Sharp Tech with Ben Thompson - Sharp Tech Holiday Hoopla: Gift Recs and YouTube TV, Microchips and Remote Work, Could ChatGPT Run a Basketball Team?

Episode Date: December 22, 2022

Last-minute tech gifts as a prelude to a gift-guide zag, YouTube TV and the implications of this week's Sunday Ticket news, the differences between remote work for a startup and a mature business, and closing with microchips and AI saving the day in D.C.

Hello and welcome back to another episode of Sharp Tech. I'm Andrew Sharp and on the other line, Ben Thompson. Ben, how you doing? I am stumbling, tripping, getting to the end of the year. I feel like the, I think I already complained about this, but this whole Christmas on Sunday thing is a mess. Because now like we're going too long at the end of the year and then we'll come back too late in the new year.

But here we are about on our way out of the content minds for 2020. We made it to the Sharp Tech holiday party. I didn't have any time to find like sleigh bells, perfect sound effect. Maybe Jim can add those in post-production. But what's important is that we're here. This is the final item for both of us. For some reason, we decided to do a two-part episode that's going to mean two hours of podcasting. I've never done that before.

Really have no idea how this will go, but I'm excited. A special present. for our sharp tech subscribers to help tied them over the Christmas week. Professional podcaster Ben Thompson. What a segue from presents to this question from Duman. He says, what non-tech gift would Ben recommend for the holidays and what tech gift would Andrew recommend? So I think you should, I think you should go first. Okay.

So the tech side of this, if there's no budget whatsoever, I'm going to zag a bit. from previous takes, I cannot recommend the AirPods Max enough. And it's a great Christmas gift because look, almost anybody. You think anti-airpods, and yet owning and loving AirPods Max remains hilarious. I'm not at risk of losing the AirPods Max, so I'm comfortable in that respect. But I look at the AirPods Max, they're so comfortable. and the sound is great. The noise cancelling works better than any noise canceling I've ever experienced.

And the reason it's a great gift is because nobody is going to go out and buy themselves like $500 headphones just because you kind of feel like an idiot. I bought them on credit card points to make myself feel less guilty. But if you give them to somebody, they will end up becoming like the favorite piece of tech in that person's life. So that would be choice number one if money is no object. Just to note, for the price of AirPods max, you could buy multiple AirPods potentially addressing them. It's true.

Ask some backups. Yeah. Well, if we're talking less expensive, I would sound like a corporate shill if I plugged a Strateree Plus subscription and said the link to buy gifts is still in your show notes. So I'm not going to say that. absent a Stratacri subscription I can't tell whether this will seem

too obvious for our audience and whether everybody uses this app but I would buy someone a subscription to one password

which you introduced me to and which has turned into my single favorite app in any category it saves all your passwords

makes it extremely easy to queue them up sign into whatever website you're looking at read and it generates passwords when you sign up for stuff.

It's just terrific. And I think a lot of normies in your life may not be aware that one password exists. So if you're like looking for an easy gift for your parents, a $4.99 a month subscription, family subscription to one password is not a bad idea. No, I suggest the family subscription because your parents will mess up and lose stuff. And that way you have access to all their stuff. That's the real win. Yeah, good recommendations, Andrew.

I'm proud of you. The reason why I wanted you to go first is because the single greatest gift that you can give those around you is convincing everyone around you to stop giving gifts. That's my take. The obligatory gift giving on Christmas, great for kids. They can look forward to it. But, you know, what gifts really resonate with you? The ones that are sort of surprises throughout the year when you're not a lot. expecting it, something along those lines.

That's a meaningful gift. The everyone dreads and gets annoyed by and is frustrated about the gift for Christmas. This is go a couple of ways. So the first way it goes, this is how it goes in my family, which is everyone gives these super specific requests because they're basically using Christmas as an alternative buying arrangement for things that they want. And you can't actually buy something that's not on the list because then they're going to be annoyed because they wanted that.

So you have to go, it's literally just like a money transfer. It's like we could all just buy ourselves what we wanted at the time we wanted it. Or we can wait a few months so that someone else will buy it and they better buy the right thing. I'm going to be mad about it. It's a great take. Okay. I've run into this problem year after year with my siblings.

They'll like text me, what do you want for Christmas? And I feel like kind of an idiot giving them like stuff that I could buy myself and should by myself. I don't necessarily need them to buy it for me. And it also, it sort of removes the spontaneity from the gift giving process, but there's no better solution for adults. It gets worse, though, if there's not a specific about what you want, because then you're really on the hook. It's like you have to figure out something that is good and meaningful and worth it or whatever. And if you don't, then you get like the cold shoulder, they're bad at you, or worse, Like it just turns into a big, just a mess.

It's just a mess. I'm banned gift giving. If you have to give a gift, I am a big belief. Like in general, you want to buy someone something they will not buy themselves. I think for, you know, for adults, if they indulge a nice bottle of wine or whiskey or, you know, chocolate, something along those lines where they're going to feel vaguely guilty and somewhat mad at you. But they're mad at you, not because they don't enjoy it, but because they feel guilty. You want guilt-inspired anger. Guilty pleasure, sure.

That's right, that's right. So lean into the guilt is my take if you can't avoid the inherent guilt in modern gift. Well, no, I really appreciate that perspective because I am headed up to have Christmas with my wife's family. And I haven't been able to do much Christmas shopping this year. And I also feel like we're all older and don't necessarily need to be getting gifts for each other. Right. The great thing of being an adult is you want something and you can go buy it. Yeah. It's a much better system. The one exception that I almost made this afternoon was a Janus t-shirt. You know how Nike has those giant freak t-shirts where freak is in like 72-point font?

I own a couple of them and look like a moron every time I wear them, but I do love them. So that's what I ran into. I wanted to buy my brother-in-law something Janus-related. But then I thought, you know, this is. is something he's going to feel like an absolute moron anytime he puts it on. No, that's a great gift. So basically, if you give gifts to adults, you want to lean into absurdity and guilt. Like, that's your go-to thing. So, yes, give him a t-shirt. He's going to look like a moron wearing.

That's exactly the right sort of thing to do. There you go. He could spend his own money on stuff that he looks good in. Exactly. All right. We did have a bit of news. That's right. That's the thing.

We're all adults here. It's different with kids. We're getting a lot of stuff for the kids. kids, got to have a lot of fun. For now, though, we had news on the way into our holiday party. So I'll read from John Orrin, a longtime whiz fan, a brother in arms at Sports Business Journal. He writes, Google's YouTube has emerged as the likely new home of the NFL's out-of-market Sunday ticket package with a formal announcement potentially coming as soon as today, Wednesday. The Wall Street Journal was first with the story last night, and Google will pay

$2.5 billion per year for the rights to the package plus, quote, additional payments based on the number of YouTube subscribers that Google is able to add, according to the New York Times. That is a significant increase from the $1.5 billion that DirecTV currently pays and is in line with a figure that the league has targeted for years. The NFL would not comment on this report. So, Ben, broadly speaking, what's your reaction to this news? what's most interesting to you? There's a few takes for this. Number one, I think it's just a massive win for the NFL. You know, one of the challenges they had with Sunday Ticket is it's a package that they want to sell nationally. And DirecTV was a good partner in that it's like a national video service, right? You only have to deal with one thing. You don't have to deal with multiple cable companies and like all those sort of like rigumroll that could get into that.

And DirecTV was a clear win for them. because if you really care about the NFL, like the problem with satellite TV is you have to get a freaking satellite, right? Big bay in the rear end, it entails a big commitment because obviously you need a contract that case. They're coming to give you expensive equipment, wire it up, all that sort of thing. And so that was a match that made a lot of sense up until getting satellites and direct TV suddenly flipped into being just totally obsolete technology, basically because the internet came along. And so you have this emergence of virtual MVPDs, like like multi, multi-video provider or whatever it is. Like basically the YouTube TVs of the world,

Hulu TV, those sorts of things have come along. And one of the, what we've talked about this in the past in the context of regional sports networks, where because YouTube TV isn't carrying this, like all this infrastructure costs and this sort of, you know, expectation that they have local sports, they've been able to not carry local sports and basically say,

hey, if you really care about getting your local sports, team on TV, YouTube TV is not the right choice for you. And that's okay because their, their, their market definition is just different. And that's been a massive problem for our since because they have lost way more customers than just like an ESPN has, which has also lost a lot of customers, but that's been a broad-based decline. And this has really screwed with the MBAs finances and MLB's finances in particular because these teams get a lot of revenue from their local regional sports network.

Now, this does get into one of our sort of pet complaints about how short-sighted the NBA is about their business. Who sponsors the NBA finals? YouTube TV. And they run commercials the whole time about how much cheaper their packages are. Again, they're much more expensive than used to be, but they're still cheaper than cable, both because of fees and also because the regional sports network issue.

And the NBA is up there getting money from a company that is killing a core piece of the company. their finances. It's crazy. It's insane that they do this. It's like moving a team away from Seattle to a much smaller market just because it has a marginally better stadium. It's nuts. They integrated YouTube TV branding into the finals logo. Which is an outrage.

My gift is a return to the original NBA finals logo. Oh my God. Yeah. Well, so my reaction is twofold. First of all, Amazon adding Thursday night football, I think a lot has been made of how successful it's been. It sounds like Amazon's really happy with the numbers. But I don't look at Thursday night football rights as a, as a, you know, an indication of what customers are actually going to choose. But being able to purchase Sunday ticket on YouTube TV and only YouTube TV is going to make a...

It's not just only YouTube TV. So I let me unwrapped this a little bit more. So when I first saw this news, I also assumed it would be just on YouTube TV. And I was like, this is a red flag major problem for the NBA and MLB because the hardcore sports fans are going to cancel their case that want NBA Sunday Sunday ticket. If you're if you have to get YouTube TV, you also cancel your cable subscription, right? And so like just really bad news. It turns out that this is also going to be available. on YouTube itself.

So YouTube just launched this thing called primetime subscriptions, primetime something or other, where basically they are selling subscription content on YouTube itself. And so WeekPass has joined this. It's mostly smaller companies, smaller streaming services.

Now, there's similar things like Amazon has Amazon channels where you can subscribe to HBO on Amazon. Apple has the same thing. You can subscribe to Disney Plus on Apple TV. YouTube Prime Time Channels is similar in that you can subscribe to whatever's on there. What's interesting about it is it's fully inside of YouTube. Like the videos just show up the same as any other sort of video.

And so you're also going to be able to get Sunday ticket within YouTube itself. Now, this is where I think the NBA has to be breathing a sigh of relief because your hardcore sports fan can continue getting local cable, including RSNs. And they can then subscribe to the NFL Sunday ticket if they want via YouTube, which is obviously, obviously widely available. It's on your smart TV. It's on your Apple TV. It's on whatever your your fire stick or Roku or whatever it might be. And so they can still sort of have it all. But from from Google's perspective, I agree with you. It makes a lot of sense to push both services. And are they going to make, are they going to make their $2.5 billion back? I'm not sure. This gets to some of the points we talked about a little bit ago where sometimes it's worth

investing in one part of the business to pull up the whole thing. And from the NFL perspective, again, it's adding a new partner beyond Amazon. It's adding a nationwide sort of approach, which, you know, fits with their sort of most operandi. And it's going to be available and accessible to way more people than something on satellite ever was. So, I mean, I think the NFL is the biggest winner for sure. I think the NBA and RSA ends are losers, but the loss isn't as large as I thought it was going to be originally.

Yeah. Yeah, well, and I think the issue is YouTube TV is a really compelling product. And if I were a league that was dependent on cable or a cable company, I would not want more people to find out what a great deal it is for consumers. And this Sunday ticket, like, that's meaningful. Like, it's going to peak people's interests and get them to check it out. And even if they're not signing up for YouTube TV, Whole Hog initially, I do think this. This is just going to draw more eyeballs to what YouTube TV is doing. And if you do sign up, you're like, wow, okay, so this is a lot more affordable than the cable bill I've been paying for the last 20 years or so.

And that epiphany, I think, is going to become more and more common as more people find out what's happening here. Yeah, I think just in general, you get a better interface. You like the DVR functionality is better. You get a much better sort of out-of-home experience, you know, because using the YouTube TV app and whatever. the, I mean, it's interesting because the price has gone up a lot on this stuff. It's not like the, you know, they started out like $35 or $40. And now they're, you know, every, you know, no more of those sweetheart deals from anyone else. So there, it's still, you know, it's still pretty expensive.

But it's still less expensive than cable. That, that's a real thing. You know, the real answer is to get cable and get channels, which I use. And then you get the, all the nice interface to DVR and you get access from anywhere. but that's the very, very nerdy solution. I think that there's a lot of value to, yeah, I think YouTube, if you don't need the local sports channels, it's pretty compelling. I agree.

Okay, so two final thoughts. Barron's had an article this afternoon that said, if YouTube offers the service at $300, it would need about 8.3 million subscribers to break even or more than four times the current Sunday ticket subscriber base. In July, Alphabet said there were more than 5 million subscribers to YouTube. TV. So you would need to sign up all of those people and then some to reach a break-even point with this investment. I'm sure that's not what they're worried about right now. They're looking to draw people in as subscribers more generally. But it is, that was my first thought as I

like process this news. It's like, all right, so how much money is YouTube TV losing up front here? And we have no idea. Well, again, this primetime channels thing, I think, is it like, I do think they'll get more subscribers than DirecTV ever did. Again, just because like the, the hassle of getting a satellite. Yes, if you're in a big city, you could get it actually over the wire because you can install satellite, XYZ. But by and large, it's going to be, I think, much more accessible. And again, everyone has YouTube. So everyone already has the app necessary to get access to this. I'm not totally sure. I don't think the details will come out. Like, will this include, like, past games and all that sort of thing? I mean, like, when you're looking up, you know, the NFL also

sells a distinct package through their app where you get all this past footage and things on those lines. But you think about you search for a play on YouTube and that clip might be out there and also you can actually watch the entire game. It's right there. Yeah. Yeah. I mean, this is, I would love to, you know,

the week pass is on YouTube primetime channels also. I actually, I should have looked into this before this call, but I would love to see a similar thing there. I mean, old NBA games on YouTube is like this treasure trove of amazing stuff and having that sort of consistently

be available is really compelling. What is interesting, I think there's a broader point though about the primetime channels bit. I mentioned the big players aren't on there and you can understand why. If just a Netflix video or a Disney Plus thing is just on YouTube, it's like

the exact same as like my home video, right? As far as the user experience goes, it's just mixed in the algorithm. And we saw with Facebook and feed these feeds how devaluing that is for sort of premium content where you know the picture of my dog is next to a deeply investigated report from you know a newspaper or whatever it might be and yeah so that's not good but you do have this dynamic where these streaming services are losing

a lot of money and youtube is this massive distribution channel that is like a great way to acquire customers. And streaming services are going to be increasingly incentivized to give up the family jewels, as it were, when it comes to owning the customer experience, because they need distribution and they need to reduce churn. And so six years ago, Netflix could look at Apple. Apple, tried to do this Apple TV app thing where all your content would be in one place. And they're like, no, we're out. We want to own the customer experience. Today, when they're not growing nearly as well, suddenly that seems sort of more, more compelling. You know, you have all these offers like these files providers, they're increasingly not even bothering to deliver TV. They're saying, we'll package

this with a YouTube TV subscription, right? Like a friend of mine just built a new house and like, that's, that's, that's the offer. Well, and the cord cutting has accelerated, correct? Yeah, and I thought it would slow down after the pandemic. Uh, yeah, but it has accelerated. I do still think there's going to be a floor. Like, I think I predicted a few years ago back when it was like 120 million households that would end up at like 50 or 60 and which is just basically a hard, you know, wide. news and sports, it's approaching that line very quickly. So we will see, we'll see what happens there. But, but this bit about, you know, again, all the big players are not on primetime channels

yet. It just launched. And so that's why Google is willing to overpay for stuff like this, because it's making this channel into a real thing. And the way to make money is not on Sunday ticket subscriptions. It's on all the subscriptions over time that you're taking 30% from. or whatever it might be. It's actually similar to the NFL for networks as a whole.

Networks generally lose money in the NFL, but it's worth so much because so many people watch the NFL, they can promo all the other stuff that's in their networks, right? And so that owned and operated advertising that they're basically getting for free, along with their, you know, within the game, you know, you have the announcers, oh, coming up this week, XYZ, or 60 minutes after the game, blah, blah, blah. That's where they actually make, have traditionally made a big portion of their money.

And I think you can think about Google paying for this in the same sort of light. Well, we'll see. I have not watched a single NFL game this year, but 25 years ago, I remember as like a seventh grader begging my parents to get direct TV because all I wanted was Sunday tickets. So for people who do love football, Sunday ticket is a really big deal. So that got my attention. And shout out to the NFL, extracting an extra billion dollars from the Sunday ticket owner here. The funny thing was Apple was supposedly going to get this, but they wanted to just

like package it in or they wanted to have like, they didn't want any blackout rules or whatever. And, you know, the NFL versus Apple, you know, when it was going on, it's like, well, immovable objects versus unstoppable force. Yeah. The NFL is is more hardcore than Apple, I think. Like, look, they're not only getting an extra billion dollars out of this deal. They're also apparently going to get additional payments based on the number of YouTube subscribers. Right. So if YouTube actually starts making money on this deal, the NFL is going to make money. That's what's crazy.

They're losing money, but it doesn't matter because the NFL is still going to take their cut. Having the best content is still sort of a dominant strategy. It's the most difficult strategy because, you know, to produce great content, like owning distribution is a better way, is a more consistent way to make money. but the outsize gains still go to the best content. If you can go direct, right? Or you can be so compelling that you can pull the end user base in a way that the folks that control that interface have to respond. And the NFL, there's no better example than that.

Yep. They've got it down to a science as far as the television product. To keep it moving, Dan says, hey, guys, I liked hearing Ben's reflections on his time at Automatic. and their thoughtful approach to remote work. So I'm curious, Ben, do you think more companies should crib the automatic model? And if so, why haven't they? Is it merely inertia or is there some more profound constraint like a dearth of talent who can or want to work that way? I'd also love to hear any guesses you guys have about where the remote work equilibrium will end up on a spectrum from, quote,

remote work is the default in tech to quote, remote work is the exception. I try to get a pulse for these things on tech Twitter, but it seems polarized. Surprise, surprise. On the one hand, Elon and VCs talk about remote work in the same apocalyptic tones that European royals reserved for the French Revolution. On the other hand, millennial tech managers with young kids seem into this model. And that's actually a really interesting point at the end there. I think people imagine like a huge schism between management and entry level employees. But what Dan's describing is probably the more common reality where you've got older executives with kids in high school who are like get back to the office.

And you've got like middle management with young kids at home and they're sitting there like, well, I don't know. It's working pretty well exactly the way we're doing it. But what are your general thoughts here? My suspicion, I can't remember if we said this on the last podcast, but I think if you're a startup pre-product market fit, pre-sort of major growth, there's a lot of benefits to being in the same place, right? Like one of the challenges with processes and doing things in a certain way, all of which are essential to working asynchronous. What makes automatic, I think, unique is that it's all asynchronous, right? there was no expectation, except for like once a week that everyone be online at the same time. But before that, there's a lot of value in not having processes and not having stuff right now because you haven't figured it out.

You're still trying to figure out what this company is. You're trying to figure out how to grow. There's a million fires to put out. There's things that are very difficult. And so while there are examples of startups that are remote from the beginning, again, as I mentioned last week, everyone talks about GitLab because there's not that many. I do think that for new companies being in the same place is super valuable and is going to be the default way going forward. Now, once you have product market fit, once you have a working business model, once it's more keeping the train going and you actually don't want big diversions, you don't want to be all over the place, you just want stuff to keep going as it's going, then remote work makes a lot of sense because you should be having a lot of processes. You should be having a lot of like, you know, backups.

You should have worldwide coverage of these sorts of issues. And so what I suspect will happen is lots of new early companies will still primarily be in person. And then more established companies and parts of that business that are more about sort of like keeping the trains running, that will lend itself well to remote work. And so there will be some transition point where it will almost be a. marker you can look at a startup, right? It's like, you know, it's always been tough to say, what is a company transition from being a startup to being an established company? Traditionally, it's been when they IPO. But the reality is, is somebody's wait so long to IPO. It's like, you're not really a startup anymore, right? You have thousands of employees or whatever might be.

But maybe once they start supporting remote work, that's like, okay, you're now, you're now a company, right? Like, or you're, you have the processes in place to allow for this sort of thing. And so it's not a talent thing. Clearly, talent would like to be. remote. I mean, one thing that Matt always said about automatic was they didn't save any money with remote work because they were supporting all these trips around the world and all these get together. That was very pricey. The benefit they saw was access to much more talent. Like they could get the programmer who needed, wanted to be home with his family in Tennessee or whatever, right? And was not going to have a similar level of job. I could live in Taiwan with like, you know, an American salary and, you know, live abroad like I had wanted to do and found a. job that could do that. And so they had access. Now, I think this is bad for automatic and some respects because they have much more competition. But I think that competition will be mostly these sorts of companies. I think if you're remote and you want to work for a VC funded startup, that's, I think, going to be, and continue to be pretty rare. And I think that's a completely

fair expectation from the startup side and sort of the VC side. Yeah. Well, you mentioned those early days where you're figuring things out and sort of workshopping various ideas. It's just so much easier to do that in person, in part because I was thinking about this the other day. You know, obviously ideas sort of build on one another and everybody sort of brainstorms together. But it's also easier to tell somebody that their idea is bad when you're in person and you can sort of do it warmly. Like if you're setting that in Slack or an email or whatever, it can sort of rub people the wrong way, ruffle some feathers. But it's just easier to communicate when you've got like verbal and physical cues to let people know that you don't think they're stupid.

You just think their idea is stupid. No bad ideas in a brainstorm. That was a famous Grantland saying. So the startup aspect of what you're describing there makes sense. And I also think that remote work is going to be a carrot that people dangle to recruit the best talent in all sorts of different industries. Now, my question is... Just to go back to your point, though, I think there's a speed and stability tradeoff, right?

When you're a startup, you need speed. When you're established company, you need stability and stuff to not get screwed up. And I think that, like, being in person lends itself to speed. And there's some aspect to having someone that's just consistently there. And yeah, they have a life. They have kids that, you know, they have to go coach Little League in the afternoon. But that's okay. We don't need speed from them.

We need stability and consistency. And, like, there's an aspect, I mean, where having the solid, you know, family person is the exact sort of person you want to sort of keep the trains running, right? Whereas you have the person that is just completely pushing it, like staying up all night, like living like a moron. Like startup by all means, you know, go for it. And there's this transition that all companies go through. And I think this is just a physical manifestation of what happens with all companies anyway.

Yeah, well, the millennial tech managers, they'll keep a steady hand on the wheel and make sure the company gets where it needs to go. I mean, that'd be a welcome change of face to the impact of millennials. That's all I have to say. Oh, don't even get me started on the Gen X millennial rivalry between Ben and I. God damn it. So to frame this, though, the New York Times last weekend, I believe, had a story about downtown San Francisco. They write, today, San Francisco has what is perhaps the most deserted major downtown in America. On any given week, office buildings are at about 40% occupancy, while the vacancy rate

has jumped to 24% from 5% in 2019. What I find interesting about this is obviously the easiest answer is going to be a hybrid arrangement would be great for everybody. I disagree. Really? On what basis? I think a hybrid arrangement is the way. worst of all worlds. You don't get, so from an employee benefit, you don't get a whiff where you want, right? Like a lot of employees, or at least I suspect, may I'm self projecting, would rather live in the Midwest, would rather live in the South or rather live somewhere else. So they have to still live in this super expensive sort of environment that mostly sucks. Sorry, San Francisco, right? And so, you have to still live there. And by the way, your home office is probably crappy because you can't

afford a big house with sort of your own place. And by the way, it starts. to really suck once you're in your 30s and start having kids and you look around and you're like, all right, we have no space and everything is like 10 times more expensive than it's supposed to be. When you said the executives, they want to go back to the office, it's because they want to get away from their house. But I guess you get to that flight later. But so the, the, so and then you stuff go to the office and everyone is in the office resenting it while they're there. So everyone's grumpy about it. I think you should pick one or the other. Either be in the office and And maybe you can have a relative, like one day a week or really lack of day's goal,

you know, sort of policy or be remote, right? And then if you're remote, then you actually, if you actually develop the things we talk about the automatic. You actually develop processes and practices that make you efficient remotely. You actually learn how to measure employee performance so you know when people are slacking off. You actually establish communication so everyone's always up to speed and knows what's going on without depending on hearing stuff around the water cooler. The other thing with having a hybrid arrangement is what happens is everyone who wants to advance in the company ends up realizing they need to be in the office because that's what the boss is always in the office. Like that's where stuff happens. That's how you hear about all things that are going on.

And so you have this self-selection where everyone starts to feel like the people that are not in the office are probably slackers or maybe they're looking for something else or whatever might be, which might not be true. There might be people who have a genuine reason to not be in the office. but then they get lumped in with the people who don't want it hard enough, who aren't hustling. I think hybrid is a bad idea. And it's mostly, you know, I think management that really wants them to be in the office giving a sop to employees because they're with their employees being mad. But you actually end up in an even worse situation. What a take. You explained it better than I could have.

And for me, it's just sort of a gut feeling that hybrid, while when you're sitting at a dinner table and does, discussing the future of work in this country, a lot of people are going to say, well, I think we'll net out with some sort of hybrid arrangement. And I just have a feeling that we're going to have to make a call somewhere along the way where a lot of companies are going to have to make a call where you're either in office or you're remote and you'll have to weigh a lot of different factors as you make that decision. But in general, he's asking for a guess at what the equilibrium will look like on a society-wide basis. My guess is that getting people back in the office is going to have too many benefits to companies. And then it also has like social benefits

for employees, economic benefits for cities. And ultimately, that's where we'll end up would be my guess. But who knows? And I certainly hear the argument that, look, you can maintain a really successful network of people around the country and retain more talent that way. Yeah. I think you see it vary by division, right? So take meta, for example. There's aspects of meta that could be fully remote. If you're working on the VR headset, you should be in the office, right?

I wonder how much of John Carmack's complaints about the poor performance and efficiency of meta's VR bit is tied to COVID in people being remote. Not a great. I don't think that's great for working on hardware, for working on something you should be iterating on. that there should be no closed doors on what you do. You should be exploring sort of the space. And, you know, I don't know.

I'm just sort of like just an example that that popped in my head. And let's be honest, this is going to make a lot of people mad, but hey, I'm on a roll today. So I might as well. There's a lot of- You came out as anti-gifts on our Christmas episode. Except for Secretary Plus. There's a lot of self-serving arguments here. The fact of the matter is there's a lot of people that want to work at home.

And so they are searching for and grasping onto any argument that supports the position that they can work at home. And I think what's going to be interesting is this COVID pandemic era happened in where the bubble, like, I don't think there was a bubble in tech for a long time. But then there was a COVID bubble, right? Where there's all this stuff just expanded. These companies were hiring like crazy. Like Facebook by weighing off 11,000 people only went backwards in 10,000. time like six months, right? If they wanted to go back to pre-pendemic levels, they would have needed to lay off like 40,000 people, right? And so you have this crazy talent sort of acquisition

where talent could call the shots. Now, when we're in a different environment, I do think that, you know, there is going to probably be a shakeout in that regard. But to your point, I think it would be a mistake to go one way or the other. I think there is a lot of talent out there that makes sense for roles and positions and jobs that, you know, the sort of person that wants to go live in San Francisco and go on an adventure is probably not the person you want initially keeping your servers up 24-7, right? There's like, this is almost like a mentality difference that goes into that as well. Whereas so, like, I just want to live close to my family in Kansas City. Probably a great person, right? I'm doing like, keep your infrastructure up.

I mean, not to like stereotype too broadly, but I do think there is some aspect of like, are you a more conscientious person? Are you a more sort of open-minded experimental person that probably ties into different roles? And companies that are smart will, I think, leverage that to take advantage of it. But the other thing I would say is employees should be careful about getting what they want. Because once you go remote, once you have the processes to do that, it's not going to be bound by national borders. And it's like people who, you know, at newspapers saying, wow, if we get all our content online, everyone can access it. We'll reach way more customers.

Well, you will reach more customers and everyone else will reach more customers too at the same time. You're going to get a lot more competition. And that's going to, that might not turn out the way you want it to. Yeah. I mean, that's the thing is there are a lot of secondary and tertiary considerations. I think it's probably easier to develop younger talent when you're all in an office together. Yeah, that's a great point.

I think for young people, this whole remote thing is, I mean, again, we're getting to the point. As you noted, I'm probably Gen X. Like, so I'm far away from these people. And so I can sit here and have all my group chats and be super connected into lots of folks. If I were to start, if you were trying to start in an industry, man, it sounds really, really hard. And I, you know, I would not want to be a new employee going to work for a remote company. That sounds tough. And young people may want to be at home, but I think it's healthy for young people to be around other humans and force to socialize in person that we've talked.

talked about that a lot, like getting out of your own little space is generally a good thing. So not to prescribe things from on high here on Mount Take because I'm going to be remote regardless. Yeah, as we all sit in our remote offices. To keep it moving, RJ says, are there any daily practices or habits you all recommend for remote work? I like the flexibility, but it's two-sided. I can work from anywhere, but that means I can also always be working. Do you have any, Any good tips that you've developed over the years? Yeah, number one, if you have a family that's always at home, you might need to still get in an office, like rent a space or something.

I think we talked about this last time, but it's hard. Your family can intellectually know that you're working, but it can be hard to sort of, for that to land. And so I actually ended up having to do that, where I actually had another place where I would go work because it was too difficult to be at home all the time when people were in and out. and it was just, it was a, it was just a breeding for sort of frustration, at least for me, because I, when I'm writing, I get in the zone and I need, and I'm locked in and I'm like catatonic the whole time. And if I get knocked out of the zone, it takes me a long time to get back into it. And so, like, it just wasn't good for anyone led to fights, et cetera. So that might be something that you need to do. Uh, I do think having like real clear lines and boundaries

or, like, it's just a matter of self-control. I mean, that's a tough thing. Remote works great. if you're really good at managing your time and having clear boundaries around what you do and when you're working and when you're not, if that's something that you struggle with, then there's a lot of value in going to the office and having de facto lines and boundaries on your day. That's the other thing.

Like, I always start the day at 8 a.m. Like, and it helps because I have kids in school. I walk the kids in school. I walk the dog. I come back and I start my day. And, you know, the way I do it is Mondays through Wednesdays, it's generally understood I'm around, but I'm not available

because my Michael Wong writing on my do XYZ. Thursdays, because I usually post the interview, I work on the day, but I'm usually done by like five or six. And then on the weekend, I, you know, Friday I do office work, but then the weekend I don't do anything. Like, I'm fully available to family. I try the kids of sporting games. I do XYZ.

That's in, you know, my wife and I have this arrangement where she knows like she's on call, really the first half of the week and I got it on the weekend. But so that's stuff you just sort of develop over time. think it's particular to every circumstance, but you need to respect yourself as an employee and know, like, being home with kids, like people who say that I want to be homesombed with kids, it's like, do you, like, that's sure it's a great recipe for being a phenomenal employee.

Just to be honest. And I'm not saying you need to give yourself to work. What you do need, though, is clear lines where there's a portion of your time. You can be fully devoted because it's tough to do two things at the same time. And so I think clear boundaries, by and large, is my answer. Well, and I just want to say as an employee of yours, you've been great from day one about the asynchronous aspects of this arrangement. I remember because what I do and what my recommendation to RJ would be is I've always found it useful to put my phone on airplane mode for an hour or two when I need to be human and like show up and be present with my wife or other family members or friends. And I remember early on, I like apologize to you for missing a text message.

And you were like, don't apologize. Literally, I think that's the only time you've like been stern and we're like, that's not how we do things. Because of the asyncretist, you know, emphasis. And it makes it much easier because it does allow you to sort of have a couple hours here and there. And that's where hybrid work, I think, can go sideways because you end up with an expectation. Because in the office, it's not asynchronous. It's secretous. That's the whole benefit.

right? And so you're actually putting your employees in a tough situation where homework, one of the advantage of working at home is you can have a long period of time in your own office, not in an open office plan where you can really focus. So I think for certain jobs like writing or programming or things like that, there's really real efficiency gains to be had here. I think this idea that at home is inherently less efficient is not true and it's definitely not true for for roles that require deep focus for long periods of time. But as part of that, you, you have to put in the processes and the expectations that make that work. And yeah, asynchronous for us is super important.

I mean, I'm in a different time zone on the other side of the world. So that's particularly important for me. Like, look, I'm not going to get back to you in a, like immediately. You have to be used to that. But, yeah, I mean, I don't know. This is just boundaries in life are important, period, whether you're in the office or out of the office. And that's just something you learn with time and experience. and learning to respect yourself.

Yeah. But it goes both ways. If you want your own time, you want your own boundaries, then you should also carve out time where you can actually give your full talent and ability so you can do great work. Yeah, well, and the reason I was laughing about boundaries, as you were explaining it earlier, like, it's embarrassing, but I need to put my phone in a completely different room when I'm trying to get something done that requires, like, deep focus.

and I would also recommend exercise 30 minutes a day. That's helped me a lot. But for now, let's keep it moving, Ben. We've got a note here from Kevin. He says regarding last week's email about monopolies producing useful technology, Dr. Knott at Washington University has done a bunch of relevant research on this. As I recall, she found that to be the case because monopolies have done an unusually large fraction of the, quote, basic research by private companies. The returns to basic research tend to be very high, but take a long time to materialize, and most private companies prefer research that pays off more quickly. I think you can argue that this calls for more government funding of basic research, as opposed to more lax antitrust enforcement.

Very helpful note from Kevin there. I'm not even sure last week's emailer was affirmatively arguing that monopolies are good because they yield innovation. He was mainly just pointing out some under-discussed examples of that phenomenon. And it was all worth it to me for the Bell Lab story, which I was not aware of before we recorded. Yeah, I think I've pretty sure, this is, you know, 10 years of articles, they all run together. I think I've made or at least put forward this argument that this might be the case. Because one of the challenges you have with aggregators with these companies like, like a Google,

where their power derives from customers going to them, as opposed to them like controlling the pipes or whatever, like a traditional monopoly, is there's no real regulatory solution. to that, right? You see this in the EU where they keep, okay, put up a choice screen about which browser you're going to use. Everyone chooses Google, right? Like, whatever might be. And so, but I think a potential solution to this, again, I'm not sure how it would work, but this idea that, hey, Google spending a bunch of money on like stupid stuff, maybe that's a good thing, but the answer is how do you get that into the broader domain, right? The key thing about the Bell Labs bit was they were forced to release their patents on all this sort of stuff.

And so I think there is something to this, to be honest. I mean, one of the problems with this basic research is you don't have, because you don't have the profit focus and you don't have the market focus is you tend to get a lot of waste and kind of wazy sort of stuff. And like that's, but the whole point is like, well, it's basic research, right? My sense, though, is a private company without incentives is still probably better than the government. in some regards.

You know, call me cynical. But I'm open to this idea, particularly when it comes to things like aggregators, that naturally accrue very large market power and don't have obvious sort of solutions, that something along these lines where, but again, I don't know how you would do this in law, but that there be some sort of expectation that if you're over certain market size, if you're determined to have this sort of structure, that there has to be much more opening of your patents and your technology. and just like that's sort of a requirement because the whole reason they're powerful is not because of their tech.

They're powerful because they have this large audience. And so, I mean, and you see this in large part. Like Facebook has built up this entire ecosystem around open networking. And why did they do that? Because Google had their own private networking and they wanted to have as good of networking as Google, but they were a much smaller company at the time. So they basically got the entire industry to work together. And that's now the dominant form of networking.

And it's been a big benefit to everyone. Like, it's all open source software running on commodity hardware for all this networking sort of stuff. That, like, there's actually a good incentive and it makes sense in the business model for these companies to open up their technology anyway. So, I mean, again, I don't know all this looks like, but like everything has to be open source and available if you're, you know, a massive aggregator or something along those lines. I think is directionally in the right place for how we can reap the maximum societal benefit. I mean, maybe it's something like, yeah, if you have over. It probably is defined by the U.S. markets, but if you have over 150 million active users, you can't, like, all your patents are open source.

Like something along those lines. That's exactly. I just think in general, there should be a framework where we look at, like, the handful of companies that these rules are really about and use the size of their user base or maybe revenue or whatever you want to choose to just reflect that really we're concerned about four or five companies. And in this case, it's not even concern. It's just saying you guys are doing a lot of useful research that could be very beneficial to society and innovation.

It would be really useful for smaller companies, right? I mean, like all the stuff that Apple's are a startup. Yeah. And could do. Now, we do at, as part of this, you would have to fix the patent system where the reason these companies accumulate these huge patent war chest is for countersuits. So when when the small company comes along and wants to get a piece, you know, a chunk of flesh, you know, I personally would get rid of software patents completely. you know, there is, but there's a lot, you know, there's a, it's a very, it's a very, it's a very fraught area that people are strong opinions about. Yeah.

But, but, but yeah, I think we have a few sort of pegs in the stool here that could pegs in a stool, a leg of a stool that, that, that I think makes a much smarter approach to spurring innovation while acknowledging the reality of the way the world works. That second part, acknowledging the rather than works is completely lacking. And I think most, uh, and I trust, you know, crusaders. All right, Nick says, it's not a Christmas party without some chip talk. Will 5 nanometer chips eventually be used in less advanced cases like cars and appliances? If so, will TSM continue to update the U.S. Vabs to produce leading edge chips? Or will they continue to produce 5 nanometer as those chips move down the chain?

On the other hand, will the recent trade restrictions impact China's ability to keep producing a high volume of chips approximately 10 years behind the leading edge. Will China be able to produce chips on par with the capacity currently being installed in Arizona 10 years from now? Thanks. Looking forward to another year of listening to you guys talk. What do you think, Ben? So the way TSMC has always operated is they build a fab and they weave that fab as it is. And so once they build a 5-9mm fiber, that fab is making 5-9mm chips forever.

And that's how they make money in the long run because they, you know, once it's fully depreciated, it's still turning out chips. Now, the price of those chips goes down, but it's basically 100% profit for every sort of chip that goes out. And so that said, I don't know about the Arizona ones. If I'm right where these are really for AMD and Apple and Nvidia, and that's basically it, maybe it'll be more like the Intel model where they do sort of keep updating them over time to be sort of not, it's not winning edge per se because that needs to be done in Taiwan where all their engineers are, but it's still relatively, relatively cutting edge.

So I don't know. That's an open question. I'm very interested to see how TSM is going to handle this. Because they're on the leading edge now, they can charge way higher prices than they ever could for new chips coming out of these fabs. So they make money. When I talk about them, that's how they traditionally made money who's on the back end. Now they make money in the front end and the back end.

So I don't know. I think that would make sense, but we'll see. Number two, yes, in 30, 40 years, these chips will be. be used in cars and appliances in large part because that's just what's going to be available, right? One of the, I think a lot of car companies, you know, they've been back like 90 nanometer or even higher for a lot of their stuff. There's, there's a huge node at 28 nanometers.

So TSM has a bunch. That's where China's really building a ton of capacity. So 28 nanometer chips are going to be more widely available and cheaper. But it's a long process to get a chip certified, get it all these XYZ. And so new things being developed today will be built on more modern. sort of architectures, and then they'll be produced for 15 years or 20 years. So, yeah, that will happen. It'll just happen in sort of the very, very long run.

By and large, for a car company, it's not worth the effort to redesign a chip that works perfectly fine when this sort of stuff's going on. Will the recent restrictions impact China's ability to keep producing high-velling chips in years behind the edge? No, because I think China will figure out how to make these chips probably on their own, but also the U.S. companies are able to service these fabs. Like there's no restriction on U.S. companies delivering and servicing equipment to 28 nanometer fabs. Like, and that was part of the goal of the restrictions was not to completely cut off U.S.

Let's not kneecap our economy as we take. Well, not just that, but what's also not create a market for competitors for our companies that are basically monopolies, right? And so that's that, whereas, you know, because a Japanese company could probably, uh, there is in a sufficient. knowledge in the Japanese, Japan in particular, to make a lot of these machines, right? It used to be that both countries made all these machines. US used to make lithography. Like, and so there's latent knowledge that is much more advanced than what's necessarily in China.

And so the real risk here isn't just that your companies lose revenue, but actually you spur new competitors that, again, in these markets where your U.S. companies basically have monopolies. So that's definitely concern that they're trying to limit. Will China be able to be able to? to produce chips on part of the capacity currently being installed in China 10 years? No, probably not. The 5 nanometer chips need EUV, which no one in the world can make except for ASML that has this massive supply chain of all these companies, many of which are the U.S. Now, there is news that

the Netherlands of Japan are on board with supporting these restrictions. Yes, ASML is a Dutch company for anyone who doesn't know or hasn't listened to Sharp Tech the last three months. I think the potential hole here will be Germany. Germany has traditionally not cut along necessarily with U.S. trade restrictions on China has seen that as an opportunity to fill. And some of the core components of extreme ultraviolet lithography like the mirrors and some of the lasers. The white sources from the U.S., but the rest of the laser is a German company called Drumpf. And then the mirrors are made by Zeiss.

Seaman, I think, is also a big supplier of ASML. So it's possible that China is making EUV, their own UV machines in 10 years, or theoretically, again, maybe a like Canon or Nikon theoretically could, but I think it's pretty unlikely. The big concern here is, and China, I think, is very smartly focusing on the trailing edge. They're building up tons and tons of capacity at 28 nanometers, all these older chips, which they can make. And what they can do is they can flood the market, they can drive down prices, they could potentially drive TSM out of the market. They could probably bankrupt Global Foundries because Global Foundries is basically a trailing edge company now. And then we end up in a situation where, sure, we control all the Wheating Edge chips, but the vast majority of chips that are using the vast majority of things, like if you thought the auto industry had a bad during COVID, we're probably going to end up in a situation a few years where the auto industry is completely dependent on Chinese chips. Yeah.

And no one's thinking about this or paying attention to it. Well, we've been paying close attention to it. And I appreciated Nick's question here because it was one follow-up question I had after we finished recording. The first of two TSM segments is like how quickly does five nanometer become trailing edge as opposed to leading edge? And it sounds like the timeline there is actually fairly broad. Like it's going to be 20 or 30 years before. for those are serving the same purposes as like a 28 nanometer. I think there's still a fair bit of unknowns here, too.

Around 14 nanometers, chips started becoming more expensive as they got smaller. For a long time, the smaller chip got the cheaper it got because you could fit more onto a wafer. But what EUV in particular is so expensive. And it's expensive to buy the equipment. It's expensive to operate. Like the power requirements are astronomical to run these machines. and there's a real question as how many industries are just going to stop at 28 nanometers, basically.

Like 20 nanometers is this massive, massive node. TSM makes a ton of money on 20 nanometers. They actually are building two new 28 nanometer fabs in Japan that's basically dedicated for the Japanese auto industry. And I think for maybe Sony also, the fate of all these five nanometer fabs is actually kind of interesting. TSM slowed down their buildout of like extra fabs at the, at these sort of, cutting edges. Because I think it's a question. Yeah, smartphones need it.

Servers need it. GPUs need it. How many other folks actually need this level of performance? And so maybe there ends up being a gap where there's 14 or 28. Intel has a lot of 14 nanometers. So they're hoping that becomes an important node. But Intel could be stuck in sort of no man's land as well. So it's unclear how that's going to develop.

Well, we will continue to monitor all developments in that space. Iwu asks, does the bill to ban TikTok have legs? I'm just going to use that question as occasion to recommend a recent New York Times magazine article on TikTok. It's a comprehensive look at how they expanded in the U.S. and why it's so controversial. Now, I'm sticking with my take that TikTok will be banned by the end of 2023 in this country. We'll see how it happens.

But who knows? And final question here. Daniel says, as a fellow long-suffering wizards fan, does Andrew believe that chat GPT or some other form of AI could run the wizards better than the current management and finally bring a title to Washington, D.C.? Ben, do you have any preliminary thoughts here? No, I'm eagerly awaiting your answer.

Okay, so here's the thing. I have asked basketball questions to chat GPT, And there have been a bunch of cases where chat GPT refuses to take a position on like the best player in the NBA or best NBA player of all time. So if we're handing the car keys to Sam Altman, we would definitely need to crank up like the confidence meter on chat GPT or nothing would ever get done in a GM context. But beyond that, we are talking about an unbelievably low bar here in Washington, D.C. And I'm pretty confident that Chat GPT could clear that bar. The Wizards, they gave $250 million to Bradley Beal over the summer, even though there was no competition to sign him.

They handed him a no trade clause, which is something that teams haven't been handing out for like the past 20 years. The stupidest, the stupidest NBA contract clause in history, it's pretty bad. I was subjected to a lot of bullying. I went to Vegas summer. League immediately after they signed that Beal contract and endured like 96 hours of jokes about the no trade clause. They drafted Johnny Davis from your Wisconsin Badger.

I take no responsibility. No, you were relaying Wisconsin fans on draft night who were like talking up Johnny Davis. And so that gave me a little bit of hope. No, no, no, no. The response was, look, he was terrible. What I was telling you was he was terrible his freshman year. and kind of came out of nowhere as a sophomore. So maybe the fact he's terrible in summer league means that maybe he will come out of nowhere.

Turns out if you can't get good separation at the college level, it might not be great for your NBA prospects. Do we have scouts? What the hell is happening? So, all right, all this is to say, we haven't drafted a successful rookie in like 10 years. And the last five, we've blown like lottery pick after a lottery pick. if you can give me a computer program that can hoover up information and statistics and just take a guess at what the best moves are, it can't possibly be worse than what the Wizards have had over the last five to 10 years. So I wholeheartedly agree that ChatGPT is something the wizard should explore.

Well, there you go. AI is taking over the world, taking over D.C. There you go. Taking over the NBA. And maybe that's why I will win. It can't be worse than what we have now. Well, well, well, all right. We've got a lot more nonsense plan for the second episode here.

That's going to be subscriber only. So if you're listening to this on a free feed, you can subscribe with the links in your show notes. And I look forward to keeping the holiday hoopla going with you, Ben. Well, I'll say Merry Christmas now and save Happy Holidays for Part 2. Okay.