Tech Brew Ride Home - Fri. 01/12 – Perplexity, The AI Challenger To Google Search

Episode Date: January 12, 2024

How did bitcoin do on its first day of ETF trading? Where are all these tech layoffs coming from? The weird case of eBay executives allegedly harassing people. A look at the AI company taking direct aim at Google Search. And, of course, the Weekend Longreads Suggestions. Sponsors: Miro.com/podcast Links: US bitcoin ETFs see $4.6 billion in volume in first day of trading (Reuters) Discord is laying off 17 percent of employees (The Verge) U.S. Criminally Charges EBay in Cyberstalking Case (NYTimes) This One-Year-Old Startup Is Hoping to be the Next Google—Can It Succeed? (The Information) Weekend Longreads Suggestions: How AI Replaced the Metaverse as Zuckerberg’s Top Priority (Bloomberg Businessweek) Avi Schiffmann’s Tab AI necklace has raised $1.9 million to replace God (Fast Company) How much detail is too much? Midjourney v6 attempts to find out (ArsTechnica) Learn more about your ad choices. Visit megaphone.fm/adchoices

On April 4th, 2023, around 2 in the morning, a man was found stabbed multiple times on a sidewalk in downtown San Francisco. Hey, who did this to you? What happened next turned the story into a political firestorm. Reports have identified the victim as Bob Lee, the founder of Cash App. From Bloomberg Podcasts, this is Foundering, the Killing of Bob Lee, beginning April 16. Welcome to the Tech meme right home for Friday, January 12th, 2024. I'm Brian McCullough today. How did Bitcoin do on its first day of ETAF trading? Where are all of these tech layoffs coming from? The weird case of eBay executives allegedly harassing people, a look at the AI company taking direct aim at Google search,

and of course the weekend Longreads suggestions. Here's what you missed today in the world of tech. How did Bitcoin do in its first day of ETF trading? Well, the price of Bitcoin is down a tiny bit at the time of this writing. But according to analysts, the new ETFs saw $4.6 billion worth of shares traded yesterday, their first day of trading. Grayscale, BlackRock and Fidelity, apparently dominated trading volumes, quoting Reuters. Fees on the new Bitcoin ETFs range from 0.2% to 1.5% with many firms also offering to waive fees entirely for a certain period or a certain dollar volume of assets. After its ETF started trading, Valkyrie cut its fees a second time to 0.25% and waived them for the first three months. As the ETFs began trading on Thursday,

market participants were closely watching bid-ask spreads. The difference between the price for a trader to buy into an ETF and the price it can be sold. ETFs with narrower spreads are typically viewed as more desirable. Trading volume, internal plumbing, and the number of participants involved, quote, are critically important to driving the spreads to a good spot, said Jason Stoneberg, Director of Product Strategy at Invesco, who's ETF with Galaxy Digital debuted on Thursday. Some analysts cautioned that the euphoria around the approval might be premature. The broader investment community still views cryptocurrencies as risky, with scandals such as the implosion of Crypto Exchange, FTCS in 2022, adding to investors' weariness. A Vanguard spokeswoman

said the firm had no plans to launch its own crypto investment products and that its focus remains on core asset classes such as stocks, bonds, and cash, which it views as, quote, the blocks of a well-balanced long-term investment portfolio, end quote. but this got me thinking. There's a certain camp in crypto, the line go up camp for whom this milestone, you know, trading Bitcoin on public markets is one they've been dreaming of for years now. But what about the other camp, the OG decentralized true believers? Coin desk takes a look at that dichotomy, quote, these hard-won approvals for ETF trading are largely viewed as a leg up for an industry,

hoping to rebuild its reputation after 2022 spectacular market collapse fueled by Sam Bankman-Fried and others. But for long time, crypto advocates, considerations may go beyond market recovery. Some fear that fraternizing with crypto's original enemy, traditional finance, TradFi, big banks and Wall Street, which early fans of the Bitcoin blockchain had in their sites, threatens to break its original promise of decentralizing financial services. Others contend that Bitcoin, the cryptocurrency, was intended for the masses, and that some form of alignment with Tradfai was unavoidable with benefits to both parties. It was always an inevitable part of the process of going mainstream.

stream, Jameson Lop, software engineer and Bitcoin advocate said during an interview, speaking about crypto and TradFi colliding through the creation of Bitcoin ETFs. Wall Street wants a cut of the action, he said. However, these Bitcoin ETFs will, quote, accelerate the flywheel of adoption and make the asset class, quote, less of a scary concept to mainstream audiences, he added. If Satoshi Nakamoto releasing the Bitcoin white paper 15 years ago was an almighty active rebellion against Tradfai, like the Greek god Zeus fighting his titan father, Kronis, to avoid being eaten up like his siblings, then Bitcoin was supposed to be the people's weapon against the unchecked power of big banks, whose irresponsibility and greed brought the global

economy to its knees in 2008. It's unsurprising them that to some purists on both sides, the ETFs not only represent the convergence of two worlds designed to be rivals, but the potential corruption of both. The approval of Bitcoin ETFs will inevitably turn out to be a very bad thing for Bitcoin decentralization, said proof of decentralization podcast host Chris Bleck on X. While ETFs will see new institutional and retail money flowing into crypto, Nikki Gomez, senior partner at XREG consulting, warns they will also influence more centralization, moving Bitcoin, quote, further away from its true value and potential. Ultimately, this will spur a larger divide with the crypto purist, Gomez said in a statement shared with CoinDesk, end quote.

It is my job to obsessively trend spot in the tech industry, and I'd like to think I'm good at it, but I have to admit to you, the latest round of layoffs that have been happening for a good six weeks now have taken me by surprise. I thought we were done with all this, but apparently not. Discord is laying off 17% of its staff or 170 people after growing its workforce by 5x since 2020, according to its CEO, CETROW, quoting the verge. CEO Jason Citron said the move is meant to, quote, sharpen our focus and improve the way we work together to bring more agility to our organization. The cuts were announced today to employees and an all-hands meeting and internal memo I've obtained. They'll impact 170 people across various departments. Based on Citron's message to employees and my understanding of the business, Discord isn't in dire financial straits, though it has yet to become profitable and is still trying to revive user growth after a surge during the pandemic.

In his memo to employees, which you can read in full below, Citron said Discord grew its headcount too fast over the last few years, an admission that has become quite common among tech CEOs as of We grew quickly and expanded our workforce even faster, increasing by 5X since 2020. Citron wrote, as a result, we took on more projects and became less efficient in how we operated, end quote. These cuts are Discord's largest to date after the messaging app laid off 4% of its staff last August. They add to the layoffs that continue to sweep across the tech industry, including deep cuts at Google and Amazon just this week. Discord has raised a total of about $1 billion in funding. It has more than $700 million in cash on its balance sheet,

and the goal to become profitable this year, according to people familiar with the matter. The company has been contemplating going public since it turned out a $12 billion acquisition offer from Microsoft in 2021, though I'm told it's nowhere near close to doing so, end quote. eBay will pay $3 million to resolve charges over a harassment campaign by staffers who sent spiders and other disturbing items to the folks behind the e-commerce bytes blog. I believe I told you about this some time ago, but I continue to find this whole story just so bizarre. Department of Justice has charged eBay with stalking, witness tampering, and obstruction of justice, quoting the New York Times. The charges, which will be dropped under a deferred prosecution

agreement if eBay maintains a good record for the next three years, stem from actions taken by the company in 2019 to undermine and silence the writers of an e-commerce newsletter that was mildly critical of some of its behavior. The intimidation efforts included various forms of cyberstalking and harassment that were continuing when the perpetrators were arrested. In its agreement with the government, eBay will engage an independent corporate compliance monitor. It also agreed to pay a criminal penalty of $3 million, the maximum fine for its six felony offenses. The government will not move ahead with the case unless the company violates the agreement. Although the money is inconsequential for a company that had more than $5 billion in cash on hand in its most recent quarter,

the notoriety is not. eBay engaged in absolutely horrific criminal conduct, said Joshua S. Levy, the acting U.S. attorney. The company's employees and contractors involved in this campaign put the victims through pure hell in a petrifying campaign aimed at silencing their reporting and protecting the eBay brand, end quote. David and Ina Steiner, writers and publishers of a news site and blog called e-commerce bites live in Natick, Massachusetts. eBay is based in San Jose, California. During the course of the harassment campaign, eBay security team members flew to Boston to accelerate their activities against the couple in person. When they were caught, they began a cover-up and destroyed incriminating messages. The forms of harassment included threatening direct messages over Twitter,

The social media platform that is now called X, attempts to install a GPS device on the Steiner's car, posting ads for fictitious sexual events at the Steiner's house, and sending anonymous and scary items like a bloody pig's mask to the couple's home. A 24-page document detailing the charges that was released on Thursday broadens the number of eBay executives in the case. In earlier documents, only two executives were mentioned, the chief executive and the chief communications officer. Now there is a third executive identified as eBay's senior vice president for global operations, end quote. There's another big new AI player that I don't believe I've told you about before. Perplexity AI is a generative AI search engine.

You know how people are like, why do you need Google to answer questions if you've got AI? Yeah, perplexity is that. They're going directly after Google search. They call their product an answer engine. Perplexity was founded by former researchers from OpenAI, Meta, and Quora. They launched in December of 2022, so right on the heels of chat GPT, but before the Bing chat integration, or whatever Microsoft called that. When they raised a $74 million round at a $520 million valuation a couple of weeks ago, with participation by Elad Gill, Jeff Bezos, and others,

they claim to have around 10 million monthly active users. And now, the information says, they doubled annual recurring revenue to around $6 million just since October. Quote, I've been testing out Perplexity's search engine for the past few months, and it has many of the features that I found missing in alternatives like OpenAIs, chat GBT, Google's Bard, and Microsoft's Bing. Its answers are concise and to the point. It includes citations to articles to back up its statements, and it doesn't have an overly cutesy distracting personality. Despite all its strengths and investor hype, though, the odds are stacked against it, most notably that it's competing against the Silicon Valley Powerhouse Google.

Other companies have tried to take on the search engine giant and failed. Last year, AI-powered search engine Niva axed its consumer business after struggling to attract new users. In May, Niva sold itself to Snowflake for $150 million. supervised, reported, just half of what it was valued at in its last fundraising. Google's revenue from advertisers has made it a cash cow. However, because perplexity doesn't offer sponsored results to user queries like Google does, it can't take advantage of that lucrative ad business model. Instead, it charges subscription fees for a premium version of its search engine that allows

users to ask unlimited questions, choose their AI model, and upload documents. This is similar to the approach NEVA took as well. As Elon Musk and others have discovered, though, persuading people to sign up for a paid subscription to something they can get for free is very difficult. However, founder Avrend Strinavas, pointed out that perplexity doesn't need to make a serious dent in Google's traffic to do some damage. You only need the top five to 10% of Americans to use you more than Google, he explained to me. When that happens, it's already a big dent because advertisers care the most about premium users. Getting to the top five to 10% of Americans isn't an easy task, though.

Still, perplexity is making some progress, even if its business model remains tiny. Since October, perplexity's annual recurring revenue has doubled from 3 million to around 6 million. According to a person familiar with the situation, that growth will hopefully justify the expensive multiple IVP paid in the startup's latest fundraising 150 times forward ARR. To put that in context, OpenAI is reportedly raising at a $100 billion valuation 63 times the startup's forward revenue. Anthropic has told investors it would be generating revenue at around a $200 million pace by the end of 2023, implying a multiple of 75 times forward revenue for its ongoing fundraising round. Still, even though Srinivas admits that the company needs to think about

what a sustainable business model could look like in the future, that could include its current subscription model, letting developers access its in-house model through an application programming interface, or taking a page from Google's book and adding advertisements to its search results, he said, end quote. Time for the weekend long read suggestions. First up, remember when Zuck sort of stopped talking about the Metaverse? At the time, it felt like there were financial reasons for this, rescuing the stock and all that. But this big piece from Bloomberg Business Week suggests it was also because his head was turned by the emergence of AI. Quote, in the summer of 2021, during a private moment at the Allen & Company conference in the Idaho Mountains, Google chief

executive officer Sundar Pichai complimented Mark Zuckerberg on a technical breakthrough by Facebook's artificial intelligence team. The only problem for Zuckerberg in Idaho was that he had little idea what breakthrough Pichai was talking about, according to people familiar with the meeting. Zuckerberg is now making AI his top priority. After his conversation with Pichai, Zuckerberg returned to Meta's headquarters in Menlo Park, California, and asked to be briefed on all the latest work by its AI research called Fair for Fundamental Artificial Intelligence Research. He educated himself a lot more, says Jerome Pesenti, Meta's former vice president for artificial intelligence, end quote. Then, in this week of AI hardware, having a breakthrough moment, word of another one, tab AI. This is sort of a necklace you wear, all. all day to record everything that happens to you. Quoting Fast Company, Tab is a small puck that hangs around your neck and listens to everything you and the people around you say. Essentially, just a microphone and a battery that lasts up to 30 hours between charges. It uses Bluetooth to beam your audio to your phone and into the cloud where ChatGPT currently transcribes your conversations

and various AI models will extract insights for you. Its UX isn't final, but assume you'll use your phone screen for most anything you want to do. Ultimately, Tab is meant to be an AI companion or what Schiffman calls a clarity machine that rides along in every moment of your life. Tab is not an assistant, period. I'm not building something that's going to connect to Notion or your emails anytime soon. I'm solely building a friend that morphs into your creative partner, life coach or therapist, as needed, he says. What I'm trying to do is create a new relationship in your life, radical transparency without concern of judgment. I think this is a relationship people used to have with God, but is lacking in the modern world, end quote. And finally,

If you haven't played around with it yet, Ars Technica has a sort of walkthrough of mid-jorney version 6. Quote, it's definitely a crazy update, both in good and less good ways. Artists Julie Weiland, who frequently shares her Mid-Journey creations online, told Ars, the details and scenery are insane. The downside for now are that the generations are very high contrast and overtly saturated, in my opinion. Plus, you need to kind of readap and rethink your prompts, working with new structures, and now less is kind of more in terms of prompting. end quote. In our testing of version 6, which can currently be invoked with the V6.0 argument at the

end of a prompt, we noticed times when the new model appeared to produce worse results than version 5.2, but Mid Journey veterans like Weiland tell ours that those differences are largely due to the different way that version 6 interprets prompts. That is something mid-journey is continuously updating over time. Quote, old prompts sometimes work a bit better than the day they released it, Wylan told us, End quote. Okay, bonus episodes. Chris and I finally did a proper tech meme ride home experience episode last night. And yes, it was with the great John Gruber. It was great. We talked AI hardware. We talked Apple's AI strategy. We talked Vision Pro. We talked about Chris's concerns about the way in which threads has adopted hashtags, or not, as Chris would tell you. So that is coming

to you on Saturday. Or you can watch it on YouTube as soon as I uploaded, which should be around the time you hear this. As I said, one of the reasons I've been reviving the TechMeme Right Home YouTube channel is because when I record these bonus episodes over Zoom, I have the video. The fact that I've not been posting the video anywhere has frankly just been rank laziness on my part. So going forward, whenever I do an interview, I'm going to post it on the YouTube channel as well. And then, since it's a holiday on Monday, I'm not going to do a 15-minute news rundown that day, but I will give you my picks for the coolest things at CES this year. That too has been on YouTube all week, so if you hear something that you want to see more of, check that out.

But also, it will be in your ears on Monday. Talk to you on Tuesday.