Tech Brew Ride Home - Tue. 06/20 – Spotify To Go “Supremium”

Episode Date: June 20, 2023

Spotify is thinking of bucking the “max” and “ultra” naming convention and might introduce “supremium.” What if FTX, the exchange, makes a comeback? One of the hottest sectors in VC right now is defense. And the story of how Meta is playing catchup when it comes to AI. Sponsors: Grammarly.com/go go.tech/tm Links: Spotify Plans New Premium Tier, Expected to Include HiFi Audio (Bloomberg) FTX paid over $120 million in advisor fees between February 1 and April 30 (The Block) Masayoshi Son Ends Seven-Month Silence to Make Case for SoftBank’s Future (Bloomberg) Silicon Valley VCs rush into defence technology start-ups (FT) Mark Zuckerberg Was Early in AI. Now Meta Is Trying to Catch Up. (WSJ) When AI Overrules the Nurses Caring for You (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 Tuesday, June 20th, 20th, 20th, 23. I'm Brian McCullough today. Spotify is thinking of bucking the max and ultra naming conventions and might introduce Supremium. What if FTX, the exchange, were to make a comeback? One of the hottest sectors in VC right now is defense

and the story of how meta is playing catch-up when it comes to AI. Here's what you miss today in the world of tech. Ashley Carmen is reporting that Spotify plans to launch a more expensive Supremeium team. tier with hi-fi audio, audiobooks, and more launching outside the U.S. later in 2023. Spotify's premium plan currently costs $9.99 a month, but I'm just glad that this isn't yet another max or ultra, quoting Bloomberg. Dubbed Supremium internally, according to people familiar with the strategy, the new tier will be Spotify's most expensive plan and likely offer a high-fi feature that the company first announced it was working on in 2021. Spotify delayed that products rollout after two of its competitors, Apple Music, and Amazon Music, began offering the feature for free

as part of their standard plans. The new tier will launch this year in non-U.S. Markets First. To augment its current premium tier, Spotify will give subscribers expanded access to audiobooks, either through a specific number of hours free per month or a specific number of titles. There will be an option to purchase more, of course. Currently, the company only sells audiobooks a la carte through its app. Spotify plans to introduce that feature in the U.S. in October after first launching in markets abroad. These changes might be enough to drive new revenue and maintain interest in a stock that has doubled so far this year to $159.99 per share. Spotify has been competing fiercely with the rival services from Apple and Amazon, both of which hiked their

standard plans prices by a dollar in the U.S. to $1099 per month in the past year. Spotify's $999 premium plan, which includes access to podcasts and ad-free music listening, has remained the same in the U.S. since the service launched stateside. The company also offers a free version with commercials. Chief Executive Officer Daniel X said on an earnings call earlier this year that the company balances pricing changes with the desire to grow subscribers. In 2022, the company increased prices in more than 40 markets, end quote. What if FTX, the exchange, made a comeback?

According to filings, FTCS has paid $121 million in legal, consulting, and financial services fees. just between February 1st and April 30th, but some former clients are now pushing to reboot the exchange, quoting the block. The mounting costs of FTX's bankruptcy are fueling a movement among some former clients to reboot the exchange under new leadership to return value to customers. Travis Kling, the chief investment officer at Ikeye Asset Management, once referred to a reboot as, quote, one of the most bullish outcomes possible for creditors. Ikagi held a majority of its assets on FTX. Loom Dart, an anonymous crypto personality, is leading the charge on a movement dubbed the

FTX 2.0 coalition. In his view, the regulatory woes facing Coinbase and Binance make a relaunch more viable, end quote. Yeah, you got to say that makes sense, and not just for the creditors of the bankruptcy. We know that exchanges can print money, if run right, and in good times. And given the Coinbase and Binance issues of late, there really could be a window for maybe a regulatory blessed exchange to reopen from scratch. In his first appearance in seven months, Masayoshi Son made a case for SoftBank's future, saying the company won't be deterred by a few short-term losses. I bet you couldn't guess what the thing is that has happened in the last seven months that has made Masa San

dip his toes back into being bullish again. Quoting Bloomberg, SoftBank Group Corp is in position to win the race to master AI, thanks to its billions of dollars of tech investments. Founder Masayoshi Sahn said in his first public appearance in seven months, a huge revolution is coming. He said at Japanese telecom unit SoftBank's annual shareholder meeting on Tuesday, adding that it was the parent company's job to make aggressive early investments. SoftBank Group won't be deterred by a few short-term losses. We will rule the world in the end, end quote. The billionaire broke his months-long silence after bidding adieu to SoftBank Group's lost-laden earnings call, saying he wanted to focus on taking arm public. His absence has left cash-strapped startups wondering if the world's biggest tech investor will ever go on the offensive again.

But Saan says he's been busy exploring Generative AI's transformative potential for the Japanese firms more than 400 portfolio companies. For example, the 65-year-old said he talks frequently with Open AI CEO Sam Altman about way softbank's domestic search engine operator Z Holdings Corp, can channel generative AI phenomenon chat GPT for Japanese language users. We will not rest. We will be ever more fierce, Son said, suggesting SoftBank will continue to shift gears away from total defense. With Arm at the core, we will continue to pursue arenas including in Quantum, he said, end quote. The debt-laden and lost churning parent company is hosting its own shareholders meeting

in person for the first time in four years on Wednesday. Son is expected to speak more on arms positioning there. Prospects for the chip design unit's initial public offering have brightened recently, buoyed by hype around generative AI and talks with potential anchor investors, including Intel. Arm is seeking to raise as much as $10 billion, Bloomberg News reported, and brokerages are revising up their soft bank stock price targets. The company's shares have gained about 25% so far in the June quarter, heading for their best quarterly performance in three years. But the outlook for soft bank's flagship Vision Fund investment unit remains bleak, slumping tech valuation. have forced it to shoulder billions of dollars in losses for five straight quarters.

Investment at SoftBank's funds have ground to a virtual halt, forcing belt tightening throughout the startup ecosystem. SoftBank invested in seven startups through funding rounds totaling about $550 million so far in the June quarter, data compiled by Bloomberg Show. For reference, the Vision Fund segment spent $15.6 billion in the same quarter just two years ago. I've made many, many mistakes in my AI investments, some of them embarrassing, song said, but among the many failures, there are a number of buds that will blossom very soon, end quote. The Financial Times points out that the bullish sector for VC right now is in defense. A16Z, Sequoia, and other VCs are increasing investment in defense tech startups. Pitchbook says U.S. VCs

invested $33 billion in the sector in 2022, which is up from $16 billion in 2019. Quote, investment in military tech startups is booming. as the war in Ukraine and geopolitical tensions with China leads to growing confidence that the U.S. government will give lucrative contracts to Silicon Valley companies making cutting-edge defense systems. U.S. venture capitalists have agreed to more than 200 defense and aerospace deals in the first five months of this year, worth nearly $17 billion, more than the sector raised during the entirety of 2019, according to data from Pitchbook. This boom has mirrored the gold rush, also experienced by the artificial intelligence sector, even as investments in startups and other parts of the tech industry has plummeted in recent months,

amid a broader downturn. Silicon Valley had shunned defense technology for years, spooked by association with controversial overseas conflicts, and wary of the Pentagon's notoriously slow and risk-averse procurement process, which has favored established defense contractors. According to interviews with more than 15 investors and founders, this wariness has given way to a belief that startups are finally in line to take a significant share of the U.S.'s mammoth defense budget, which has grown over two decades to reach a record $886 billion for 2024. We are seeing more VCs saying they are comfortable investing in startups doing tech that can have a kinetic effect used purely for the military. Mike Brown, a partner at San Francisco

based Shield Capital and the former director of the Defense Innovation Unit at the U.S. Department of Defense said, Sequoia Capital led a seed round of about $6 million in mock industries earlier this year, according to two people with knowledge of the deal. Mock was started by 19-year-old MIT dropout Ethan Thornton last year and develops hydrogen-powered weapons and defense systems. Sequoia declined to comment. And DeRille Industries, a defense tech company valued at $9 billion, whose largest backer is Andreessen Horowitz, recently revealed it was in talks to develop its first weapons by creating a loitering munitions version of its autonomous drones, aerial weapons systems that can wait

passively for a target and then attack. End quote. Horse race time, but this time through the AI lens. Remember how meta is sort of playing a different game when it comes to this AI stuff, at least up to this point, open sourcing its stuff instead of trying to build moats around things? Well, this article from the journal suggests it has different motivations and situational reasons for that. They're behind. This article posits after a decade-long focus on research in its AI division disincentivized work on generative AI.

A decade ago, the company founder and CEO saw the promise for artificial intelligence and invested large sums of money into its advancement. He hired one of its early visionaries, Jan LeCoon, to lead the charge. Now, just months after OpenAI's chat GPT burst into the consumer marketplace, meta is falling behind in the very same technology. Meta is now scrambling to refocus its resources to generate usable AI products and features, including its own chatbots, after spending years prioritizing academic discoveries and sharing them freely while struggling to capitalize on their commercial potential. That's a tall order as many of META's top AI employees have departed and amid the company's own sets of layoffs in what CEO Mark Zuckerberg has called a year of efficiency.

About a third of META workers who co-authored, published AI research related to large language models, the complex systems that power AI systems like ChatGPT have left in the last year, according to a Wall Street Journal analysis. Meta has taken sharp turns before, at moments when it has appeared behind, such as when it transitioned Facebook from a desktop to a mobile first ads business, or in 2016 when it launched its stories feature on Instagram to lure people away from Snapchat, which had introduced a similar feature a decade ago. Meta began investing in AI in 2013. Zuckerberg and then CTO Mike Schrofer personally sought to recruit one of the leading minds in AI

to lead a new research division to advance the technology. They found their lieutenant in Jan Lecun, a New York University professor, whose breakthrough work in the field was renowned. Lacoon, deeply rooted in academia and fundamental research, was instrumental in creating a culture that reflected his priorities, hiring scientists over engineers and emphasizing academic outputs, such as research papers over product development for the company's end users. The strategy made Meta's fundamental AI research lab

highly attractive to top talent over the years, but challenged the company's ability to commercialize its advancements, people familiar with the matter said. It also encouraged a diffuse bottoms-up approach to research, direction and resource allocation. Researchers drove their own agendas, pursuing independent projects in different directions, rather than toward a cohesive company-wide strategy, the people said. Meta divvied up hardware into small pools across each project. Some researchers given more computer chips than they needed would tie them up in unnecessary tasks to avoid relinquishing them,

some of the people said. Meanwhile, meta was slow to equip its data centers with the most powerful computer chips needed for AI development. Even as the company acquired more of these chips, It didn't have a good system for getting them into the hands of engineers and researchers. At times, thousands of pieces of coveted and expensive hardware sat around unused, some of the people said. Meta is in the process of overhauling its data centers, which could have contributed to the logjams. As of May, Meta's latest supercomputer for AI projects has 16,000 such chips, a company blog post said. As large language models began to show increasingly impressive capabilities in 2020, tension mounted within Meta's AI research division between those who argued the company should

invest seriously in the industry's new direction, and those including Lacoon, who believe such models are fads that lack scientific value, people familiar with the matter said. Lacoon's strong opinion toward large language models, he believes they don't get AI closer to human level intelligence, both internally and publicly made it difficult for researchers with opposing views to amass the support and vast resources needed for those kinds of projects, some of the people said. Some meta-researchers pressed forward anyway with fewer resources, using around 1,000 chips to produce a large language model in 2022 known as OPT or open pre-trained transformer, and around 2,000 chips to produce META's flagship model called Lama in 2023.

The industry standard, by contrast, is 5,000 to 10,000 chips. Meta initially allowed a limited group of outside researchers to access Lama before it leaked online, sparking a burst of innovation that executive site as a prime example of META's goal to share its AI technology. Meta has since lost numerous AI researchers who worked on these, and other key generative AI projects in the last year, many citing burnout or a lack of confidence in meta to keep up with competitors. Six of the 14 authors listed on the research paper for Lama have left or announced they will be departing, according to their LinkedIn profiles and people familiar with the matter. Eight of the 19 co-authors on the paper for O.P.T. have left as well,

end quote. Finally today, also from the journal, A. Contrary Look at AI Bullishness. This article claims that U.S. hospitals are using sometimes flawed AI-based diagnosis tools, as some clinicians say they are feeling pressure from administrators to defer to the algorithms. Quote, artificial intelligence and other high-tech tools, though nascent in most hospitals, are raising difficult questions about who makes decisions in a crisis, the human or the machine. The technologies which can analyze massive amounts of data with a speed beyond human capacity are making extraordinary advances in medicine from improving the diagnosis of heart conditions to predicting protein structures that could speed drug discovery. When it is used alongside humans to help assess, diagnose, and treat patients, AI has shown powerful

results, academics and tech experts say, at the same time, the tools can be flawed and are sometimes implemented without adequate training or flexibility, say nurses and health care workers who work with them regularly putting patient care at risk. Some clinicians say they feel pressure from hospital administration to defer to the algorithms. AI should be used as clinical decision support and not to replace the expert, said Kendrick Cato, a professor of nursing at the University of Pennsylvania and nurse scientists at the Children's Hospital of Philadelphia. Hospital administrators need to understand there are a lot of things an algorithm can't see in a clinical setting, end quote. In a survey of 142 registered nurses published this month by National

Nurses United, a union, 24% of respondents said they had been prompted by a clinical algorithm to make choices they believed, quote, were not in the best interest of patients based on their clinical judgment and scope of practice about issues such as patient care and staffing. Of those, 17% said they were permitted to override the decision while 31% weren't allowed and 34% said they needed doctor or supervisor permission. If a nurse feels strongly that this does not make sense for the patient, they should use their clinical judgment and contact the doctor, the medical center said. The ultimate decision-making authority resides with the human physicians and nurses. It said nurses don't face disciplinary action for overrower.

writing an algorithm unless it is something that is blatantly against standards of care. Nurses could use extra help since the pandemic hospitals have been chronically understaffed and nurses and doctors complain of high stress and exhaustion. And a survey of more than 12,500 nurses in November 2022 by the research affiliate of the American Nurses Association, 43% of nurses said they were burned out. Many applications are designed to ease the burden on nurses by taking over time-consuming and tedious tasks such as patient chart documentation, patient monitoring, and medication verification, end quote. Nothing for you today. Talk to you tomorrow.