Tech Brew Ride Home - Tue. 11/07 – An App Store, But For GPTs

Episode Date: November 7, 2023

OpenAI wants to open an App Store where everyone can build their own GPTs. There’s also a new GPT-4 that has gotten significantly cheaper. Did Cruise know its cars were underperforming even before the DMV shut them down? WeWork is officially dead, but are we seeing green shoots… evidence that the tech recession might be ending? Links: OpenAI Launches GPT-4 Turbo (TechCrunch) OpenAI is letting anyone create their own version of ChatGPT (The Verge) CRUISE KNEW ITS SELF-DRIVING CARS HAD PROBLEMS RECOGNIZING CHILDREN — AND KEPT THEM ON THE STREETS (The Intercept) WeWork, once valued at $47 billion, files for bankruptcy (CNBC) Shein Targets Up to $90 Billion Valuation in US IPO, Sources Say (Bloomberg) Klarna’s financial glow-up is my favorite story in tech right now (TechCrunch) 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 TechMeme right home for Tuesday, November 7th, 2023. I'm Brian McCullough today. Open AI wants to open an app store where everyone can build their own GPTs. There's also a new GPT4 that's gotten significantly cheaper. Did Cruz know its cars were underperforming even before the DMV shut them down? We work is officially dead, but are we seeing green shoots? Evidence that the tech recession might be ending. Here's what you missed today in the world of tech. We've discussed how this AI moment is not even a year old. old yet. Chat GPT was only released November 30th of last year, and I went into the RSS feed yesterday and found that the very first mention of chat GPT on the show only came on December 5th. So,

not even a year in, and it's amazing, but OpenAI's Developer Day is now as important to our purposes as an Apple event. I think there were two big stories yesterday, so we'll break them up into two segments. First, OpenAI said chat GPT has 100 million weekly users and that more than two million developers are currently building on the company's API, including at over 92% of Fortune 500 companies, and also, you know, at little developers like resumewriting.com. Well, the first big news was the debut of GPT4 Turbo with a 128,000 token context window. Also an April 2023 knowledge cutoff. a JSON mode, new modalities in the API, and 2x to 3x cheaper tokens. Quoting TechCrunch, GPT4 Turbo comes in two versions, one that's strictly text-analyzing

and a second version that understands the context of both text and images. The text-analyzing model is available in preview via an API starting today, and OpenAI says it plans to make both generally available in the coming weeks. They're priced at one penny per thousand in-pourable. Tokins, around 750 words, where tokens represent bits of raw text, e.g. The word Fantastic, split into fan, Tass, and Tick. And three cents per thousand output tokens. Input tokens are tokens fed into the model, while output tokens are tokens that the model generates based on the input tokens. The pricing of the image processing GPT4 Turbo will depend on the image

size. For example, passing an image with 1080 by 1080 pixels to GPT4 Turbo will cost 0.0.0.0.0.0.5 0.0765, OpenAI says. We optimize performance, so we're able to offer GPD4 Turbo at 3x cheaper price for input tokens and 2x cheaper price for output tokens compared to GPT4. OpenAI writes in a blog post shared with TechCrunch this morning. GPD4 Turbo boasts several improvements over GPT4, one being a more recent knowledge base to draw on when responding to requests. Like all language models, GPD4 Turbo is essentially a statistical tool to predict words. Fet an enormous number of examples, mostly from the web, GPD4 Turbo, learned how likely words are to occur based on patterns, including the semantic context of surrounding text. For example, given a typical email ending in the fragment looking forward,

GPT4 Turbo might complete it with two hearing back. GPT4 was trained on web data up to September of 2021, but GPT4 Turbo's knowledge cutoff is April 2023. That should mean, about recent events, at least events that happened prior to the new cutoff date, will yield more accurate answers. GPD4 Turbo also has an expanded context window. Context window, measured in tokens, refers to the text the model considers before generating any additional text. Models with small context windows tend to forget the content of even very recent conversations, leading them to veer off topic often in problematic ways. GPT4 Turbo offers a 128,000 token context window, four times the size of GPT4s, and the large.

context window of any commercially available model surpassing even Anthropics Claude II. Claude 2 supports up to 100,000 tokens. Anthropic claims to be experimenting with a 200,000 token context window, but has yet to publicly release it. Indeed, 128,000 tokens translates to around 100,000 words or 300 pages, which, for references around the length of Weathering Heights, Gulliver's Travels, and Harry Potter and the Prisoner of Asgaban. At GPT4 Turbo supports a new JSON mode, which ensures that the model responds with valid JSON, the Open Standard File Format and Data Interchange format. That's useful in web apps that transmit data, like those that send data from a server to a client so it can be displayed on a webpage, OpenAI says. Other related new parameters will

allow developers to make the model return consistent completions more of the time, and for more niche applications, log probabilities for the most likely output tokens generated by GPT4 Turbo, end quote. But possibly bigger news, OpenAI also introduced GPTs, custom versions of chat GPT, that ChatGPD Plus and enterprise users can create without any coding and monetize in its upcoming GPT store. In other words, OpenAI got an app store, but instead of building apps, they want you to build GPs. Like in theory, I could train a GPT on all of the scripts I produced for the show over the last six years and create a GPT, which would do, I don't really know, but you can see that they're obviously

reaching for a sort of iPhone moment here, quoting the verge. In the coming weeks, these AI agents, which OpenAI is calling GPTs, will be accessible through the GPT store. Details on how the store will look and work are scarce for now, though OpenAI is promising to eventually pay creators an unspecified amount based on how much their GPTs are used. GPDs will be available to paying GPT Plus subscribers and OpenAI enterprise customers who can make internal-only GPTs for their employees. During a recent demo, I received of OpenAI's GPT platform, a bot called Creative Writing Coach, critiqued and uploaded PDF of a writing sample. Over a period of about two minutes, I watched other GPT be spun up to help attendees navigate Dev Day.

The platform Auto-Name the Bot Event Navigator generated a profile picture for it using Dolly and ingested a PDF attachment with the event scheduled to inform its answers. OpenAI's interface lets you guide how you want a GPT to interact with people before you publish. The Dev Day Event Navigator agent I saw during my demo was instructed to be helpful and concise and to avoid scheduling conflicts. OpenAI auto-generated several conversation starter prompts such as, what's the first session today? Each GPT can be granted access to web browsing, Dolly, and OpenAI's code interpreter tool for writing and executing software. There's also a knowledge section in the builder interface for uploading custom data like the DevDen day event schedule. With another feature called Actions, OpenAI is letting GPTs hook into external

services for accessing data like emails, databases, and more, starting with Canva and Zapier. The introduction of custom GPs means that OpenAI is now competing with other AI bot platforms like Character AI and Meta, which recently introduced a slew of its own AI personas in WhatsApp, Instagram, and Messenger. OpenAI is positioning its platform as being more utility-focused than its competitors rather than emphasizing bots that act like people, though, it isn't against people building GPTs with human-like personas. The creators of GPs won't be able to view the chats people are having with them, and it's unclear what high-level usage data they'll get access to. OpenAI says it will be monitoring activity to block things like fraud, hate speech,

and adult themes. When the GPT store launches down the road, OpenAI will only accept agents from people who have verified their identity. Initially, GPs will be accessible through shareable web links, end quote. The Intercept has seen internal documents that suggest Cruz knew its cars were struggling to detect large holes and sometimes had problems recognizing children prior to its California permitting crisis. Quote, even before its public relations crisis of recent weeks, previously unreported internal materials such as chat logs show Cruz has known internally about two pressing safety issues. Driverless cruise cars struggled to detect large holes in the road and have so much trouble recognizing children. children in certain scenarios that they risked hitting them. Yet until it came under fire this month, Cruz kept its fleet of driverless taxis active, maintaining its regular reassurances of superhuman

safety. One of the problems addressed in the internal previously unreported safety assessment materials is the failure of Cruz's autonomous vehicles to, under certain conditions, effectively detect children so that they can exercise extra caution. Quote, Cruise AVs may not exercise additional care around children reads one internal safety assessment. The company's robotic cars, it says, still, quote, need the ability to distinguish children from adults so we can display additional caution around children, end quote. In particular, the materials say, Cruz worried its vehicles might drive too fast at crosswalks or near a child who could move abruptly into the street. The materials also say Cruz lacks data around kid-centric scenarios like children suddenly separating from their accompanying adult, falling down, riding bicycles, or wearing costumes. The materials note results from simulated tests.

in which a cruise vehicle is in the vicinity of a small child. Quote, based on the simulation results, we can't rule out that a fully autonomous vehicle might have struck the child, reads one assessment. In another test drive, a cruise vehicle successfully detected a toddler-sized dummy, but still struck it with its side mirror at 28 miles per hour. The internal materials attribute the robot car's inability to reliably recognize children under certain conditions to inadequate software and testing. Quote, we have low exposure to small VRUs,

vulnerable road users, a reference to children, so very few events to estimate risk from the materials say. Another section concedes cruise vehicles, quote, lack of high-precision, small, VRU classifier or machine learning software that would automatically detect child-shaped objects around the car and maneuver accordingly. The materials say cruise, in an attempt to compensate for machine learning shortcomings, was relying on human workers behind the scenes to manually identify children encountered by AVs where its software couldn't do so automatically. Cruz has also known that its cars couldn't detect holes, including large construction pits with workers inside, for well over a year, according to the safety materials reviewed by the Intercept. Internal Cruise assessments claim this flaw constituted a major risk to the company's operations. Cruz determined that, at its current relatively minuscule fleet size, one of its AVs would drive into an unoccupied open pit roughly once a year, and a construction pit with people incited about every four years.

Without fixes to the problems, those rates would presumably increase. as more AVs were put on the streets, end quote. It's official. WeWork, once valued at $47 billion, as recently as 2019, has filed for Chapter 11 bankruptcy protection for its locations in the U.S. in Canada, and has reported liabilities between $10 and $50 billion, which is a lot. Four years ago, within the early years of this very podcast, WeWork was the highest valued private startup in the world. Quoting CNBC, WeWork debuted through a special purpose acquisition company in 2021, but has since lost about 98% of its value. The company in mid-August

announced a 1-40 reverse stock split to get its shares trading back above a dollar, a requirement for keeping its New York Stock Exchange listing. WeWork shares have fallen to a low of about 10 cents, and we're trading at about 83 cents before the stock was halted Monday. Former co-founder and CEO Adam Newman said that the filing was disappointing, quote, It has been challenging for me to watch from the sideline since 2019 as WeWork has failed to take advantage of a product that is more relevant today than ever before, Newman said in a statement to CNBC. I believe that with the right strategy and team, a reorganization will enable WeWork to emerge successfully, end quote. From that sad note, I wanted to end today with some signs of green shoots in tech, at least vis-a-vis the idea of a tech IPO pipeline. sources say Sheehan aims for an $80 to $90 billion valuation in a U.S. IPO that it is planning in the coming

months, far exceeding its $50 to $60 billion valuation that it's been seeing in private trades, though it is worth remembering that Sheehan was valued at $100 billion back in 2022, quoting Bloomberg. While valuation in private trades doesn't necessarily reflect the company's actual valuation, the gap underlines investor concerns over Sheehan's challenges. ranging from intensifying competition to allegations of copyright thefts and potential use of forced labor. It may also complicate Sheehan's ambitions for a blockbuster listing. Sheehan was the world's third most valuable startup in 2022 when a funding round valued the company at $100 billion. Its valuation has since dropped along with other startups and technology companies as investors

grew wary toward risk assets amid uncertain economic outlooks and higher interest rates. Valuation of Bight Dance, the parent of short video hit TikTok, fell to below $300 billion in secondary markets in July, down at least 25% from last year, Bloomberg News has reported. Deliberations are ongoing and no final decision has been made regarding Sheehan's IPO, including its valuation and timing, the people said. Chean pioneered ultra-fast fashion selling new and stylish items such as shirts and swimsuits for as little as $2 each. Its direct-to-consumer sales took off in the U.S. during COVID, and the company quickly became, one of the most downloaded shopping apps in the country targeting teens and young women. The online retailer expects its net income to reach $2.5 billion this year, despite the intensifying competition, said the people who asked not to be identified as the information is

private, end quote. In addition to that, buy now, pay later fintech, Clarna, was also once a supernova expected to have a monster IPO, and then, well, the last 18 months happened. But as this piece in TechCrunch points out Klarna 2 has recently reported a turnaround of sorts. Numbers that say their business is maybe seeing green shoots, as I say. If the high flyers in tech, the ones that were the supernovas that then got arrows in their back, I'm thinking of everyone from Shopify to Roku here, if these companies become recovery stories, then potentially that means we would be seeing signs that the tech recession of the past two years might be ending. Quote, Clarna managed to both increase revenue and swing to profitability

in just one year. Altogether, they're reporting better gross merchandise value, a higher take rate, and solid revenue growth combined with lower costs and smaller credit losses, meaning that Clarnas cost-to-income ratio narrowed to negative 83% in Q3 of 2020 from negative 116% in Q3 of 2022. Boom. Profits. The numbers look even better if you allow for adjusted results, adjusted operating results came in at $43.8 million in the quarter compared to a loss of $143 million a year ago. It's a good idea to ask just how Klarna pulled this off. Most private companies tend to post huge losses in the name of growth, so it's rare to see a company as large as Klarna increasing its revenue 30 percent and flipping into the black. Their credit loss performance

improved by 46 percent year over year. Still, that's only one part of its improving results. Better credit results don't drive revenue. In fact, you could argue that more stringent credit rules could limit growth at a company like Klarna and the expense of profits, of course. There's an important factor contributing to the streak of good results. Klarna's bet on the United States is paying off. The company said its U.S. business, quote, achieved its fourth consecutive quarter of profit with GMV increasing 46% year over year in the third quarter. That's a lot of implied profitable growth. And given the relative strength of the U.S. economy compared to other regions, it is likely an important driver of Klarna's current

glow up. As we are looking forward to an eventual Klarna IPO, we do care about its present value. During its last fundraise, Clarnow was worth $6.7 billion. So if we annualize its Q3 revenue, we get a figure of around $2.2.2 billion. Clarna likely has a big holiday quarter underway at the moment, so our revenue figure is likely too small. Still at our admittedly conservative run rate revenue figure, the company is worth around three-ex its current top line. Is that a lot? A little? I look at the trailing price sales multiples of major public fintech companies. Block and PayPal gives us ratios of 1.4-2x and 2.16x respectively. That said, Block's revenue increased 16% in the third quarter exclusive of Bitcoin trading revenue, while PayPal's net revenue rose 8% in the last year.

So Clarna is growing its top line faster than either of those two companies and is not priced too far above them if you go by this metric. That allows us to wiggle the math a little and predict that if Clarna can maintain, its current trajectory for a quarter or two, it should be able to defend its most recent private market valuation, even during a period of depressed fintech prices, end quote. Nothing for you today. Talk to you tomorrow.