, and the PGA Championship beginning on Thursday. The best part about this NBA thing, it's the same exact teams that were in the bubble in Orlando in 2020, the same matchups. That's right. And if the NBA gets Lakers versus Celtics, that is going to be a huge narrative for.

I think Denver's too good, though. Yeah, there. We also have the Cannes Film Festival, which is taking place in southern France. Lots of rosé being consumed, but there's also new movies from Wes Anderson and Martin Scorsese. My question for you is, if you could go to a film festival, what would it be? Would it be like the Venice, the Sundance, the telly ride? I'm going to give you maybe a not popular answer. Toronto International Film Festival.

That is not a popular answer. Yeah. It's the paddle of international film festivals. I think it's the wrong answer. What's your answer? Is it good? Have you been there? No, I just like Toronto.

Well, you can go there for not the film festival. I feel like it's got some good movies, too. I think Cannes sounds kind of a lot. I've just never been to South the Friends. I'm too worried about pronouncing that word where I'd be uncomfortable the whole time. It's not that hard. Just C-A-N.

Can. Yeah. All right. And then speaking of movies Fast X is coming out on Friday. I don't know if you're big Fast and Furious guy. That's the 11th installment in the franchise. And did you know that when Vin Diesel, some Reddit guy did this analysis,

Vin Diesel, when he wears four sleeveless shirts, and spends 14 to 15% of the movies running time in them, then that Fast and Franchise movie makes more money at the box office and is more critically acclaimed. Wow. Okay, so we need him in... Sleeveless shirt. Sleeveless shirt.

As long as possible. That's always a good move. I love how they're like, this is probably going to be the last one, and then they're going to make it into two movies, and now it's really going to be a trilogy. This series will never die, long live Fast and the Furious. All right, Kyle. That is our time.

It's been so fun having you on the show. I think Toby's coming back tomorrow. Yeah. And we're going to have to say goodbye to not Toby. I know. RIP to not Toby. But thanks for having me. It's a blast.

Yeah. Thanks so much, Kyle. You can always email us with any questions, comments, book recommendations at Morning Brew Daily at Morningbrew.com. Big thanks to everyone who made this show possible. The producer and editor is Emily Milliron. Our technical director is Euchena Wa Ogu. Samantha Velas and Raymond Lou are the associate producers.

Billy Minino is on audio. Hair and makeup is leaving the show in solidarity with Kyle. Devon Emery is our chief content officer and our show is a production of Morning Brew. Have a great week, everyone. Yamava Resort and Casino at San Manuel is California's number one entertainment destination for today's superstars. Catch the Jonas Brothers return to the Yamava Theater stage on April 30th, the powerful vocals of Demi Lovato on May 17th, and the signature Southern Country Rock of Eric Church on July 19th.

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