Tech Brew Ride Home - Fri. 01/20 – Alphabet’s Monster Layoffs

Episode Date: January 20, 2023

Now Alphabet has monster layoffs to announce. How much of it is about getting Google ready to battle OpenAI? More Twitter bans, but this time, the bans are for all 3rd party clients. The big executive shakeup at Netflix. Genesis officially files for bankruptcy, and in the Weekend Longreads Suggestions, the reasons why the humble pizza box is one of the worst designed products in existence. Sponsors: The Pegasus Investment Round! Email [e-mail] (Listener ad!) NFTTallinn.com and code RIDE for 10% of all tickets! (Listener ad!) Links: Google to Cut 12,000 Jobs in 6% Reduction of Global Workforce (Bloomberg) Twitter’s new developer terms ban third-party clients (Engadget) Netflix co-founder Reed Hastings to step down as chief executive (FT) Crypto Lender Genesis Files for Bankruptcy as Crisis Spreads (Bloomberg) Google Calls In Help From Larry Page and Sergey Brin for A.I. Fight (NYTimes) Weekend Longreads Suggestions: How Amazon Became Ordinary (Ritholtz.com) Who Owns the Generative AI Platform? (a16z) The Steam Deck wasn’t born ready, but it’s ready now (The Verge) A WIRED compendium (The Future, Now and Then) You Don’t Know How Bad the Pizza Box Is (The Atlantic) Brian's Episode on the Metacast podcast! 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 20th, 20th, 20th, 203. I'm Brian McCullough today. Now Alphabet has Monster Layoffs to announce how much of this is about getting Google ready to battle Open AI. More Twitter bans, but this time the bands are

for all third-party clients, the big executive shakeup at Netflix, Genesis officially files for bankruptcy, and in the weekend long-rate suggestions, the reasons why the humble pizza box is one of the worst design products in existence. Here's what you miss today in the world of tech. Google parent company Alphabet plans to cut around 12,000 jobs, more than 6% of its global workforce. CEO Sundar Pachai said he takes, quote, full responsibility for the need to cut jobs, quoting Bloomberg. There are important moments to sharpen our focus, re-engineer our cost base, and direct our talent and capital to our highest priorities. Pichai wrote in an email to employees. He said the company has a, quote, substantial opportunity in front of us with artificial

intelligence, a key investment area where Google is facing a surge in recent competition. Pachai said Alphabet would be paying affected employees at least 16 weeks of severance and six months worth of health benefits in the U.S. with other regions receiving packages based on local laws and practices. Bonuses won't be affected, he said, end quote. More on this moment in time for Google later in the show, but as our friend Sean at SWYX on Twitter pointed out, just this week, Amazon laid off 18,000 people, Microsoft laid off 11,000 people, and now alphabet 12,000, just this week. Just those companies were responsible for 40,000 layoffs. The only Fang company at this point, not laying people off yet, Apple. We didn't talk about this, but over the last few weeks,

third-party Twitter apps like TwitterRific and tweetbot appeared to break. Speculation was rampant that Twitter was pulling the plug on purpose. And indeed, Twitter has now quietly updated its developer agreement with a clause banning third-party clients full stop. After previously claiming the company was merely, quote, enforcing long-standing API rules. Quoting and gadget, the restrictions section of Twitter's developer agreement was updated Thursday with a clause banning, quote, use or access. the licensed materials to create or attempt to create a substitute or similar service or product

to the Twitter applications, end quote. The addition is the only substantive change to the 5,000-word agreement. The change confirms what the many makers of popular Twitter clients have suspected in recent days that third-party Twitter services are no longer permitted under Elon Musk's leadership. Twitter previously said it was, quote, enforcing long-standing API rules, but hadn't cited which rules developers were violating. The company no longer has a communications team. and most staffers working on its developer platform were also cut during the company's mass

layoffs last year. But the company's suggestion that the rule was longstanding doesn't line up with its history. Twitter clients have long been a part of Twitter. Twitterific, one of the most prominent apps affected by the API shutoff last week, was created before Twitter had a native iOS app of its own and is credited with coining the word tweet, as well as other features now commonly associated with Twitter's app, end quote. co-founder Reid Hastings has stepped down as co-CEO of the company, but he plans to stay on as an executive chairman. The company is promoting C.O. Greg Peters to become co-C-EO with other co-CEO Ted Serendos, quoting the Financial Times. Hastings wrote in a blog post that he had been increasingly

delegating management in recent years, now is, quote, the right time to complete my succession, he added. Our board has been discussing succession planning for many years. Even founders need to evolve. Hastings, aged 62, wrote, I'm so proud of our first 25 years and so excited about our next quarter of a century, end quote. The change came as Netflix reported Q4 revenue up 1.9% year over year to $7.85 billion, and $55 million in net income, which was down from $607 million in net income year over year. also 231 paid memberships, which meant they added 7.66 million subscribers versus the 4.57 million that was expected, so they beat on subscription ads. Netflix also said it plans to roll out paid password sharing more broadly in Q1 and expects some cancel reaction, their words, before an improvement in overall company revenue will be realized. Lots of stories today where there's not much in the way of

context for me to offer you beyond just telling you the thing has happened? Well, the thing has happened. Crypto Lender Genesis Global Capital has filed for Chapter 11 bankruptcy in New York, listing the estimated range for both assets and liabilities at between $1 and $10 billion. Voting Bloomberg. Genesis's plan is to use the Chapter 11 process to try to sell assets or raise money, with creditors ending up owning the reorganized business if those efforts are unsuccessful, a statement showed. The company intends to use $150 million of cash on hand to fund itself in bankruptcy. Chapter 11 allows a firm to continue operating while trying to work out ways to repay creditors. Parent company Digital Currency Group had been in confidential negotiations with various

creditor groups amid a liquidity crunch. Genesis had warned that bankruptcy was possible if it failed to raise cash. Genesis Global Trading and other units involved in derivatives and spot trading and custody businesses aren't part of the bankruptcy filing, end quote. From the, of course they did, because it would be weird if they didn't, file. Sources are telling the New York Times that Google executives met with Larry Page and Sergey Brin, Google's founders last month, to discuss Google's AI efforts as the company is seeking to combat open AI's chat GPT. Quoting the New York Times, Mr. Page and Mr. Brin, who had not spent much time at Google

since they left their daily roles with the company in 2019, reviewed Google's artificial intelligence product strategy, according to two people with knowledge of the meetings who were not allowed to discuss them. They approved plans and pitched ideas to put more chatbot features into Google's search engine, and they offered advice to company leaders who have put AI front and center in their plans. The re-engagement of Google's founders at the invitation of the company's current chief executive, Sundar Pichai, emphasized the urgency felt among many Google executives about artificial intelligence and that chatbot chat GPT. The new AI technology has shaken Google out of its routine.

Mr. Pichai declared a, quote, code red, upending existing plans and jump-starting AI development. Google now intends to unveil more than 20 new products and demonstrate a version of its search engine with chatbot features this year, according to a slide presentation reviewed by the New York Times and two people with knowledge of the plans who are not authorized to discuss them. At the same time, Alphabet is scaling back its workforce. On Friday, the company said it would cut about 20. 12,000 jobs after a hiring spree during the pandemic and amid concerns of a slowing economy. The layoffs were designed, quote, to ensure that our people and roles are aligned with our highest

priorities as a company, Mr. Pichai wrote in a note to employees, end quote. Time for the weekend long-read suggestions, and I have to admit I meant to share this one last week, but I forgot. From one of my favorite Wall Street people, Barry Riddlets, a piece titled, How Amazon Became Ordinary. And seriously, ask yourself, happen to you experienced every single one of the things that Barry points out, Amazon kind of sucks for now, especially buying things. Advertising on every single listing is one thing we've all seen. Also quoting Barry, I needed a simple lithium battery for a car key fob. I searched for the exact product number CR-2450 lithium and bought the first result, a duracell.

But it wasn't a 2450, it was a paid placement. Why should anyone have to double-check that? These sorts of search results seem to be happening with increasing frequency in recent months. I suspect Amazon's algorithms will eventually figure this out, but meanwhile, it reveals that advertiser dollars and not consumers are the retail giant's newest priority, end quote. Also, third-party sales of crappy products seem to be everywhere. Also, every single $20 product you buy now triggers an extended warranty pitch, which, you know, that's a well-known sales trolling technique that kills.

the likes of Circuit City and has tried to kill Best Buy in the past. And then, most damningly, this, quoting Barry again. For the longest time, Amazon was the low-cost provider. Today, this is no longer true. How many times did this happen to do during the pandemic? You needed a product, and you went to Amazon, but they either didn't have it in stock or had it at a silly, gouging price. They seemed to have frittered away their biggest advantage, the friction of setting up a new account as well. lack of inventory, higher prices, and general degradation of the user experience sent many customers scrambling to find alternatives. The beneficiaries of this during the pandemic include Walmart, Target, Chewy, Instacart, Google Wallet, and others, end quote. Actually, that made me realize that

until the pandemic, I had never purchased a single item from Walmart in my entire adult life. But in the struggle to find things Amazon doesn't have, I now have a target account. I buy from Walmart.com once a month or so. I actually have an order coming from them today. Shame on you, Amazon, shame. Then from Andresen Horowitz, a stab at attempting to answer big questions around the whole generative AI thing, like, for example, in the coming generative AI environment, who owns the platform and who owns the customer? Quote, in prior technology cycles, the conventional wisdom was that to build a large independent company, you must own the end customer, whether that meant individual consumers or B2B buyers. It's tempting to believe that the biggest companies in

generative AI will also be end-user applications. So far, it's not clear that's the case. It's not yet obvious that selling end-user apps is the only or even the best path to building a sustainable generative AI business. Margins should improve as competition and efficiency in language models increases. Retention should also increase as AI tourists leave the market, and there's a strong argument to be made that vertically integrated apps have an advantage in driving differentiation. But there's a lot to still prove out. There are also, also countervailing forces. Models released as open source can be hosted by anyone, including outside companies that don't bear the costs associated with large-scale model training,

up to tens or hundreds of millions of dollars. And it's not clear if any closed source models can maintain their edge indefinitely. For example, we're starting to see large language models built by companies like Anthropic, Cohere, and Character AI. Come closer to open AI levels of performance trained on similar datasets, i.e. the internet, and with similar model architectures. The example of Staple Diffusion suggests that if open source models reach a sufficient level of performance and community support, then proprietary alternatives may find it hard to compete. Perhaps the clearest takeaway for model providers so far is that commercialization is likely tied to hosting. Demand for proprietary APIs, e.g. from OpenAI, is growing rapidly. Hosting services for open source models, e.g. Hugging Face and replicate are emerging as useful hubs to easily share and integrate models.

and even have some indirect network effects between model producers and consumers. There's also a strong hypothesis that it's possible to monetize through fine-tuning and hosting agreements with enterprise customers, end quote. Then from The Verge, a year ago, Sean Hollister wrote a piece in The Verge saying that the steam deck was great, but it was still undercooked. Now, after a year of updates, he says, it's a gaming system that wasn't born ready, but the steam deck is ready now. quote, according to data harvested from Val's servers, the deck has already accounted for one-third of my total Steam playtime since 2019.

It's changed how I play games and where I buy them, just the way I'd hoped it would during my first hands-on last year. Now, instead of buying games for the Nintendo Switch, I'm paying for PC copies again. I know I'm not the only one. No other company has yet delivered this combination of portability, performance, and price. I'm waiting and watching for that to change because we all know that technology marches on. Valve seems happy to let others borrow its know-how, and it intends to eventually offer a sequel that will likely have more battery life and better screen. But as of today, nearly 11 months after the first units started shipping, the steam deck feels like an excellent deal, end quote.

Next, let me turn you on to a true long read suggestion. Dave Karp has been reading and rereading every single issue of Wired Man magazine going back to its very beginnings. And you can follow along with him and read the articles with him on his substack to find gems like this. Quoting from Dave. The first thing to understand about 1993 and 1994 is that the World Wide Web wasn't really a thing yet. Wired declared that the digital revolution had arrived, but that digital revolution was interactive TV, virtual reality, the national information infrastructure, and the growth of bulletin board systems. This brings me to Gary Wolf's piece, the second phase of the revolution has begun. The wild thing about this article

is that it's the first feature story to talk about the World Wide Web, and it appears at the tail end of 1994. Wolf is introducing wired readers to Mosaic, the web browser that ushered in the World Wide Web. You can get a feel from this article of how the web looked to already committed digital revolutionaries as it arrived. Or take Bob Garfield's piece, YouTube versus Boob Tube Tube. It's a portrait of YouTube when it was just still a young company only recently acquired by Google. It's really fun to find the articles where the companies we all know of now and take for granted now, to see them mention for the very first time in the pages of Wired. And finally, from the pages of the Atlantic, want to know the worst product designs out there, maybe the worst right now, a design that should be disrupted,

but hasn't been yet. It's the humble pizza box. Quote, sliding a $40 pie into a pizza box is the packaging equivalent of parking a Lamborghini in a wooden shed before a hurricane. The problem with the pizza box starts with the pie itself. Let's consider what makes the pizza so perfect, not the alchemy between sauce and cheese, but the texture. A classic hot pizza will have a tender and gooey center with a crust that's as dry and crispy as an eggshell. Even a single slice of freshly cooked budget pizza can deliver a textual kaleidoscope that is unparalleled for its price. of those qualities fares well in a box. Unlike a Tupperware of takeout chicken soup or Palak Panier, which can be microwaved back to life after its journey to your home,

the texture of a pizza starts to irreparably worsen after even a few minutes of cardboard confinement. You'll never get a pizza out of a box that tastes as good as it would have before it went in, Scott Weiner, a New York pizza tour guide and the author of Viva La Pisa, The Art of the Pizza Box told me. The basic issue is this. A fresh pizza spews steam as it cools. A box traps that moisture, suspending the pie in its own personal sauna. After just five minutes, Weiner said the pie's edges become flaccid and chewy. Sauce creeps into the crust, making it soggy. All the while, your pizza is quickly losing heat. After 15 minutes, the cheese has congealed into dollops of rubber. And after 45 minutes, your pizza deteriorates into something else

entirely. It'll be chewy and dry at the same time. Anthony Falco, a pizza consultant, and the author of Pizzazar told me, and there's nothing you can do to fix it, end quote. No bonus episode for you this weekend, but if you fear missing my voice, guess what? I've got the next best thing. A couple months ago, I sat down with the hosts of the Metacast podcast. Metacast is the podcast about podcasting.

And for two hours, not only did I tell them about how I do this show in great detail, but basically the majority of the show is me giving them my, entire career story. So if you've ever been curious about how I got to hear from film school to my dot-com era startups to my web 2.0 era startups, it's all there. Check it out. Final link in the show notes, Metacast, the podcast about podcasting. Talk to you on Monday.