Tech Brew Ride Home - Fri. 07/19 – The Big CrowdStrike Outage Explained

Episode Date: July 19, 2024

The big tech outage caused by a single software update that even my mom is texting me about. The new mini AI models are bring prices down as we hoped. How Netflix completely righted its ship. And, of course, the weekend longreads suggestions. Sponsors: Miro.com The Next Wave Podcast Links: Major Windows BSOD issue takes banks, airlines, and broadcasters offline (The Verge) Global IT Collapse Puts Cyber Firm CrowdStrike in Spotlight (Bloomberg) Samsung halts Galaxy Buds 3 Pro shipments over quality issues (The Verge) OpenAI debuts mini version of its most powerful model yet (CNBC) OpenAI's 4o-mini brings big brains on a budget. (Ben's Bites) Netflix Q2 Profits Surge 44% to $2.15 Billion As Streamer Adds 8 Million Subscribers (The Wrap) Weekend Longreads Suggestions: A One-Man Telemundo on TikTok (NYTimes) Pooping on the Moon Is a Messy Business (Wired) Interesting Raise Story About San Francisco Compute Co. (Bloomberg) 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, July 19th, 2024. I'm Brian McCullough today. The big tech outage caused by a single software update that even my mom is texting me about. The new mini AI models are bringing prices down, as we hoped, how Netflix completely righted its ship seemingly.

And of course, the weekend long-ray suggestions. Here's what you missed today in the world of tech. Okay, you know how every time there's a hack or security story, I'm like, what is my threshold for talking about it, lest I do a breach story every day? well, I have a new yardstick, I guess, because my mom texted me this morning. Guess you have a big morning of news to get to, and on her way out the door, my wife said something similar. So I guess if it's big enough to break through to them before I can even log in to big outage, here's what's happening, quoting the verge. Thousands of Windows machines are experiencing a blue screen of death,

B-S-O-D issue at Boot Today, impacting banks, airlines, TV broadcasters, supermarkets, and many more businesses worldwide. A faulty update from cybersecurity provider CrowdStrike is knocking affected PCs and servers offline, forcing them into a recovery bootloop so machines can't start properly. CrowdStrike is widely used by many businesses worldwide for managing the security of Windows PCs and servers. Australian banks, airlines, and TV broadcasters first raised the alarm as thousands of machines started to go offline. The issues spread fast as businesses based in Europe started their workday. UK broadcaster Sky News was unable to broadcast its morning news bulletins for hours this morning and was showing a message apologizing for, quote, the interruption to this broadcast.

Ryanair, one of the biggest airlines in Europe, also said it's experiencing a third-party IT issue, which is impacting flight departures. The Federal Aviation Administration says it's assisting airlines like Delta, United, and American Airlines due to communications issues. The FAA is closely monitoring a technical issue impacting IT systems at U.S. Airlines, says FAA spokesperson Jeannie Schiffer in a statement to the verge. Several airlines have requested FAA assistance with ground stops for their fleets until the issue is resolved. The Berlin Airport is also warning of travel delays due to technical issues. Many 911 emergency call centers in Alaska have also been impacted by the issues. One airline in India has even turned to handwritten boarding passes due to

the outages. Crowdstrike is actively working with customers impacted by a defect found in a single content update for Windows hosts, said CrowdStrike's CEO George Kurtz in a post on X. Mac and Linux hosts are not impacted. This is not a security incident or cyber attack, end quote. So it's kind of been hard for me to get a handle on what exactly has gone down here. CrowdStrike says the issue has been identified and a fix has been deployed. But from what I can see, it just seems a software update bricked a bunch of PCs. Apparently, this was a kernel-level driver that CrowdStrike uses on Windows machines and a ton of people use CrowdStrike. Basically, they reverted this update, but that does nothing to help you

if you're already seeing the blue screen of death. Basically, if you slept through all this, you could be fine, and again, also Windows and Linux systems appear not to be affected, but quoting again, in a Reddit thread, hundreds of IT admins are reporting widespread issues, and the workaround steps involve booting affected Windows machines into safe mode and navigating to the CrowdStrike directory and deleting a system file. That will be troublesome on some cloud-based servers are even for Windows laptops that are deployed and used remotely. Our entire company is offline, said one Reddit poster, while another says 70% of their laptops are down and stuck in a boot loop. Happy Friday, says one Reddit poster. It looks like it's going

to be a long day for IT admins worldwide, end quote. Now, this is also apparently completely unrelated to several issues that took down Microsoft 365 apps and services over the last 24 hours or so. That was an Azure-specific problem, apparently. But, and this is something that I've heard before, this actually points to a systemic concern here. CrowdStrike and other endpoint security tools need access to the core of operating systems, giving them the ability to disrupt the very systems that they're trying to protect. Quoting Bloomberg, CrowdStrike was founded by former executives of Antivirus Pioneer McAfee and launched in 2012. It has grown into the leading maker of a relatively new type of security.

software that's considered among the best defenses against ransomware and other hacking threats. It controls about 18% of the $8.6 billion global market for so-called modern endpoint protection software just ahead of arch-rival Microsoft, according to market research firm IDC. The type of software crowdstrike supplies is separate and distinct from older, more limited types of security software. Traditional antivirus software was useful in the early days of computing and the internet for their ability to hunt for signs of known malware. but it has fallen out of favor as attacks have become more sophisticated.

Now products known as endpoint detection and response software that CrowdStrike develops do far more, continually scanning machines for any signs of suspicious activities and automating a response. But to do this, these programs have to be given access to inspect the very core of the computer's operating systems for security defects. This access gives them the ability to disrupt the very systems they are trying to protect, and it is how Microsoft's Windows systems came into play in Friday's outage. While cybersecurity professional state crowd strikes technology is a strong way to defend against ransomware, its cost, which in some cases can be more than $50 per machine,

means that most organizations don't install it on all of their computers. What that means, however, is that the computers that have the software installed on them are among the most important to protect, and if they go down, key services can fall with them, end quote. experts are also coming out this morning to say, CrowdStrikes Fix requires tampering with system files with no way to automate that at scale, meaning outages could persist for longer than expected. So IT folk, I'm sorry to hear about your weekend plans. Samsung has halted Galaxy Buds 3 Pro shipments over quality issues, quoting the verge.

Samsung has temporarily stopped shipping its new Galaxy Buds 3 Pro-shutments, pro to retailers following complaints about quality control. Early customers who received the wireless earbuds ahead of its wider July 24th release reported that the ear tips were fragile and prone to breaking when removed. The pause was confirmed in a statement to Android Authority in which Samsung said it had, quote, temporarily suspended deliveries of GalaxyBud's 3 Pro devices to distribution channels to conduct quality control assessments before the product is delivered to customers. We sincerely apologize for any inconvenience this may cause, the company said, directing customers who had already received the earbuds to contact Samsung support or visit their nearest Samsung

Service Center, end quote. Open AI yesterday launched GPT-40 Mini, a smaller, cheaper offshoot of GPT4O, replacing GPT3.5 turbo, with support for all multimodal inputs and outputs coming soon. Quoting CNBC, the company called the new release, quote, the most capable and cost-efficient small model available today, and it plans to integrate image, video and audio into it later. The mini AI model is an offshoot of GPT-4-O, OpenAI's fastest and most powerful model, which it launched in May during a live-streamed event with executives. The O&GPTO stands for Omni and GPT-40 has improved audio, video, and text capabilities with the ability to handle 50

different languages at improved speed and quality, according to the company. The mini AI model announced Thursday is part of OpenAI's push to be at the forefront of multimodality, or the ability to offer a wide range of types of AI-generated media like text, images, audio, and video inside of one tool. ChatGPT. Last year, OpenAI Chief Operating Officer Brad Lightcap told CNBC, quote, the world is multimodal. If you think about the way we as humans process the world and engage with the world, we see things, we hear things, we say things. The world is much bigger than text. So to us, it always felt incomplete for text and code to be the single modalities, the single interfaces that we could have to show how powerful these models are and what they can do, end quote.

GPD 4.0 Mini is available for free users of chat GPT, along with ChatGPT Plus and team subscribers, and it will be available to ChatGPT Enterprise users next week, the company said in a press release, end quote. Yes, and also this is pretty notable. GPT40 Mini costs 15 cents per 1 million input tokens and 60 cents per one million output tokens. Prices lower than those of Claude3 Haiku and Gemini 1.5 Flash, and it beats the early version of GPT4, and it costs 30 times less than GPT-40. So at least on the end-user side, we are starting to see cost deflation as we've come to expect from tech products generally over the last 30 to 50 years or so. Also, say goodbye to GPT 3.5 turbo, since again this replaces that. And quoting from Ben's Bytes.

It's not just about the cost savings. GPT-40 Mini is seriously smart. It outperforms other small models in math, coding, and multimodal reasoning. On the MMLU benchmark, General Intelligence, it scores 82% surpassing GPT 3.5 and some larger models. This little model can handle a massive 128,000 token context window and output 16,000 tokens, opening up a ton of new possibilities. Companies like Ramp and Superhuman are already using it to great success in real-world tasks. This model and other kiddos like Gemini 1.5 Flash and Claude 3 Haiku are great for low logic tasks. Think translations, rewrites, getting data from forms and images.

etc. Just don't expect them to use their own brain and you'll be fine, end quote. Netflix kicked off tech earnings season yesterday, reporting Q2 revenue up 16.8% year-over-year and net income up 44% year-on-year. But the big news was that Netflix added 8 million subscribers in Q2 versus only 5 million estimated, as it benefited from a crackdown on password sharing and popular titles like Bridgeton and Baby Reindeer. And Netflix says it's ad tier now accounts for over 45% of all signups in the markets where that's available. An ad tier membership grew 34% quarter on quarter in Q2. In other words, remember when Netflix had that big crisis, earnings misses, growth slowing. They quickly reached for two break in case of emergency

levers to turn things around, getting less laissez-faire about passwords, and adding ads, something it swore it would never do. The bottom line here is, both of those panic levers seem to have worked out for them. Quoting the wrap, Netflix and YouTube are pulling further ahead of rival studios' nascent streaming businesses. In Nielsen's latest gauge report for the month of June, Netflix reported an 8.4% share with only YouTube ahead of it with a 9.9% share. The next closest competitors are Prime Video at 3.1% and Hulu at 3%.

Netflix estimated that it's streaming, pay TV, film, games, and branded advertising currently account for 6% of a $600 billion market opportunity. Our biggest opportunity is winning a larger share of the 80% plus of TV time, primarily linear and streaming that neither Netflix nor YouTube has today. The company wrote in its quarterly shareholder letter, If we execute well, better stories, easier discovery, and more fandom, while also establishing ourselves in newer areas like live, games, and advertising, we believe that we have a lot more room to grow, end quote.

Time for the weekend long-wreed suggestions. First up, I wasn't kidding with that Mark Rober reach out yesterday. Creators are becoming interesting to me again because they're clearly becoming more powerful. I'm also especially interested in one-person band creators like Carlos Espina profiled here by the New York Times, who has 9.4 million TikTok followers and who posts in Spanish about immigration and politics and whom the White House is treating as a fully legit broadcaster. Yes, I'm aware of the analogy of me also being a one-man-band news provider myself, but, you know, I don't have anywhere near Carlos's reach, quoting the New York Times. On a recent scorcher of a Houston afternoon, Carlos Eduardo Espina was driving to a restaurant

that specializes in Nicaraguan and Puerto Rican food when he received a news alert on his iPhone. The former president of Honduras had been sentenced to 45 years in a U.S. prison for drug trafficking. Oh, I need to make a video actually in the car, Mr. Espina, 25 said apologetically as he pulled his Honda crossover SUV into the restaurant's parking lot. He skimmed a Honduran newspaper's Instagram post about the news and then opened TikTok where he has 9.4 million followers. He turned the camera on himself, while his girlfriend, who was sitting behind him, crouched out of the frame, clearly used to this sort of drill. His hazel eyes widened and he boomed, Important Notesia de Ultima Oro. Spanish for important breaking news then shared a one-minute recap. The video racked up more than 100,000 views during lunch, which Mr. Espina received for free because the restaurant owner was thrilled to recognize him from TikTok. Mr. Espina, a recent law school graduate who lives in College Station, Texas, has become something of a one-man telemundo for millions of Latinos in the United States and one of the White House's favored social media personalities. He posts almost constantly sharing earnest and personal news about and the Latino community, along with videos about food, sports, and politics, and often championing

the Biden administration's agenda. Despite having more TikTok followers than Beyonce or Reese Witherspoon, he has received little attention in the national press, perhaps because his videos are mainly in Spanish. But he drew attention last month with videos that he filmed with President Biden as he announced two new immigration measures. I've basically become, for many people, their main informer on immigration, said Mr. Espina, who's often found in jeans and a man bun. People will be watching Telemundo, and if they see something on immigration, they'll immediately go to my profile and say, hey, what is Carlos saying about this? End quote. And finally, from Wired, well, actually, let me just go with the title that Wired used itself. Pooping on the moon is a messy business. If humans are to return to the moon, space agencies and governments need to figure out the legal, ethical, and practical dimensions of extraterrestrial waste management.

quoting from the long reads summary of this piece, ever thought about what might happen if you passed a bowel movement in space? My guess is no. Here on Earth, gravity pulls your poop down and flush toilets immediately whisk it away. On the moon, where would it go? Let this squeamish thought sink in and then buckle up as you read Becky Ferraria's fun-wired story. Quote, at the dawn of the space age, she writes, American crews literally just taped a bag on their butts when they had to go,

a system that infamously resulted in escaped turds floating through the Apollo 10 command module, end quote. More than 50 years ago, the first astronauts on the moon left nearly 100 poo bags across six landing sites, and they're still sitting there today. I didn't count how many unexpected phrases and laugh-out-loud lines there are in this piece, but I was thoroughly entertained from Ferraria's opening paragraph to her last line. Potty humor aside, she provides a fascinating look into this less appealing aspect of space travel for NASA and other space agencies to return to the moon, and for companies and billionaires like Richard Branson to launch a new era of tourism, a solid waste management system, pun intended, must be in place. And what about those very old Apollo poo bags left on the lunar surface teeming with microbiota?

What can they tell us about the emergence of life in outer space? Quote, answers to some of the most profound and ancient questions about our place in the cosmos, writes Ferreira may indeed be waiting in Neil Armstrong's 54-year-old. spent diapers, end quote. No bonus episode for you this weekend, but I did want to share an interesting raise. The very last link in the show notes today is to a Bloomberg story from this week about San Francisco compute, one of the earliest companies the Ride Home AI Fund invested in. Jack Altman, Sam Altman's brother, led the latest round by putting in $12 million. We participated in that round, doubling down from our participation in the pre-seed round as well.

What do they do? Quoting Bloomberg, to help get small players a piece of coveted AI chips and their compute resources, San Francisco Compute Company wants to make it easier to buy a chunk of access at a time. The company's idea is to create a kind of trading platform for coveted compute power, end quote. So a kind of spot exchange to buy time on H-100s and the like, say. Remember how I said there's an economics problem for AI startups where you have to raise millions of dollars just to create an AI product because the computer. is so expensive, but what if you could get the compute piecemeal? Yes, SF Compute helps do that. Hashtag proud investor, of course, but if this sounds like a problem you're encountering, if you need only a month or a week of access to H-100, say, hero runs is the term, and you don't want to commit to, like, year-long terms, get in touch. I'll put you in touch

with SF Compute. We'll tell them Brian sent you like the good old days. Brian at ridehomefund.com. If interested, talk to you on Monday.