Tech Brew Ride Home - Fri. 11/03 – SBF Guilty

Starting point is 00:00:00 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 TechMeme right home for Friday, November 3rd, 2023. I'm Brian McCullough today. Sam Bankman-Fried has been found guilty. The FTC alleges Jeff Bezos ordered Amazon to boost junk ads. Elon Musk says Starlink is almost profitable. He also says he's about to release his own AI model.

Starting point is 00:00:51 And in the weekend, long-read suggestions, is Elon about to give Joe Rogan a new lily pad to take his podcast to? Here's what you miss today in the world of tech. A jury has found Sam Bankman-Fried, guilty on all seven. counts of fraud and conspiracy in the FTX trial. The judge has set sentencing for March 28th, 2024. Is it wild to anyone else how quickly this all wrapped up? FTX only blew up a year ago right now. A year ago right now, FTX blew up and chat GPT came out. That, I can't believe, was only a year ago, but here we are. Quoting the verge. After more than a month in trial, the jury took four and a half hours to decide Bankman-Freed's fate, declaring him guilty on all seven charges, including wire fraud, conspiracy to commit wire fraud, and conspiracy to commit money laundering.

Starting point is 00:01:42 In court, Bankman-Freed's defense argued that he had honestly failed at operating a high-risk business. He denied directly supervising the damning code updates that allowed Alameda to spend FTX funds and said he had not participated in trading or questioned employees about billions of missing dollars. His testimony was contradicted by his forefirm. former roommates slash lieutenants, all had worked under Bankman Freed and later cooperated with prosecutors, and quote. I've been perusing the various pieces from reporters who were in the courtroom all month, and pretty much the unanimous take, even as it was happening, was that SBF really didn't stand a chance. And when he agreed to testify, as I think we discussed, the writing was pretty much on the wall,

Starting point is 00:02:28 quoting the New York Times. From the outset, the decision to have Mr. Bankman Fried testify in the federal trial that charged him with some of the most grievous acts of financial fraud in the country's history seemed like a self-defeating proposition, ostentatiously unfazed by physical beauty, art, novels, fashion, religion, and heated food. Bankman Freed was also an avowed hater of Shakespeare, quote, one-dimensional, characters, illogical plots, obvious endings. He was mystified by emotionally driven decisions, challenging any efforts to place him somewhere on a continuum of human relatability. What would a jury of his peers possibly look like? Or in the specific absence of that, what would 12 ordinary people see when they were seated on the other side of the witness stand from him?

Starting point is 00:03:11 The prosecution hoped that they would observe a grown man, steeped in self-contradiction and capable of criminality rather than the 31-year-old boy Mr. Bankman Fried appeared to be, someone whose adolescent enthusiasms and distractibility caused him to make billions of dollars worth of hapless, innocent errors. In the end, the jury only saw the duplicitous adult. Among the many paradoxes surrounding the case was the idea that someone so antagonistic to the perceived value of image and story would have paid such careful and perversely winning attention to his own. You didn't cut your hair because you were busy and lazy? The prosecutor, Danielle Sassoon, asked the defendant in her cross-examination. Her question was rhetorical.

Starting point is 00:03:49 She would deploy this tactic repeatedly, asking Mr. Bankman-Fried if he said X or Y, encountering a vague response, and then proving that he had said whatever he claimed he could not really remember. During this particular sequence, she introduced a statement he had made revealing that it was, quote, important for the business for people to, quote, think I look crazy. She further informed the courtroom that when Anthony Scaramucci, one of Mr. Bankman-Freed's investors told him to put on a suit, Mr. Bankman-Freed responded that t-shirts were crucial to his, quote, brand. His defense essentially boiled down to the notion that mistakes were made, chief among them that he managed risk poorly, but never intended to do anything wrong. However much Mr. Bankman-Freed might have paid attention to his narrative, he brought less attention. attention to his actual product, end quote. Elon Musk has announced that Starlink is cash flow break-even. This is notable because back in 2021, Musk said SpaceX would spin off and take Starlink public once its cash flow was reasonably predictable, quoting Reuters. Since 2019, Starlink has grown its network in low Earth orbit to roughly 5,000 satellites, swiftly positioning itself as the world's largest satellite operator and arrival to satellite

Starting point is 00:05:02 internet firms such as Vesat and UTELSAT's newly acquired One Web. Starlink is also now a majority of all active satellites and will have launched a majority of all satellites cumulatively from Earth by next year. Musk said in a post on social media platform X on Thursday, Musk has sought to establish the Starlink business unit as a crucial source of revenue to fund SpaceX's more capital-intensive projects such as its next-generation starship, a giant reusable rocket the company intends to fly to the moon for NASA within the next decade. Starlink posted a more than six-fold surge in revenue last year to $1.4 billion, but fell short of targets

Starting point is 00:05:38 set by Musk, the Wall Street Journal reported in September, citing documents, end quote. Elon also says that ex-AI, that new startup he formed to get revenge on, I mean, compete with, OpenAI, will release its first AI model to a select group on November 4th. And, quote, in some respects, Elon says, it is the best that currently exists. Reuters again from the Elon Beat. The team behind XAI, which launched in July this year, comes from Google's Deep Mind, the Windows parent, and other top AI research firms. Though Musk owned X, the social media firm formerly known as Twitter, and XAI are separate, the companies work closely together. XAI also works with Tesla and other companies.

Starting point is 00:06:30 Larry Ellison, co-founder of Oracle and a self-described close friend of Musk, said in September that XAI had signed a contract to train its AI model on Oracle's cloud, end quote. Apple closed out tech earnings season yesterday reporting Q4 revenue was down 1% year-on-year to $89.5 billion versus what was $89.3 billion estimated, so slight beat there. Net income was up 11% to $22.9 billion. iPhone revenue was up 3%. But Mac revenue was down 34%, iPad, down 10% and wearables, home and accessories revenue down

Starting point is 00:07:09 3% again year-on-year. The stock is down this morning because Apple also projected that their all-important holiday quarter will be about the same as last year. The only bright spot in their earnings report was the services segment, which includes Apple TV Plus and Apple Music, which was up 16% year-on-year to a record $22.31 billion. The Federal Trade Commission says Jeff Bezos himself ordered Amazon executives to accept more junk ads to boost profits. This comes in a new release of the FTC's complaint against Amazon that had some previously redacted sections unredacted. Quoting Bloomberg, Amazon's founder and former chief executive officer Jeff Bezos personally ordered executives to accept more ads, even ones the company had internally labeled as, quote, defects, indicating they weren't relevant to user searches,

Starting point is 00:08:05 according to the new version of the complaint. The FTC alleges that Amazon's increased use of ads boosted profits, while it harmed sellers and consumers, making it harder for shoppers to find products they are searching for. We'd be crazy not to increase the number of advertisements shown to shoppers. The FTC quoted Amazon executives as saying. One executive compiled a number of the defective ads showing buck urine, showing up in responses to searches for water bottles or T-shirts for the Los Angeles Lakers basketball team in response to queries for the Seattle Seahawks football team merchandise. In third quarter, 2023 earnings announced last week, Amazon reported advertising revenue of

Starting point is 00:08:44 $12.1 billion making the company's ad unit its fastest growing business. Amazon said its search results consider a number of factors and users can easily refine their results. Quote, Amazon works hard to make it fast and easy for customers to find the items they want and discover similar options by providing a mix of organic and sponsored search results. Amazon spokesperson Tim Doyle said he also cited a study by a London marketing firm that found consumers find Amazon ads relevant and useful. In an email later Thursday, he added, quote, the claim that Amazon leadership directed employees to accept more advertising defects that would degrade the customer experience is grossly misleading and taken out of context and does not reflect Amazon's

Starting point is 00:09:23 longstanding dedication to continually improving the customer experience, end quote. The FTC also alleged that the company deleted internal communications using the disappearing message feature of signal and destroyed more than two years' worth of such communications from June 2019 to at least early 2022. Amazon denied that its employees deleted messages, saying the company informed the FTC about the signal usage, quote, painstakingly collecting signal conversations from its employees' phones and allowing agency staff to inspect those conversations. Some executives began to use the encrypted communications app after Bezos disclosed in 2019 that his phone had been hacked and alleged the National Enquirer tabloid sought to publish his intimate photos and texts, end quote. So from a story of making a marketplace potentially worse in order to chase high-margin ads,

Starting point is 00:10:19 to a story about potentially making the web worse to chase revenue growth. Google AdSense will soon move from paying per click to paying per impression and split the revenue share into separate rates for the buy-side and sell side, quoting 9 to 5 Google. Today, Google pays publishers when someone clicks on an ad on their site or per-click. AdSense is soon moving to paying per-per-eck. impression, which Google notes is the industry standard for display ads like banners, boxes, etc. As such, this will, quote, provide a more uniform way for paying publishers for their ad space across Google's products and third-party platforms, helping them compare with other technology

Starting point is 00:10:56 providers they use, end quote. Google says that, quote, publishers will continue to keep about 68% of the revenue. These changes will go into effect early next year and do not, quote, require any action from publishers. Google said it has conducted testing on possible earnings changes for publishers and doesn't expect anything to change, end quote. One of the ways Google made the internet better in the early 2000s, in my opinion, was that it moved the advertising model away, not completely, but away from generally CPM or cost per impression ads like we used to have in the bad banner ad days towards the cost per click model. So that seems to be going away.

Starting point is 00:11:35 I wonder if this is also a step toward integrating Google's ad products into the whole double-click display ad regime, which is one of the things regulators are threatening to force Google to unbundle. Time for the weekend long read suggestions, and this week, just two, both from the verge. We don't tend to cover automotive earnings on the show, but apparently this quarter, all of the non-Tesla automakers announced disappointing EV numbers. Not disappointing sales numbers. Electric vehicle sales in the U.S. should hit 9% of all cars by the end of the year, a 50% year-on-year increase. No, it was apparently more that no one but Tesla can seem to

Starting point is 00:12:23 produce enough cars, fast enough, or, you know, profitably. The Verge takes a look at what's going on here, quote, the news and the numbers seem wildly misaligned. Things are going great. No, wait, things are going badly. Evis are the future. Nope, EVs are a fad. Take a breath. Unsurprisingly, there are a lot of different trend lines here. Price fluctuating. new incentives, the auto worker strike, to name a few, that are colliding to make a mess of any attempt to get a solid temperature read on the EV transition. The early adopters have all well adopted, and everyone else isn't feeling that willing to take risks in their car buying, said Jessica Caldwell, Director of Insights at Edmonds. Evie adoption is looking to move into

Starting point is 00:13:09 its next phase, requiring much more mass market interest, and this larger cohort has to be sold on EVs since they aren't as enthusiastic and willing as the early adopters, she said. This will be much more challenging for dealers, converting a whole cohort of more trepidacious, price-sensitive shoppers to an entirely new technology. Buying an EV isn't just about bigger screens, faux grills or light bars. It's an entirely new lifestyle, full of range considerations and charging anxieties and home equipment installations. US automakers bear a lot of the blame, too.

Starting point is 00:13:40 They assumed that current demand patterns could also be applied to EV. which is why most of them prioritize big trucks and SUVs right out of the gate. GM especially was guilty of this, leading with the Hummer EV truck and SUV while letting the small utilitarian Chevy Bolt language for many years before being recalled and then discontinued. But you can't just build plug-in trucks that need batteries as heavy as a Honda Civic if your supply chain isn't healthy and mature. Average battery pack sizes have gone up 10% each year from 2018 to 2020, according to Bloomberg, from 40 kilowatt hours to 60 kilowatt hours. And that rate of increase is expected to accelerate as more big heavy trucks hit the market

Starting point is 00:14:20 from the Chevy Silverado EV to the RAM-1500 rev to the Tesla cyber truck. Automakers say they are responding to consumer demands for longer ranges and more dependable battery sizes, but the supply chain is going to find it very difficult to keep up with the pace, especially as U.S. policymakers try to redirect the production of battery materials away from China. Of course, this is what is making EVs more expensive. Too expensive for most people, taking into account the recent drop in demand. China, meanwhile, is eating our lunch by prioritizing small, inexpensive models that are affordable to middle-class shoppers. The average price of an EV in China was less than $3,200 or $35,000 in the first half of 2022, according to researchers at Jado Dynamics.

Starting point is 00:15:04 In the U.S., it's around $53,000, end quote. And finally this week, some podcasting news. Three years ago, Joe Rogan signed his monster deal with Spotify. That deal is nearly up. So what is Joe going to do now? His podcast is still by far the biggest in all the land. Quote, the one thing everyone seems to agree on is that it is in Spotify's best interest to keep Rogan on board. After all the money, the company has sunk into deals that went nowhere, Harry and Megan, and acquisitions that were eventually dismantled, Gimlet. Rogan is still the best bet the company has ever made. He remains the top podcaster in the world, and it's not close. But, and this is a big but, this is not 2020. Money is a lot tighter than it was several years ago. Investors are pissed that Spotify's podcast bet still is not profitable, and CEO Daniel

Starting point is 00:15:53 Eck has pledged to focus on efficiency. Rogan's current deal is reported to be worth as much as $200 million over three-ish years. So then the question becomes whether Spotify can find the right price to keep him happy and mollify investors. It's a situation where you are damned if you do and you're damned if you don't, says RT researcher founder Richard Kramer. If you do keep him, Spotify will be locked into paying Rogan as much or more than before at a time when they need to contain costs. If you don't keep him, then it's really tough because your biggest property and source of sales within the ad business walks, end quote. And while Spotify has become one of the biggest players in the market, in no small part thanks to Rogan, it is still the podcast app of

Starting point is 00:16:32 choice for only 17% of podcast listeners, according to a study from Cumulus, and continues to lose share to YouTube. His reach will be greater if he goes independent again, and he is a guy who likes to be everywhere, end quote. You know, Elon was on Rogan's show recently, and the first two hours of that conversation were available on X. I wonder if they maybe talked about other things off air? You see where I'm going with that. No bonus episodes for you this weekend. Be well. on Monday.

Tech Brew Ride Home - Fri. 11/03 – SBF Guilty

There aren't comments yet for this episode. Click on any sentence in the transcript to leave a comment.