Tech Brew Ride Home - Thu. 04/25 – Zuck Is Disappointing Wall Street Again

Episode Date: April 25, 2024

Meta’s earnings were fine, but it’s what Zuck warned about spending that has Wall Street nervous. Sub 2nm chips are on their way. An AI startup has a big new raise after its big raise just a month ago. Google Meet lets you jump devices. And the first reviews of the Rabbit R1 are out. Links: Zuckerberg Asks for Patience as Meta’s AI Push Spooks Market (Bloomberg) Zuckerberg says it will take Meta years to make money from generative AI (The Verge) TSMC aims to produce ultra-advanced 1.6-nm chips by 2026 (NikkeiAsia) Six-Month-Old AI Coding Startup Valued at $2 Billion by Founders Fund (The Information) Google Meet will let you transfer calls between web and phone with ‘Switch here’ (9to5Google) A morning with the Rabbit R1: a fun, funky, unfinished AI gadget (The Verge) Rabbit R1 hands-on: Already more fun and accessible than the Humane AI Pin (Engadget) Rabbit’s R1 is a little AI gadget that grows on you (TechCrunch) First Ones videos on YouTube 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 Thursday, April 25th, 2020. I'm Brian McCullough today.

Meta's earnings were fine, but it's what Zuck warned about spending that has Wall Street nervous. Sub two nanometer chips are on their way. An AI startup has a big new raise after its big raise just a month ago. Google Meet lets you jump devices, and the first reviews are out for that Rabbit R1. Here's what you miss today in the world of tech. Earnings season is upon us again. Meta's stock opened down almost 15% this morning, after Meta reported revenue up 27% year-over-year

to $36.46 billion net income was up 117% to $12.37 billion, and its family, daily, active people number was up 7% year-over-year to $3.24 billion. But what doesn't the street like about this news? Quoting Bloomberg, Mark Zuckerberg is asking investors for patient again. Instead, they're alarmed after meta-platforms revealed that it will spend billions of dollars more than expected this year. Fueled by investments in artificial intelligence, the company's chief executive officer did his best to soothe Wall Street. But the spending forecast, coupled with slower sales growth than anticipated, sent the shares tumbling as much as 15% in pre-market trading on Thursday. It was a familiar pitch for Zuckerberg, who has said before that the company's

futuristic technology bets will eventually pay off and that savvy shareholders should stick around. The Facebook parent is now plowing ever more resources into artificial intelligence, which requires significant investments in computing power, part of an arms race with rivals from alphabet to Microsoft for supremacy in this fast-developing technology. Zuckerberg warned that the investments would increase meaningfully and take a long time to generate returns for the social networking company, perhaps years, but urge them to see the long-term benefits that AI has to offer. Zuckerberg took a similar tack when meta-pivoted towards building the so-called Metaverse, and other futuristic technologies like VR headsets and smart glasses,

those endeavors have been pricey. Reality Labs, the division inside meta, that is spearheading these efforts, lost $16 billion in 2023. But Zuckerberg says that advancements the group has made in the past year, especially its success with its AI chatbot and Rayban smart glasses, has given him confidence that further investment is necessary, end quote. In other words, investors hated the big investments in the Metaverse. They were won back by layoffs and cost-cutting at Meta,

though the big investments never really went away. And now there is a huge new category of investment, AI. So investors are back to being like, can't you just be a cash cow? And Zuck is like, nah. On the Metaverse front, the reality labs unit lost only $3.85 billion, which is better than the $4.31 billion in losses that was estimated. But that still means reality labs has burned $45 billion just since the end of 2020. So investors are wondering what number of billions will be burned, I mean invested in AI now. Quoting the verge, historically investing to build these new scaled experiences in our apps has been very good in terms of a long-term investment for us and for investors who have stuck with us,

Zuckerberg said on the first quarter earnings call, drawing an analogy to the rollouts of stories and reels. And the initial signs are quite positive here too, but building the leading AI will also be a larger undertaking than the other experiences we've added to our apps, and this is likely going to take several years, he said. He said that the meta-AI assistant had been tried by, quote, tens of millions of people since it was made widely available last week, though that's to be expected, given how prominently it's now featured in areas like the Instagram search box.

The real test will be whether meta-AI becomes a product that people come back to often, and if lots of people want to use an AI assistant in social media apps. Looking ahead, meta sees multiple ways to monetize its assistant, which is free to use right now. There are several ways to build a massive business here, including scaling business messaging, introducing ads, or paid content into AI interactions, and enabling people to pay to use bigger AI models and access more compute, Zuckerberg said. And on top of those, AI is already helping us improve app engagement, which naturally

leads to seeing more ads and improving ads directly to deliver more value, end quote. On the earnings call, Zuck also said, Threads now has more than 150 million mouths, monthly active users, up from 130 million in February. lots of people are wondering if that might be hiding some details, quoting Alex Heath. The metric I'd like to see, however, is daily users. Meta is juicing the visibility of threads posts in the Instagram feed, and I've heard that a lot of user growth has been coming from that drive-by traffic. If it really wants to kill X, Meta needs to build a sticky experience that more people come to daily,

end quote. Everyone says they're going to run up against the laws of physics at some point, but TSM just unveiled a new chip manufacturing technology called A16 and says the company plans to start producing ultra-advanced 1.6 nanometer chips by 2026, quoting NECA Asia. The technology features nanosheet transistors with backside power rails, a brand-new approach that delivers power to chips from the bottom up rather than from the top-down, avoiding complicated internal wiring and improving energy efficiency.

Intel was the first in the industry to announce it would start using backside power, saying it will be available in Intel's 20A and 18A, 2-nanometer and 1.8 nanometer technologies as soon as 2025. The top American chipmaker also unveiled its 14A 1.4 nanometer technology earlier this year. Samsung is targeting mass chip production at the 1.4 nanometer level in 2027. In general, a smaller nanometer size indicates a more advanced and powerful chip. Traditionally, the number referred to the distance between transistors on a chip. Smaller distances allow for more transistors to be packed into the same space. leading to significant performance gains. However, modern chipmaking has become increasingly complex.

Pushing the boundaries of computing power now requires not only shrinking the size of transistors, but also a complete overhaul of their structure. Starting from two-nanometer tech, TSM and Intel will adopt the so-called gate all-around or nanosheet transistor structure. Samsung began trialing such technology with its three-nanometer node. Apple's latest premium iPhone pro uses TSM's three-nometer technology, many industry executives expect that generative AI will eventually need even more advanced chips, end quote. So this was fast. Remember that coding assistant Devin? The startup behind it just raised a new round, one month, yes, one month after its last round, quoting the information.

Founders Fund has led a $175 million investment in Cognition, a startup that recently launched in artificial intelligence powered coding assistant called Devin, according to an investor who reviewed terms of the deal. The venture firm valued the startup at $2 billion including the new money, the investor said. Just a month earlier, Founders Fund led the startup's series A investment at a $350 million valuation according to Pitchbook. The startup introduced Devin, its chatbot in March, describing it as the first AI software engineer. The launch went viral on X, but some observers pointed to apparent inconsistencies in the company's demonstrations and argued that the chatbot wasn't as capable as its founders made it out to be. In a post on X, one of the

company's founders said they were working hard on improvements. Cognition is one of numerous companies using AI to assist software engineers. Microsoft Owned GitHub, Google, and Amazon offer their own AI coding assistance, as do startups including Magic, Replit, and Codium. While existing tools suggest code as developers type, which they can choose to employ, Devin, Magic, and others aimed to effectively automate the work of a human engineer. In the coming year, GitHub says it plans to release a coding agent that would review problems with existing computer code, suggest a plan to fix it, and automatically write and run the code. All of the coding tools rely on the same conversational AI that also powers text-focused chatbots like ChatGBT.

Cognition, which has employees based in New York and San Francisco, was founded in November 23 by Wu, Walden, Jan, and Stephen Howe, a former engineer at Scale AI. Wu previously co-founded Lunch Club, a virtual networking startup. He left lunch club in 2022, end quote. Yeah, I was never able to cover the controversy around the Devin demo because no one really did a write-up. But here's a summary of what you might have seen last week, quoting from the information about the controversy.

Over the weekend, a YouTube video title debunking Devin, first AI software engineer Upwork lie exposed, began picking up Steam. In the video, a developer describes some inconsistencies in Devin's demo, including the fact that Devin doesn't actually do what the Upwork posting is asking for. That the bugs it's fixing were likely created by the coding assistant itself, and that it seems to take six plus hours to complete a task that should have taken half an hour. It's understandable that a demonstration of a nascent product wouldn't tell the whole story, and we suspect that the Devin demo was less the product of a marketing mastermind and more

likely something the founders threw together the night before the launch. Cognition co-founder Weldon Yann also responded to some of the critiques in a post on X last night. The problem is that the Devon demo diverged so much from the claim its founders and investors made in an effort to publicize the product. And sure, much of the excitement came from AI enthusiasts outside the company that hyped up the product on social media, but it's up to founders to keep expectations realistic in these cases, end quote. Although clearly, Founders Fund has seen something in other demos. Small little public service announcement for you here, Google Meet has rolled out an update to let users seamlessly transfer calls between devices via its Android, iOS, and web apps, quoting 9 to 5 Google.

Let's say you start a call on your phone because you're not at your desk yet once you get to a computer. Opening the meet page preview for that call will soon offer a switch here option. This will switch the call from your mobile devices while maintaining an ongoing conversation and without worrying about missing important information. Call switched to another device will appear on the first device. You won't have to manually hang up or rejoin. said under other joining options, selecting join here too will let you keep the meeting active on both devices. This should also work in the opposite direction from desktop to mobile and is supported

by Google Meet for Android, iOS, and the website. This is rolling out to all Google workspace customers and users with personal Google accounts over the coming weeks, end quote. Finally today, gadget review Thursday, a bunch of reviews, actually of one single device, a new one, the Rabbit R1. A bunch of folks got their hands on them, and the consensus seems to be. It's a fun and funky AI device that feels pretty nice and does a solid job with basic AI questions, but the Rabbit Hole app is maybe a bit unfinished. Let's start with David Pierce and the verge. From a hardware perspective, the R1 screams kind of meh Android phone. Here are the salient specs. It's about three inches tall and wide and half an inch thick. It weighs

115 grams, which is about two-thirds as much as the iPhone 15. It has a 2.8.8 inch screen runs on a 2.3 gigahertz MediaTech MT 6765 processor and has 128 gigs of storage and 4 gigs of RAM. It has a speaker on the back, two mics on the top, and a SIM card slot on the right side next to the USBC charging port. It only comes in one color. A Hugh Rabbit calls glute orange, but is often known as brilliant orange or luminous orange. It's definitely orange and it's definitely luminous. At this point, the best way I can describe the R1 is like a Picasso painting of a smartphone. It has most of the same parts just laid out really differently. Instead of sitting on top or in the back, the R1's camera sits in a cutout space on the right

side of the device where it can spin its lens to face both toward and away from you. After spending a few hours playing with the device, I have to say it's pretty nice, not luxurious or even particularly high end, just silly and fun. Where Humane's AI pin feels like a carefully sculpted metal gem, the R1 feels like an old-school MP3 player, crossed with a fidget spinner, The wheel spins a little stiffly for my taste, but smoothly enough. The screen is a little fuzzy, but fine, and the main action button feels satisfying to thump on. And quote, here's Sherlin Lowe and Engadgett. It's definitely cute, designed by teenage engineering, which has put its design talents to use on the play date, as well as nothing's most recent phones, as well as music gadgets. Like all those things, it combines a retro-futuristic aesthetic with solid build-quality, shiny surfaces, glass and metal accents, end quote.

Brian Heater and TechCrunch, quote, You interact exclusively with the onboard operating system. This can, however, be connected to other accounts, including Spotify, Uber, Mid Journey, and DoorDash. The system can take voice recordings and do bidirectional translations. The system can also gain environmental context via the onboard camera. Among the first tests I threw at it was offering a description of my bookshelf. I pointed the camera at a row of four hardcoveres, Moby Dick by Herman Melville, the Barbary Coast by Herbert Asbury,

Understanding Media by Marshall McLuhan and Doddsworth by Sinclair Lewis. It universally had difficulty with the last book, understandably, as it was the least clear of the group. It largely spotted and understood what it was seeing with Moby Dick, calling it a classic and sometimes offering a brief synopsis. It recognized the middle two books 50 to 75 percent of the time. It also attempted to offer some context as to the curatorial choices and sometimes went out on a limb to compliment said curation. Having only played around with the R1 for a few hours, I can definitely tell you that It's a more accessible device than the humane pin, courtesy of the touchscreen and price. It doesn't solve the cultural screen obsession humane is interested in, nor does it seem to be

shooting for such grandiose ambitions in the first place. Rather, it's a beautifully designed product that offers a compelling insight into where things may be headed. Something worth noting for all of these early stage write-ups is that these sorts of devices are designed to improve and customize results the more you use them. I'm writing this after having only picked up the device last night. I'm going to send it off to Devon for a more in-depth write-up, end quote. But back to David Pierce, quote, almost immediately I started running into stuff the R1 just can't do. It can't send emails or make spreadsheets, though Liu has been demoing both for months. Rabbit Hole is woefully unfinished, too,

to the point I was trying to tap around on my phone, and it was instead moving a cursor around a half second after every tap. That's a good reminder that the whole thing is running on a virtual machine, storing all your apps and credentials, which still gives me, security-related pause. There's still an awful lot the R1 can't do, and a lot I have left to test. I'm particularly curious about its battery life, its ability to work with a bad connection, whether it heats up over time, and how it handles more complex tasks than just looking up information and ordering chicken nuggets. But so far, this thing seems like it's trying to be less like a smartphone killer and more like the beginnings of a useful companion. That's probably

as ambitious as it makes sense to be right now, end quote. Reminder to check out those first one videos over on YouTube. There are only 15 minutes long tops, usually around seven or eight minutes. Kind of fun. Bottom link in the show notes is to the playlist. Talk to you tomorrow.