Tech Brew Ride Home - Fri. 09/27 – Sam Altman Declines To Go “Founder Mode”

Episode Date: September 27, 2024

Founder Mode? Not for me, says Sam Altman, but we will see. A few new gadgets from Samsung. Maybe ARM should buy Intel. Are AI startups hitting revenue traction faster than SaaS startups did? And, of course, the Weekend Longreads Suggestions. Links: Sam Altman tells OpenAI staff there’s no plan for him to receive a ‘giant equity stake’ in company (CNBC) Samsung Galaxy S24 FE goes official starting at $649 – is it still a ‘Fan Edition?’ (9to5Google) Arm Is Rebuffed by Intel After Inquiring About Buying Product Unit (Bloomberg) Exponential growth brews 1 million AI models on Hugging Face (ArsTechnica) AI start-ups generate money faster than past hyped tech companies (FT) Weekend Longreads Suggestions: McDonald’s touchscreen kiosks were feared as job killers. Instead, something surprising happened (CNN) Apple Rolls Back Its Big Plans to Release Movies in Theaters (Bloomberg) The 27-Year-Old Economic Adviser for Gen Z (WSJ) 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, September 27th, 2024. I'm Brian McCullough today. Founder mode, not for me, says Sam Altman, but we will see. A few new gadgets from Samsung. Maybe Arm should buy Intel. Are AI startups hitting revenue traction faster than SaaS startups did? And of course, the week on long read suggestions. Here's what you miss today in the world of tech. At an all hands meeting, Sam Altman has reportedly said, no. There are no plans for him to get a, quote, giant, giant. equity stake in OpenAI, calling that information, quote, just not true, quoting CNBC. Altman and Finance Chief Sarah Fryer both said at the meeting conducted by video that investors

have raised concerns about Altman not having equity in the high-valued artificial intelligence company that he co-founded almost nine years ago, said the person who asked not to be named because the gathering was only for employees. Regarding his potentially attaining an equity stake, Altman said, there are no current plans here, the person said. Open-A-I-I chairman Brett Taylor told CNBC in a statement that while the board has talked about the matter, no specific figures are on the table. The board has had discussions about whether it would be beneficial to the company and our mission to have Sam be compensated with equity, but no specific figures have been discussed nor have any decisions been made, Taylor said. The meeting late Thursday followed the board's decision to consider restructuring the company to a for-profit business, according to a separate person with knowledge of the matter. Should the change occur, the nonprofit segment would remain.

as a separate entity, said the person who asked not to be named, because no plan has been finalized, end quote. Meanwhile, current and former staff tell the journal that OpenAI has rushed product announcements and safety testing, lost its lead over rivals, and Sam Holtman is detached from the day-to-day operations of the company. Interesting, targeted leak that. Quote, some tensions are related to conflicts between Open AI's original mission to develop AI for the public good and new initiatives to deploy money-making products. Others relate to chaos and infighting among executives worthy of a soap opera. Current and former employees say OpenAI has rushed product announcements and safety testing and lost its lead over rival AI developers. They

say Altman has been largely detached from the day-to-day, a characterization of the company disputes, as he has flown around the globe promoting AI and his plans to raise huge sums of money to build chips and data centers for AI to work. One thing nearly everyone agrees on is that maintaining a mission-focused research operation and a fast-growing business within the same organization has resulted in growing pains. It's hard to do both at the same time. Product First culture is very different from research culture, said Tim Shee, an early Open AI employee, who is now chief technology officer of AI startup Kresta. You have to attract different kinds of talent, and maybe you're building a different kind of company, end quote.

Altman has been in Turin, Italy, as this week's events occurred for Italian Tech Week, speaking in a fireside chat there Thursday, he denied that employee departures were related to the restructuring plans and said, quote, I think this will be hopefully a great transition for everyone involved, and I hope Open AI will be stronger for it, as we are for all of our transitions, end quote. Samsung dribbled out a few hardware releases yesterday. First, the 14.6-inch Galaxy Tab S-10 Ultra, and 12.4-inch Galaxy Tab S-10 Plus, which are, quote, built with AI and enhancements available for $1,200 plus and $999 plus, respectively. Then, Samsung also unveiled the $649 plus Galaxy S24FE, a fan edition value-focused version of the S-24 with a 6.7-inch display,

Exenos 2,400E, and 8 gigabytes of RAM in five colors. Quoting 9 to 5 Google. This year, the Galaxy S-24FE is best compared to the Galaxy S-24 plus, thanks to the use of larger 6.7-inch display. The Ph.D. Plus dynamic Amel-led display isn't as high in resolution as the S-24-plus, but it should look rather similar to most users. On that display, you'll find an optical under-discay fingerprint sensor and a 10-mixel camera that's used for optical face unlock. Samsung will open sales of the Galaxy S-24FE on October 3rd in 5 colors, graphite, gray, yellow, mint, mint, and blue starting at $649. Samsung's store is offering up to $400 off with trade-in. and a discount on Bud's FE. At $649, it's $350 cheaper than the Galaxy S-24-plus it's most comparable to,

but with lesser cameras, a smaller battery, half the storage, 25% less RAM, and a significantly worse processor if you're buying in the U.S. And that's not to mention that the Galaxy S-24 Plus is often available for hundreds of dollars off through carriers and $200 off through Samsung's own online store right now, end quote. sources are telling Bloomberg that Arm has also approached Intel about potentially buying Intel's product group, but not its factory operations. Intel apparently declined, saying that division is not for sale. Quote, in the high-level inquiry, Arm didn't express interest in Intel's manufacturing operations, said the person who asked not to be identified because the discussions were private. Intel has two main units, a product group that sells chips for personal computers,

servers, and networking equipment, and another that operates its factories. Arm, which is majority owned by SoftBank Group, makes much of its revenue selling chip designs for smartphones. But Chief Executive Officer Renee Haas has sought to broaden its reach outside of that industry. That's included a push into personal computers and servers where its chip designs are going up against Intel's. Though Intel doesn't have the technological edge it once held, the Santa Clara, California-based company remains dominant in those markets. Combining with Intel would help Arms reach and kickstart a move towards selling more of its own products. The company currently licenses technology and designs to customers, who then turn them into complete components.

Its client list includes the biggest names in technology, such as Amazon, Qualcomm, Samsung, and, of course, Apple. Under Haas, the company has moved more in the direction of offering fully formed products, potentially putting it in competition with its licensees. Arm based in Cambridge, England only has a fraction of the revenue of Intel, but its valuation has soared since an initial public offering last year and now stands at more than $156 billion. Investors see the company as a beneficiary of the AI spending boom, especially as it moves further into data center chips. Arm also has the backing of Japan's soft bank, which owns an 88% stake, potentially giving the company additional financial clout, end quote. Hugging Face has surpassed 1 million AI model listings on its platform for the first time. It began as a chatbot app in 2016 before becoming a hub and platform for AI models back in 2020. Quoting Ars Technica, the machine learning field represents a far bigger world than just large language models,

like the kind that power chat GPT, and a post on X, Hugging Face CEO Clement Delangay wrote about how his company hosts many high-profile AI models like Lama, Gemma, Phi, Flux, Mistral, Starcoder, Gwen, stable diffusion, Grock, whisper, Olmo, Command, Zephyr, Open, ELM, Jamba, Ye, but also 9900,000, 980 for others. The reason why Delangie says stems from customization. Contrary to the one model to rule them all fallacy, he wrote, smaller, specialized, customized, optimized models for your use case, your domain, your language, your hardware, and generally your constraints are better. As a matter of fact, something that few people realize is that there are almost as many models on Hugging Face that are private only to one organization for companies to build AI privately

specifically for their use cases, end quote. Hugging Face's transformation into a major AI platform follows the accelerating pace of AI research and development across the tech industry. In just a few years, the number of models hosted on the site has grown dramatically along with interest in the field. On X, Hugging Face Product Engineer Caleb Falkrin posted a chart of models created each month on the platform and a link to other charts, saying, Models are going exponential month over month and September isn't even over yet. As hinted by Dengu above, the sheer number of models on the platform stems from the collaborative nature of the platform and the practice of fine-tuning existing models for specific tasks.

Fine-tuning means taking an existing model and giving it additional training to add new concepts to its neural network, and alter how it produces outputs. Developers and researchers from around the world contribute their results leading to a large ecosystem. For example, the platform hosts many variations of meta's open-weight's Lama models that represent different fine-tuned versions of the original base model, each optimized for specific applications. Hugging Faces repository includes models for a wide range of tasks.

Browsing its models page shows categories such as image-to-text visual question answering and document question answering under the multimodal section. In the computer vision category, there are subcategories for depth, estimation, object detection, and image generation among others. Natural language processing tasks like text classification and question answering are also represented along with audio, tabular, and reinforcement learning models. When sorted for most downloads, the Hugging Face models list reveals trends about which AI models people find most useful. At the top, with a massive lead at 163 million

downloads is audio spectrogram transformer from MIT, which classifies audio content like speech, music, and environmental sounds. Following that, with 54.2 million downloads, is Burt from Google, an AI language model that learns to understand English by predicting masked words and sentence relationships enabling it to assist with various language tasks, end quote. That was a bit of a long read, but before we get to the long reads proper, one more AI data point, quoting from the Financial Times. Artificial intelligence startups are making revenue more quickly than previous waves of software companies, according to new data that suggests that the transformative technology is also

generating strong businesses at an unprecedented rate. According to an analysis of payments, information from FinTech Group Stripe, top AI groups are reaching millions of dollars in sales within a year, far faster in a startup's life cycle than comparable non-Ai tech groups. The data indicates that young AI companies have more momentum than other highly hyper hyperactive. tech startups from past eras, particularly in the software-as-a-service category. The AI startups in the cohort took a median 11 months to hit 1 million in annualized revenue after their first sales on Stripe, compared with 15 months for the previous generation of SaaS companies, the data showed. AI startups that have scaled to more than 30 million in annualized revenue achieved that

milestone in 20 months five times faster than past SaaS companies. However, a report by Goldman Sachs this month has raised concerns about the profitability of AI businesses, given, quote, the AI winners of today are no longer capital-light businesses, referencing the significant cost required for computing infrastructure to run and train AI models, end quote. And so here are the weekend long-reed suggestions. First up from CNN, you know, all the talk about AI eliminating jobs at, say, the fast food drive-thru window, technology replacing jobs. Well, people thought those big touchscreen order kiosks at McDonald's, would steal jobs too. Turns out, quote, Instead, touchscreen kiosks have added extra work for kitchen staff and push customers to order

more food than they do at the cash register. The kiosks show the unintended consequences of technology and fast food and retail settings, including self-checkout. Chains are now experimenting with artificial intelligence at drive-thru lanes, and the experience with kiosk holds lessons for them. Today, instead of replacing workers, companies deploy kiosks to transfer labor to other tasks like handing off pickup orders, help increase sales, easily adjust prices, and speed up service. Many chains, including Subway, Chick-fil-A, and Starbucks don't use them much or at all. Kiosks, quote, guarantee that the upsell opportunities like a milkshake or fries are suggested

to customers when they order. Shake check CEO Robert Lynch said on an earnings call last month, sometimes that is not always a priority for employees when you've got 40 people in line. you're trying to get through it as quick as possible. Kiosks also shift employees from behind the cash register to maintaining the dining area, delivering food to customers or working in the kitchen, he said. In theory, kiosk should help save on labor, but in reality, restaurants have added complexity due to mobile ordering and delivery, and the labor saved from kiosk is often reallocated for these efforts, said R.J. Hadovoy, an analyst who covers the restaurant and retail industries at Data Analytics firm Placer AI. Kios have, quote, created a.mortez a restaurant within a restaurant, end quote. Then from Bloomberg, we've been talking about this. Sources say Apple is rethinking its movie strategy, including rolling back theatrical releases and cutting budgets for most productions to under $100 million after some recent high-profile box office misses. Quote, Apple, which previously had intended to spend about a billion dollars

annually on blockbusters for cinemas, won't return to the big screen with a wide global theatrical release until June with F1, a film starring Brad Pitt as a former Formula One driver who returns to racing to mentor a rising star. The shift in film strategy is part of a larger reset at Apple's Hollywood studio, which is led by Zach Van Amberg and Jamie Ehrlich. Their bosses in Cupertino are seeking to rein in costs, as Bloomberg reported in July. After spending upwards of $100 million and in some cases more than $200 million on several of the aforementioned films, Apple will now focus on making about a dozen movies a year, most of them produce for less than 100 million, according to people familiar with the company's plans who requested anonymity because they were not authorized to speak about an internal matter.

That means Apple's commitment to spend $1 billion annually on films won't change, but the makeup of the company's movie slate and release strategies will, the people said. Apple will still aim to take one or two big theatrical swings a year with films exceptionally approved for higher budgets, such as F1, but films like Wolfe's for which Brad Pitt and George Clooney earned a combined sum of tens of millions of dollars will be marketed as streaming rather than theatrical titles, end quote. And finally, if you're not familiar with her, the Wall Street Journal has a great profile up of Kyla Scanlon. When we talk about modern influencers these days, Kyla is who you need to be thinking about. Kyla has created a niche for herself as the economic advisor for Gen Z.

It's not just dumb kids doing, I don't know, weird stunts anymore. Scanlon, 27 years old, is breaking all the rules for a career in finance and doing things her own way. Forget grinding away for years on Wall Street or getting a PhD in economics. Young people pay attention to her analysis of topics ranging from monetary policy to the housing market to the business of dating apps, all delivered via TikTok, Instagram, X, YouTube, Substack, and her podcast. She is perhaps best known for coining the term vibe session, in 2022, to describe the disconnect between economic data and consumer sentiment. We weren't in a recession, but Americans felt down about the economy. The vibes, she observed, were off.

A debate ensued with notable names from Nobel Prize-winning economist Paul Krugman to former U.S. Labor Secretary Robert Reich weighing in on whether we were in a vibe session. UBSN. Fidelity published reports explaining the term to clients. She first started posting bite-sized videos online during the COVID-19 pandemic, and now Fed presidents and White, White House officials sit down with Scanlon for interviews eager to get in front of her audience. Her research is sometimes shaped by her own experiences figuring out adulthood rights of passage, such as how to get health insurance now that she's aged out of her parents' plan or contemplating whether she will ever be able to buy a house.

The work I do almost feels more like cultural anthropology than economics sometimes, Scanlon said, end quote. No bonus episodes for you this weekend. Be good. Talk to you on Monday.