Tech Brew Ride Home - Wed. 05/01 – An Elon Catchup

Episode Date: May 1, 2024

Binance founder CZ looks like he’s heading to jail too, but for way less time than SBF. Is the Rabbit R1 just a fancy device for a glorified Android app? Has OpenAI floated a secret pre-release of GPT5? And finally, so much has happened, I decided we had to do an omnibus catch up with what’s going on in the world of Elon. Links: Binance founder Changpeng Zhao sentenced to four months in prison (The Verge) Rabbit R1, a thing that should just be an app, actually is just an Android app (Updated) (Android Authority) Powerful New Chatbot Disappears as Mysteriously as It Arrived (Gizmodo) Tesla conducting more layoffs, including entire Supercharger team (Electrek) 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 Wednesday, May 1st, 2024. I'm Brian McCullough today. Binance founder CZ looks like he's heading to jail too, but for way less time than SBF. Is the Rabbit R1 just a fancy device for a glorified Android app? Has OpenAI floated a secret pre-release of GPT5? And finally,

so much has happened, I decided we had to finally do an omnibus catch up with what's going on in the world of Elon. Here's what you missed today in the world of tech. Remember when the whole FTX blow up happened, and it seemed like on a certain timeline of events, SBF, who headed FTX, had been stabbed in the back by CZ, who headed rival exchange Binance, and who, by casting doubt on FTX's finances, might have started the whole bank run of sorts that led to FTX blowing up. Well, we know SBF is in jail and CZ now as well. We haven't been covering this, but it's been coming for a while now. A U.S. judge has sentenced Binance, founder Chang Peng Zhao to four months in prison for failing to establish adequate anti-money laundering

protections. Quoting the verge, Zhao once the head of the largest crypto exchange in the world, pled guilty in November of last year. Judge Richard Jones said that Zhao prioritized, quote, finances growth and profits over compliance with U.S. laws and regulations. While Jones doesn't think Zhao is likely to reoffend, the scale of the crime is notable. Though Zhao is not as well known as FTX fraudster, San Francisco. Bankman Freed, he is a more important figure in the crypto world. The Chinese-Canadian entrepreneur founded Binance in 2017. Though he was required to step down as CEO of the exchange as part of his plea agreement, he is still the controlling shareholder of the company, which one person told Bloomberg

was, quote, a massive shit-coin casino. Binance listed many more tokens than competitors such as Coinbase. Prosecutors requested three years of prison time double the sentencing guideline of 18 months because the quote scope and ramifications of Zhao's misconduct were massive. They were massive. They wrote in their sentencing memo. They also suggested that Zhao's sentence should, quote, reflect the significant harm to U.S. national security caused by his criminal acts, end quote. Binance allowed sanctions violations of more than $8.98 million, according to prosecutors and, quote, violated U.S. law on an unprecedented scale. Zhao and other Binance executives didn't comply with U.S. laws, including the Bank's Secrecy Act or BSA, and didn't adequately implement anti-money

laundering efforts. As a result, Iranian customers were able to transact at least $1.1 million with U.S. customers in violation of sanctions. Other sanctioned countries such as Cuba and Syria were able to transact as well. Jow's lawyers in their own sentencing memo said that Jal deserved no jail time as, quote, no defendant in a remotely similar BSA case has ever been sentenced to incarceration. Jow traveled from his home in the UAE to enter his guilty plea. He has remained in the U.S., quote, away from his home, partner, and young children for five and a half months, his lawyers wrote, besides, Binance has taken action to fix their anti-money laundering procedures, they wrote, end quote. Amazon earnings, they're fine. Revenue up 13% year-over

year, 10.4 billion dollars in net income in the quarter. The all-important AWS business saw revenue up 17% year-on-year. Interestingly, their subscription businesses were up 11% to 10.7 billion I told you, we're all prime members now, and their suddenly all-important ad revenue was up 24% to $11.8 billion. One of the criticisms of the new wave of AI hardware gadgets is that some people are like, why does this need to be a whole separate device? Why can't it just be an app on your smartphone? Well, what if the Rabbit R1 is just an app? An APK review suggests the Rabbit R1 runs Android, and its entire UI is powered by a single Android app. Founder Jesse Liu says, no, Rabbit R1 is not an Android app, so what do I know?

I'm going to be saying, what do I know a lot on today's show? Quoting Android Authority. It turns out that the Rabbit R1 seems to run Android under the hood, and that entire interface users interact with is powered by a single Android app. A tipster shared the Rabbit R1's Launcher APK with us, and with a bit of tinkering, we managed to install it on an Android phone, specifically a Pixel 6A. Once installed, we were able to set up our Android phone as if it were a Rabbit R1. The volume up key on our phone corresponds to the Rabbit R1's hardware key, allowing us to proceed

through the setup wizard, create a rabbit hole account, and start talking to the AI assistant. Since the Rabbit R1 has a significantly smaller and lower resolution display than the Pixel 6A, the home screen interface only took up a tiny portion of the phone's display. Still, we were able to fire off a question to the AI assistant as if we were using an actual Rabbit R1 piece of hardware. We didn't bother testing out any other functionality such as Spotify integration, vision, etc. But we wouldn't be surprised if some of them didn't work. After all, the Rabbit R1's launcher app is intended to be pre-installed in the firmware and be granted several privileged system-level permissions, only some of which we were able to grant. So some of the

functions would likely fail if we tried. Still, the fact that this app works at all on my phone is hilarious and is a testament to the fact that, at their core, a lot of these niche hardware products run on a modified version of the Android open source project. Rabbit has reached out to Android Authority with a statement from its founder and CEO Jesse Liu. The statement argues that the R1's interface is not an app. The company explains that the LLM it uses runs on the cloud, which is something we never questioned. We'll be following up with another article diving deeper into the subject soon. Until then, you can read Rabbit's complete statement below.

Quote, Rabbit R1 is not an Android app. We are aware there are some unofficial Rabbit OS app website emulators out there. We understand the passion that people have to get a taste of our AI and Lamb instead of waiting for their R1 to arrive. That being said, to clear any misunderstanding and set the record straight, Rabbit OS and Lamb run on the cloud with very bespoke AOSP and lower-level firmware modifications. Therefore, a local bootleg APK without the proper OS and cloud endpoints won't be able to access our service. Rabbit OS is customized for R1, and we do not support third-party clients. Using a bootlegged APK or web client carry significant risks, malicious actors,

are known to publish bootlegged apps that steal your data. For this reason, we recommend that users avoid these bootlegged rabbit OS apps, end quote. Is GPT5 already out in the wild just disguised a bit? The AI corners of social media are all flutter about GPT2 chatbot, a mysterious AI chatbot that became available on LLM benchmarking site LIMSys that is believed to have similar capabilities as GPT4, but also some capabilities that no one has ever seen before. Quoting Gizmodo, a mysterious new AI chatbot called GPT2 chatbot turned heads this week after it became available on a major large language model benchmarking site,

LIMSysorg. No one knows where it came from, but many consider it to have roughly the same capabilities as OpenAIs GPT4. This put GPT2 chatbot in a rare class of AI models that only a handful of developers worldwide have been able to achieve. No one knows who made it or what it is, but I have been playing with it a little, and it appears to be in the same rough ability level as GPT4. Ethan Mollick, a professor researching artificial intelligence at the Wharton School of the University of Pennsylvania, said in a tweet on Monday.

Just as GPT2 chatbot was peaking and hype, the chatbot disappeared on Tuesday afternoon. A notice on LIMSys site's homepage reads, GPT2 chatbot is currently unavailable. A tweet from the organization later confirmed that the chatbot had been taken offline, quote, due to unexpectedly high traffic. However, LIMSIS says to, quote, stay tuned for its broader releases, end quote. Online AI communities have gone wild about the anonymous GPT2 chatbot. One ex-user claims that GPT2 chatbot nearly coded a perfect clone of the mobile game Flappy Bird.

Another ex-user says it's solved an international math Olympiad problem in one shot. On long Reddit threads, users are speculating wildly about the origins of the chatbot and arguing over whether it's from OpenAI, Google, or Anthropic. There's no evidence for these claims, but tweets from OpenAI, CEO Sam Altman, and other executives have just added fuel to the fire. In Gizmodo's limited testing, we found the GPT2 Chatbot has capabilities that are similar to leading AI models from Anthropic and OpenAI. It exhibited behavior exclusive to advanced large language models, reasoning well, and outlining detailed plans for complicated tasks. A computer engineering professor at the University of Wisconsin found that GPT2 Chatbot could perform a task that other leading AI models could not. They asked GPT2 chatbot to solve a math riddle that involves learning some inexplicit rules.

AI largely struggle to answer questions like this. Ultimately, there's very little information available about the GPT2 chatbot just yet. However, it seems clear that a power player is behind this AI model. In the coming weeks, the creator and origins of the GPT2 chatbot will likely become public. This could mean a new AI model is on the horizon or maybe there's a new AI developer on the scene, end quote. But as I intimated, a lot of other people are speculating that this is maybe GPT5 from OpenAI being released to quietly, I don't know, test various things. We shall see. All right, as promised, let's dip our toes into Elon Waters. I admit to not being the best Elon Muskologist out there. There is this entire news ecosystem following his various moves, various companies.

But before he took over Twitter, following what he was doing with SpaceX and and especially Tesla, was somewhat tangential to what I usually talk about on this show. So I'm going to approach this segment as if you, like me, are vaguely aware of what's been going on over the last month with Elon and Tesla and just need a quick catch-up. Here's a summary of, again, just the last month of Tesla-specific news. Big earnings miss, I think we talked about that, layoffs to 10% of the workforce, profit margins down to six-year lows after repeated price cuts to their existing models, cancellation of the model two, which was we were told for the last decade to be the final piece of the puzzle to get Tesla to mass market adoption since it was going to be priced sub $30,000.

Although now there are reports that new models will come back into production in the second half of next year, so who knows. That's not even getting into the various issues people have been having with the cyber truck and reportedly slow sales of the cyber truck and also the full recall of the cyber truck because the acceleration pedal could get stuck. That's not even getting into the fact that to juice sales for the first time ever, Tesla was getting into advertising, only to fire the entire newly hired ad team. That's not even getting into the departure of Drew Baglino, who had been at Tesla for 18 years, was head of power train and energy engineering. That's not even getting into the never-ending investigations into Tesla's autopilot and full self-driving features, or how just a few days ago Elon flew to China and got approval from China for self-driving technology to be allowed there. Let's focus in on the fact that Tesla is going to refocus all of its energies on making full self-driving a reality as soon as possible, probably by the end of this year, so that Tesla's can be rented out as an army of autonomous Uber's. Okay, Uber has a $137 billion

market cap, roughly one-fourth the size of Tesla's market cap. So just by that metric, Why refocus your business operations on a business that the market values as smaller than your current business of selling cars? Also, if full self-driving cars is such a big business, how come nobody is valuing alphabet higher? Because they have Waymo, arguably the closest anyone is to having a fleet of robo-taxies. I mean, Waymo barely warrants a mention on alphabet earnings calls. Other huge self-driving companies like Argo have flat out been abandoned. So that doesn't make sense to me, this pivot, just from a business perspective. And now, yesterday, the news that Tesla has reportedly laid off the entire supercharger team.

This is even more confusing than that whole litany of news I just read, which again was just what happened in the last month. If you are only tangentially aware, Tesla has the biggest charging network out there, the biggest in terms of the most locations, the best in terms of fast charging and reliability. And Tesla recently got basically the entire electric vehicle industry. from Ford to General Motors to basically anyone who makes an EV to sign up to their NACS charging standard. This would, analysts estimated, by itself, earned Tesla $6 to $12 billion in additional revenue by 2030. This was always Tesla's ace in the whole their charging network. If EVs do indeed become the future, then Tesla basically owns the underlying platform of that

future. So laying off the team that made that charging network so successful and supposedly slowing the rollout of more chargers is confusing, because if all these other cars are coming online to this platform, then wouldn't you do the opposite? When you lean into supercharging growth in order to absorb these new vehicles joining the platform, lean into something that seems to be your ace in the hole if other areas of the business are having problems. Elon stands don't at me. I'm just asking questions here, as they say, because nothing of what I just laid out makes any sort of sense to me. Again, from a business perspective, but what do I know. I have never been the richest man in the world. I legitimately do not know if any of this makes

any sense. If two years from now, self-driving Teslas are everywhere, and that translates into Tesla's stock being 10x or 100x where it is today, then we will absolutely have proof positive that Elon Musk is the greatest business genius of all time, and I will be happy for all involved. I'm just saying that at this moment in time, I'm confused. I'm going to end the segment with Electrex take this morning on these recent firings. It makes absolutely no sense to lay off the supercharger team. Supercharging is an incredible opportunity for Tesla, especially now that everyone else has adopted NACS.

Tesla has a fairly simple business case from here on out to become the leading gas station of the future. With its experience and lead on superchargers, it's more reliable and better design stations and its existing business footprint with so many locations, installed around the globe. The company has a natural lead. This business case is even stronger now that the entire industry is behind NACS.

to lay off that whole team, just when the company has earned such a big win, when billions in public money is available for buildout, which would not have been available without the industry NAS adoption, which was, again, spearheaded by this team and their negotiations. And when there is a lead to be maintained is absolutely crazy. This move alone would erode any confidence I have left in Tesla's CEO if I still had any. On layoffs in general, we noted in our coverage of Tesla's layoffs that the worst part about situations like this is that they greatly affect morale. We imagine morale can't be great within Tesla right now after huge layoffs, but there can at least be a sense of relief that they're over after a large round of layoffs closes. But if Tesla is still doing

layoffs, that sense of relief is gone. And employees will still be wondering whether they might show up to work without a job, as we heard happened to many employees on the first day of layoffs. And while the last layoffs were distasteful enough, continued layoffs have even worse optics, given Tesla's move to ask shareholders for a $55 billion payout for its CEO just days after firing 14,000 people. That $55 billion could pay for 40 years' worth of six-figure salaries for those employees. Quite a large payday for a part-time CEO made worse by the potential loss of livelihood for more employees who might still be on the chopping block, end quote. Nothing for you today. Talk to you tomorrow.