Tech Brew Ride Home - Thu. 02/06 – A $50 (!!) AI Model?

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 Tech meme right home for Thursday, February 6, 2025. I'm Brian McCullough today. Now researchers say they have trained a cutting edge AI model for checks notes, $50. Not $50 million. Not $50. Get ready for the Super Bowl of AI ads. Amazon has scheduled an Alexa AI event. And also, why does Amazon fail so hard when it comes to physical retail? Here's what you miss today in the world of tech. Well, if this holds up, then the whole race to come. commoditization of the intelligence part of the AI stack is happening faster than I imagined. Stanford and University of Washington AI researchers claim they have trained an AI reasoning model

Starting point is 00:01:17 S-1, distilled from a Gemini 2.0 model for under $50 in cloud compute. So when it comes to model training, $50 million isn't cool. You know what's cool? $50. Quoting Sherwood News. Researchers at Stanford and the University of Washington have developed an AI model that could compete with big tech rivals and trained it in 26 minutes for less than $50 in cloud compute credits. In a research paper published last Friday, the new S-1 model demonstrated similar performance on tests measuring mathematical problem-solving and coding abilities to advanced reasoning models like OpenAIs I-01 and Deepseeks R1. Researchers said that S-1 was distilled from Gemini 2.0 Flash thinking experimental,

Starting point is 00:02:01 one of Google's AI models, and that they used test-time scaling or presenting a base model with a data set of questions and giving it more time to think before it answers. While this technique is widely used, researchers attempted to achieve the simplest approach through a process called supervised fine-tuning where the model is explicitly instructed to mimic certain behaviors, end quote. And quoting TechCrunch. To sum, the idea that a few researchers without millions of dollars behind them can still innovate in the AI space is exciting, but S-1 raises real questions about the commoditization of

Starting point is 00:02:34 AI models. Where's the moat? if someone can closely replicate a multi-million dollar model with relative pocket change. S1 is based on a small off-the-shelf AI model from Alibaba-owned Chinese AI Lab Quen, which is available to download for free. To train S1, the researchers created a dataset of just 1,000 carefully curated questions, paired with answers to those questions, as well as the thinking process behind each answer from Google's Gemini 2.0 Flash Thinking Experimental.

Starting point is 00:03:03 After training S1, which took less than 30 minutes using 16 Nvidia 8,000, H-100 GPUs, S-1 achieved strong performance on certain AI benchmarks, according to the researchers. Nicholas Mugganoff, a Stanford researcher who worked on the project, told TechCrunch he could rent the necessary compute today for about $20. The researchers used a nifty trick to get S-1 to double-check its work and extend its thinking time. They told it to wait. Adding the word wait during S-1's reasoning helped the model arrive at slightly more accurate answers per the paper. distillation has shown to be a good method for cheaply recreating and AI models capabilities, but it doesn't create new AI models vastly better than what's available today, end quote.

Starting point is 00:03:49 Various sources have seen an internal memo that suggests Google is eliminating its goal of hiring more employees from historically underrepresented groups and is reviewing some DEI programs after President Trump's recent executive orders. Quoting the journal, in an email to employees Wednesday, Google said it would no longer set hiring targets to improve representation in its workforce. In 2020, amid calls for racial justice following the police killing of George Floyd, Google set a target of increasing by 30% the proportion of, quote, leadership, representation of underrepresented groups by 2025. Parent company Alphabet's annual report released Wednesday, omitted a sentence stating the company was committed to making

Starting point is 00:04:29 diversity, equity, and inclusion part of everything we do, and to growing a workforce that is representative of the users we serve. That sentence was in its reports from 2021 through 2024. Google said it was evaluating whether to continue releasing annual diversity reports, which it has done since 2014. The evaluation is part of a broader review of DEI-related grants, training, and initiatives, including those that the email said raise risk or that aren't as impactful as we hoped. Google also said it was reviewing recent court decisions and executive orders by President Trump aimed at curbing DEI in the government and federal contractors. The company is evaluating changes to our programs required to comply.

Starting point is 00:05:08 the email said, end quote. And quoting the times. Like other tech giants, Google responded to a DEI backlash bolstered by Mr. Trump's election victory. Meta, which owns Facebook and Instagram, has eliminated many of its diversity teams, while Amazon has begun reviewing its DEI programs. On January 22nd, Mr. Trump signed an executive order instructing federal contractors to not engage in DEI, which he described as illegal discrimination. Through its cloud computing arm, Google provides technology services to the federal government. Google has also started a DEI review that could result in the company's cutting additional programs and initiatives, Ms. Sikoni said in the email. The company will carefully evaluate programs, trainings, and initiatives,

Starting point is 00:05:48 and will update them as needed, she said. The company will consider whether some of them raise risk or aren't as impactful as we hoped. Google reported last year that 5.7% of its workforce was black, up from 3.7% in 2020, and 7.5% of its employees were Hispanic or Latino, compared with 5.9% in 2020, end quote. Remember the Super Bowl in the late 90s when all the ads were dot-com ads? Remember the Super Bowl of a few years ago when all the ads were for crypto? So can we expect an AI Super Bowl ads bonanza soon? Because sources say OpenAI is expected to air its first TV ad during Super Bowl 59. Media radar says AI companies spent $332 million on ads in 2024 over double their 2023 spend,

Starting point is 00:06:40 quoting the journal. Though Open AI has made minimal investment, in advertising thus far. Others in the sector haven't shied away from marketing. Companies in the AI industry spent $33 million on ads last year more than double their 2023 spending level, according to estimates from AdTracker Media Radar, Google, Anthropic, and Microsoft ran ads during last year's Super Bowl, end quote, and quoting ad week. A commercial during Super Bowl 59, which this year fetched upwards of $8 million for 30 seconds of airtime, would mark the company's biggest advertisement moment since its founding in 2015. The move comes after OpenAI, pointed its first chief marketing officer, CMO Kate Rouch in December, signaling a bigger focus on

Starting point is 00:07:20 marketing. Rouch was previously the CMO of cryptocurrency firm Coinbase, where she oversaw global marketing and PR. She was behind its 2022 Super Bowl ad that grabbed attention for featuring a colored QR code bouncing against a black background. Before that, she spent more than 11 years at Meta. AI will be a theme at this year's Super Bowl. Google Workspace is making its big game debut with a campaign spotlighting its AI tools, while GoDaddies is also pitching its AI tools in its Super Bowl ad. Yet previous ad campaigns featuring AI have fallen flat with consumers. For example, in November, Coca-Cola received backlash for remaking its classic holiday ad with generative AI, while Google also sparked IIR with its Dear Sydney Olympics ad spotlighting the tech, end quote.

Starting point is 00:08:07 Putting this on your radar, Amazon has announced an Alexa-focused event on February 26th in New York. sources say the company will preview its long-delayed Alexa generative AI revamp, quoting writers. Once released, it would mark the most significant upgrade to the product since its initial introduction accelerated a wave of digital assistance more than a decade ago. Amazon on Wednesday sent press invites to an event to be held on February 26th in New York, featuring the head of its devices and services team Panos Panay. A spokesperson said the event is Alexa focused while declining to elaborate. The new generative AI-powered Alexa represents at once a huge opportunity for Amazon, which counts more than half a billion Alexa-enabled devices in the market, and a tremendous risk. Amazon is hoping the revamp, designed to be able to converse with users, can convert

Starting point is 00:08:55 some of its hundreds of millions of users into paying customers in an effort to generate a return for the unprofitable business. The AI service will be able to respond to multiple prompts in sequence and company executives have said even act as an agent on behalf of users by taking actions for them without their direct involvement. That contrasts with the current iteration, which generally handles only a single request at a time. Executives have scheduled a meeting known as the go-no-go for February 14th. There, they will make a final decision on the street readiness of Alexa's generative AI revamp, according to the people, and an internal planning document seen by Reuters. Alexa's revamp carries with it all the challenges inherent in, now familiar generative AI chatbots

Starting point is 00:09:35 from OpenAI, Alphabet, and others, including the possibility of fabricated answers, known as hallucinations. With access to Alexa available in cars, televisions, thermostats, and mobile phones, it could become an essential daily tool for scheduling and even shopping. Initially, Amazon plans to roll out the new Alexa service to a limited number of users and will not charge for it, the people said, though it has considered a $5 to $10 monthly fee. The company will also continue to offer what it is calling Classic Alexa, the version broadly available today for free. One of the people said Amazon has discontinued adding new offerings to Classic Alexa. Exa, end quote. And putting this on your radar as well, could we see a ban on social media for children in the U.S.? I feel like a lot of things are up in the air with this new administration, so who knows, but the Senate Commerce Committee has approved the Kids Off Social Media Act to ban under 13s from social media, clearing the way for consideration by the full Senate. Quoting Politico, in addition to banning social media for kids under 13, the bill requires schools that receive federal funding to restrict access to

Starting point is 00:10:46 social media on its network and devices. However, it's not clear that banning social media or phones at school is an effective way to address concerns over youth mental health. Students at schools with restrictive phone and social media policies do not have better mental well-being than those at schools with more permissive policies according to a Lancet study out of Europe. A Commerce Committee aide told Politico that because social media platforms already voluntarily require users to be at least 13 years old, the bill does not restrict speech currently available to kids. The panel approved the Kids Off Social Media Act, sponsored by the panel's chair, Texas Republican Ted Cruz, and a senior Democrat on the panel, Hawaii's Brian Schatz, by voice vote, clearing the way for consideration by the full Senate.

Starting point is 00:11:27 Only Ed Markey, Democrat Massachusetts, asks to be recorded as a no on the bill. When you've got Ted Cruz and myself an agreement on something, you've pretty much captured the ideological spectrum of the whole Congress, Senator Schatz told Politico's Gabby Miller, end quote. Interesting. Reuters says, that Trump's de minimis cancellation that we've been talking about is likely to hit Sheehan harder than online dollar store Temu, which has shifted to an Amazon-like bulk overseas shipment strategy. Quote, both sites grew exponentially in the U.S. in recent years, helped by the so-called de minimis rule, a measure that exempted shipments worth less than $800 from import duties. A June 2023 report

Starting point is 00:12:15 estimated the Chinese retailers accounted for more than 30 percent of all packages shipped to the U.S. each day the rule. The rule began to come under scrutiny during the Biden administration, prompting both firms to start making preparations to rely less on it, but Temu made changes to its model faster, analysts and sellers told Reuters. Tamu is owned by PDD Holdings, while Sheehan is aiming to list in London in the first half of the year. Tech analysts Rui Ma said Temu rapidly expanded its semi-managed model as part of its groundwork, an Amazon-like strategy that sees goods shipped in bulk to overseas warehouses instead of directly to customers. Within months of first bidding to attract sellers keeping inventory in U.S. warehouses last March, about 20% of Temu's U.S. sales were shipped

Starting point is 00:12:58 from local sellers rather than directly from China, according to estimates from e-commerce market research for a marketplace pulse. Two China-based Temu sellers told Reuters that by the end of last year, half the products they sold to the U.S. were sent to warehouses there first. Tamu has also been increasing the proportion of goods it sends by C. Bassell Rickard. operations director at Siva Logistics Greater China said, an increase in Temu Ocean freighting more goods in bulk and larger size, more valuable goods such as furniture, was apparent in the second half of last year,

Starting point is 00:13:29 reducing importing under the day-minimous threshold. In contrast, Sheehan remains more reliant on air freight to directly ship the thousands of styles of ultra-fast fashion items it pumps out each week, Rickard said, although it has open centers in states including Illinois and California as well as a supply chain hub in Seattle, end quote. Finally today, speaking of commerce versus e-commerce, again, it increasingly looks like after years of trying, Amazon just doesn't quite grok physical retail. Amazon has shrunk its Amazon Go store portfolio by around 50% since early

Starting point is 00:14:07 2023 to just 16 stores in four U.S. states as the company continues to stumble in its physical retail efforts, quoting the journal. The company in 2018 launched the Amazon Go convenience store where customers can grab a latte, bagel or turkey sandwich and walkout without having to wait in line to pay. Amazon charges them electronically. But with the Amazon Go store in Woodland Hills, California closing this month, the retailer has shrunk its Go portfolio by about half since early 2023 to 16 stores in four states. Instead, Amazon is focusing on licensing its just-walk-out technology to other retailers, while it focuses its bricks and mortar ambitions on grocery stores. This is hardly Amazon's only misfire in the physical store universe. It has closed dozens

Starting point is 00:14:51 of its other branded retail stores in recent years, including bookstores, fashion outlets, and its four-star locations stocked with best-selling items from its website. After a decade-long experiment with bricks and mortar stores, Amazon's dominance online has yet to translate into a successful strategy for connecting with shoppers in the real world, retail brokers and landlords said, they keep testing these concepts, thinking one of them is going to connect with the consumer in a big way, said Jeff Edison, chief executive of Phillips Edison and company, a real estate investor that owns grocery anchored shopping centers. But can you think of any examples where they've actually done the bricks and mortar retail well?

Starting point is 00:15:25 I can't. Amazon Go stores were launched to develop technology that speeds up the buying process while saving on labor costs. They use cameras and sensors to track customer purchases instead of traditional checkout counters, but reducing the number of employees available to help customers and giving priority to credit card payments over cash limits sales and makes the shopping experience more cumbersome, said Nick Eglanian, president of retail advisory firm SightWorks Retail. I don't really think they really understand retail, Inglanian said. Running warehouses and shipping stuff efficiently is not the same as greeting a customer and saying,

Starting point is 00:15:58 May I help you? And Amazon spokeswoman said, go-store employees greet customers at the door, restocked shelves, and are available to answer questions. While certain locations work better than others, the company continues to invest in its go-stores, including a recent redesign of its suburban store in Mill Creek, Washington, where it added more items such as Made to Order Pizza. Amazon also opened a new store in Bellevue, Washington, last summer. end quote. I am out of things to say to you today. Caput. Absolutely out. Talk to you tomorrow.

Tech Brew Ride Home - Thu. 02/06 – A $50 (!!) AI Model?

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