The Rundown - Is OpenAI's Sora Launch a Sign the AI Economy is Cracking? (ft. Kyla Scanlon & Alex Heath)

Episode Date: October 12, 2025

OpenAI’s launch of Sora, its new AI-powered social app, might be more than just a product drop — it could be a warning sign. Zaid Admani, Kyla Scanlon, and Alex Heath break down what Sora reveals about the pressure on AI companies to monetize, the growing debt behind data centers, and whether the AI economy is starting to crack under its own hype. From trillion-dollar valuations to gold’s unexpected rise, this episode exposes the fault lines forming beneath the AI boom.

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Learn more at tellus.com slash online security. No one can prevent all cybercrime or identity theft. Conditions apply. Welcome back to the rundown, one of the best business podcasts in the world. My name is Zaid Admani. And in today's show, we are talking all things AI with returning guests Kyla Scanlan and first-time guest Alex Heath. Many of you guys are probably familiar with Kyla's work.

She does an amazing job breaking down things, impacting the economy on her substack and Instagram account. And Alex is one of the best tech reporters in the world. I've been reading his stuff for years now. He has a reputation of getting the major scoops. And he recently launched his own newsletter called Sources, which will link in the description. In today's conversation, we touched on a ton of stuff ranging from opening. AI's big week, what executives inside the company feel about the rise of AI slop, if all of this is a bubble, and why the U.S. government is unlikely to stop the AI train anytime soon.

If this was an awesome and wide-ranging conversation, both Alex and Kyla are fantastic. They're really smart people. They really know their stuff. So I hope you guys enjoy this conversation. All right, guys, we have Kyla Scanlan back on the show today. You guys know Kyla, incredible economic writer, observer of macroeconomic. Kyle, thank you for coming back on the show today. And we have Alex Heath, first time guest.

Alex is a tech reporter, the founder of sources. My man has all the tech scoops. Thank you for coming on the show today, Alex. Yeah, thanks for having me. Of course. I think we have to start with the big news of the week, which was Open AI. I mean, Open AI has all the juice these days. They are dominating headlines regarding the markets, even though they're a private company.

They launched a bunch of features this week with ChatGPT, trying to turn ChatGPT into an operating system. They got the SOAR app that's going viral. We're going to talk about all that stuff. Alex, I want to turn it to you first. You were actually at their Dev Day on Monday in San Francisco. Can you just walk us through what the vibe was like at the Dev Day and what was your takeaway from that big event? Yeah, I mean, open eyes crushing it on vibes, I would say. There was packed as a lot of developers.

Everyone sees them as maybe like the next big platform. You know, you had like Facebook doing its platform stuff 10 years ago where it was going to become this distribution service for developers. The app store, obviously, even before that. And I think ChatGPT hitting 800 million weekly users and them now letting developers build their app experiences inside ChatGPT where you don't have to leave to use Zillow, Coursera services like that is really exciting for developers. So yeah, I would say the vibes were high. A lot of AI bubble talk as well. There was that kind of underlying current of fear about that.

But the product side, a lot of excitement. You know what I my biggest takeaway as an investor was that they were announcing all these partnerships, right? They were announcing like features with Figma and Shopify and Etsy. And anytime they would announce these partnerships with a logo of the company would pop up on screen. The stock price of those companies would just shoot up and it just kind of tells you the appetite that investors have to get exposure to Open AI because you can't directly invest in them and they just want to get exposure to it any way they can. But that kind of that kind of leads me to like the bubble question. Kyla, I want to talk to you about something that you wrote about this week, which was a fantastic piece about AI. You talked about how now that Open AI is launching

SORA, which is like a social media slash AI slop app, that this could be a sign that maybe the use cases for, like the revenue opportunities for like chat GPT and the traditional AI applications might not be what was expected. So now they're turning to like brain rot to get to make money. Can you talk more about that? Yeah. I mean, I felt very conspiracy theory writing that piece because the whole underlying thesis was that AI is obviously propping up the stock market like Nvidia, Microsoft, meta, or a huge component of the stock market and the returns that we've seen. AI is also propping up the economy. It's been a huge component of economic growth. And I think for the AI companies, it's kind of like, okay, so we're

building out all of these things, but how do we, you know, pay back all the money that we've been spending? And the Wall Street Journal had a great piece talking about how the money required is like five times any amount of any subscription revenue that they could possibly generate. Like it's five times larger than the current level of subscription revenue. in the world. And so I think for them, they're like, well, how do we monetize? One really good way to monetize is by doing social media because you can sell ads against it. And so for them, like when I saw that happen and I've got checked this against a few people, it's like, oh, this might just be a last resort sort of monetization model, turning to social media, trying to get advertisers

and hopefully, you know, creating some element of profitability for all of this. Yeah, to me, I think they're 100% leading into the ad model. Didn't they hire someone that used to run ads at meta or another tech company? Alex, correct me if I'm wrong. They did do that recently, right? Yeah, they have Fiji Simo running the consumer business now. She helps scale Facebook's early ads business. A scoop I had in Sources.News actually a couple weeks ago is that she's looking for ahead of monetization to do ads in Chachip T and SORA right now.

So how do you, so talking to these examples, executives, you know, when this AI stuff was really taken off a year or two ago, the promise was like, oh, we're going to solve cancer. We're going to do all these cool things. And now we're now we're just getting slop, right? And they're just pushing that out. How do the how do the people inside these companies think about that? Do they hear the criticism? Do they care about the criticism? Or is this just like an ends to like meet the revenue goals so they can do the cool stuff? It's both. I mean, I think you can do. multiple things at once. You can have your slop and you can still try to cure cancer. This is a big company. I mean, Open AI is like approaching 4,000 people. So it's not this tiny research lab that it used to be. If you paid attention to all the press, Sam Altman did this past week, he talked a lot about how excited he still is to solve science breakthroughs and how they see that as a key benchmark to reaching AGI. I think they also see that as a huge revenue opportunity, obviously. They're still focused on that. I think you can do multiple things. But you did see a lot of open AI employees on

X actually when the SOAR app launched talking about the concerns they had about it. There were ones even criticizing the meta vibes launch, which was like meta's ill-fated SORA competitor. They tried to launch the week before. Like they were criticizing that and the approach there. And then they did their own version of AI slot the next week. So yeah, there's definitely like a cultural divide here of like the people in the AI labs who want to just build the foundational research. search, create the science breakthroughs, get to AGI, automate all human labor, and then the people they brought in from big tech and startups on the commercial side under Fiji Simo who have to make money, who have to pay for all of this, have to pay for the training runs and the research, which

is only going to continue scaling. So you have to have one to feed the other. And yeah, I think Kyle's analysis is totally right. You have to do ads. There's no other way to monetize a user base at this scale than advertising. And the very, you know, vast majority of chat GPT users are free. And so like the vast vast majority. So they they have to do something there. They can't just let that continue to be free and melt their GPUs. So I would be shocked if there's not as in chat GPT within 12 months. I think it might be even sooner the way that they're going. It takes time. I mean, yeah, they move really fast, but you would be surprised also just given how fast chat GPT has grown and that they didn't foresee becoming this major consumer

platform that the back end technical lift of chaining all the data together and getting it in a place where you can do ads at the scale that they want to operate in and all the markets they operate in that usually takes years so yeah i think i think a year is actually pretty ambitious we'll see they still have to get the leader in to run this team that they're setting up for this so they haven't yet to they haven't yet done that and you've heard sam saying like oh i like instagram ads and like he's starting to like be open to advertising and his comments which he used to not be. So I think they're still warming the culture up, actually, to this idea because it is going to be a shock to the culture that thought they were all building something

that was like the anti-metta. Yeah, Kyle, what do you think about that? Yeah, I mean, Alex is definitely the expert here. But I was at a conference that was around, you know, the future of work. And, you know, every conversation just coming back to AI and like what the AI companies are doing. And they're both like practitioners of AI, people who work at the labs, people who study and teach this stuff, like journalists who cover it. And I feel like everybody was like, why are they doing social media? And the whole takeaway was the money, right? The amount of money, as you know, that's been spent on building out these data centers is just astronomical. And they're turning more and more to credit financing for it. Like I think they're like 15% of the investment grade market. And so, you know, that's when it gets really spooky. Like it's okay to cover things with cash. But when you start taking out, that to do it, like you better have some sort of plan. And so I think for them, they're probably like watching all of this, seeing how the market has ramped up and realizing that they have to have some sort of solution.

But what Alex said, it takes a lot of time. And I don't know how much time they have. I think that's the question that everybody's trying to figure out, like how fast could this bubble pop? Is it a bubble at all? And yeah, I guess we'll find out. It's definitely a bubble. Yeah. I mean, Sam has said it himself, like Sam Alman's.

said that. Did he say that you? Oh, yeah. He's just marketing. No, I mean, I mean, I was, they, all their execs did a Q&A that I was at on Monday at that day. And they were all like, we have no idea. I mean, I think they're being facetious, obviously, but I do think there is a genuine level of they don't know how to deal with the fact that anytime someone is like mentioned in the same

breath as them, their stock pops 20%. That's like a thing that they are trying to navigate that they did not foresee being that reactionary. I think they knew there was going to be this halo effect, but I think they are even surprised by the market fervor around this. And I think it scares them. I got a lot of, like, I just got a vibe of like the nervousness that they have about this being really real because they are potentially the bubble. And I think they're starting to realize that. I mean, Kyle, you make a good point that like how much time does Open AI themselves have? Because the latest figures, I believe, is like they have, what, $12 billion in revenue a year approximately?

Google makes that every two to three weeks, right? So like they're having to take on dead. They're having to raise more and more money to pay for these multi-billion trillion dollar deals with Oracle and AMD. How much longer can they keep doing that? And if the market's turn, whether it's through new tariff announcements from the Trump administration or whatever, is that just going to shorten that runway? I mean, they signed, I think the headline was they signed a trillion dollars in deals this year. So that's a huge gigantic number relative to their revenue, which, yeah, I think is around 12 billion, but to the point of tariffs, Joey Politano, who writes, I actually don't know how to pronounce his newsletter. It's like a Prisitas. It's a really great newsletter,

but he talks about how the tariff policy around computer products has actually been quite generous. So for the AI companies, they actually have a lot of support from the government to kind of go out, build out these data centers. They've been relatively protected from tariffs thus far. And so I think they're, they're insulated from some of the swings in fiscal policy that we've been seeing. And they're incentivized, like you said, just to not get in the way. I mean, there's some people that have called for regulations around like these AI, AI, AI video apps like SORA. It's like kind of, you know, freaky stuff. Like they can like really mess with boomers especially. There's probably not going to be any

regulations around that because like you said, no, the administration doesn't want to get in the way of anything that could slow down the AI store. because that that could cause the stock market to kind of lose its steam. Yeah, and I think, you know, the thesis I put forward in my recent piece, and Alex, I'm curious what you think about this, but is that the stock market is essentially providing a floor to the administration to make the decisions that they've been making, like whether or not you'd agree with the decisions. And so, like, it's giving them a lot of latitude.

Like, they wouldn't have the freedom, I think, to, like, shut down the government for as long as they've been shutting it down if the stock market was crashing. Like the stock market has been ignoring this element of reality and has only really been focused on the AI companies. And I think the administration has an incentive to allow and protect the AI investments to kind of keep that loop going. I'm curious why you think that's happening. Do you think it's because the AI companies are putting forward such insane growth projections and constantly increasing their growth projections? like Oracle, you know, was a great example the other week. Like the fact that there are companies for the first time that are worth hundreds of billions of dollars are going like,

oh, we're actually going to have an additional tens of billions in revenue. Like that has never happened in like the history of like the world. So is that why the market is ignoring all this is because like the companies are putting out these insane projections. Yeah. And like no other parts of the economy are moving, right? So like nearly 40% of US GDP this year, I think has come from. AI, it's like 75% of S&P 500 returns has been the AI companies. They hold a significant portion of the debt, like I said. And the only jobs that the US has been adding is in

healthcare. And so all of these other components of the economy are frozen in place, understandably, because of the situation with fiscal policy, like tariffs really freeze up a lot of industries. And so I think, yeah, like, investors are like, this is the only, there's a good piece in the F.T called the United States, or the United States is AI now. Like, it is just AI. And I think that's true. It's just AI. Based on what you're saying and also just kind of want to understand of how open AI thinks, if I was an investor and I'm not, the data point that I would be closely tracking is open AI's revenue run rate and chat GPT's growth rate. Because if that decelerates or even reverses at all, I think it's a massive correction. Because Allman has even said, I mean, I think

it was with Ben Thompson at Stratory. He was like, how are you going to pay for all this? And in a more direct way than I've heard him say it before, he was like, well, check our revenue, which is like, duh, but like, it was good to just hear him say it because it's like, where's the money going to come from? And a thing that I've noticed is that Chachee-T is getting fairly saturated in the markets where it can monetize the best. And like in India, which is, I think, rapidly approaching, its largest market, they're actually cutting the subscription cost aggressively because you can't scale a 20-a-month subscription in India to hundreds of millions of people. So the margin profile on the business is looking really worse, actually, the bigger the platform gets until they turn on

ads. So they're in a race to turn on ads in that sense because the bigger they get, they get, the less their revenue growth rate continues. And there's other inputs. There's other inputs there, like they have the developer platform, the API business, which I think they're going to push very hard on in the coming months to make up for chat GPT revenue decelerating. But that's a big thing. I do think there's other just wildcards like up the sleeve that we may not see coming to. Like, I think they could theoretically start charging companies thousands of dollars for a single prompt, potentially millions of dollars for a single prompt is actually what Altman was talking

with me about a few days ago because if the reasoning models get as a single prompt, advance continue getting as advanced as they are and they can really get inside a business. I think they're excited about putting like an entire data center to use on one problem. Are they going to have the pricing power to do that though? I mean, they have anthropic. If the outcome is good enough, right? If the outcome is like solving a fundamental applied like material science problem, yes. But again, this is all so theoretical.

It sounds like sci-fi, right? So like the wild cards that are like, oh, they pay for this is like something out of like a Netflix show. And then what was practically happening is that chat CPT is getting saturated. It's getting a lot of competition from Gemini and from all the other chatbots. And it's, its margin profile on the subscription is getting worse as it scales. And so they're in a really tough spot. I mean, they have to execute. I interviewed Greg Brockman, the co-founder who runs Stargate a few days ago. And he was like, yeah, we know. We know that it's on us to execute it. We feel the, we feel the pressure there because now you have to go and actually like,

put the shovels into the ground and connect the racks and set these data centers up and do it at record speed. And they've never done that before. You know, they're starting this all from scratch as a company to be their own hyperscaler. So I would be chat. I would be track. Yeah. I mean, I would be tracking ChatsbyT and I would be tracking the build out of these data centers pretty closely. Local news is in decline across Canada. And this is bad news for all of us. With less local news, noise, rumors, and misinformation fill the void. And it gets harder to to separate truth from fiction. That's why CBC News is putting more journalists

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quarterly reports, so now it's going to be up to reporters like, you have. and other people that can get the scoop to figure out what the actual story is inside these companies. And if it's legit, you know, that's, it's all going to depend on that. Otherwise, we're not going to get the real information. Have faith. Have faith. I think they have a lot of investors and there are pretty leaky ships. So I think, I think their revenue numbers will continue getting leaked.

That's a good point. Kyle, you know, something that what I liked about in your piece was that you talked about how gold is also going up at the same time where, like, you know, Open AI is worth 500 billion and, you know, NNVIDIA is at 4.5 trillion. Those two assets don't typically go together at the same time. Usually you either have risk on assets like tech companies and you have gold go the opposite direction, but now they're going up at the same time.

Is gold just to hedge against AI slop? Is that what that is? I mean, I think people have different views on it. You know, there's like a world outside of the United States, right? And so I think some people are looking at, the available options for investing and saying like, you know, it used to be that the U.S. was kind of the safest place to park your money. And it doesn't seem like that anymore. Like China has really tried to establish themselves as the custodian of gold reserves and are, you know, pushing that to people as a way to, you know, implicitly de-dollar eyes.

And so the most interesting take I saw in it was somebody who went on the odd-bless podcast with Bloomberg. and he was essentially like tech is ripping apart society so it's a good investment but then also like people are buying gold as a hedge against that destruction and so it creates a rather complete portfolio in that way but yeah I think people are seeing you know a lot of the concerns with how the Trump administration is running policy again whether or not you disagree with it it is quite volatile and sort of looking for an alternative I think a lot of investors are pretty spooked about the run-up that we've seen in the S&P and whether or not that's sustainable. Like, you know, the question that we asked a little bit earlier is all of this. A bubble. I think literally everybody who invest is asking that at this point. And so I think people are saying, like, gold is a good thing. It's the best performing asset this year, which is a very, very strange environment.

Yeah. I think, you know, I was thinking about this as well, like the fact that they're both going up at the same time. I think there's a chance that we have a 20% drawdown in the S&P, than before we have a 20% drawdown in gold, just the way that things are going right now. Didn't Jamie Diamond say like 30% drawdown risk or something? Is that what he said? But he'd say that every year, though.

He says that literally every year. He's a banker. He has to be worried about the economy every year. I'm curious to get y'all's take, though, on, we're in the middle of the froth right now. Everyone says that it's a bubble. How big does it get? So if I was to say,

does Open AI get to a trillion-dollar valuation as a private company, Um, yes or no, just curious that y'all's take. They're currently at 500 billion. As a private company as a private company as a private company. I would put the odds at like 40% as a private company. Kyle what do you think? Yeah.

I really know that. If I was to say over under open AI becomes a publicly traded company before 20, uh, over under 2028. Do you guys take the over or under? over just because if they don't that's the bubble they have to they have to they have to have the liquidity they have to they're going to be before 2028 right yes yes sorry so yeah like like they can't they can't continue raising at the scale they're at as a nonprofit and um the markets it's just like Like it's too pent up.

So I do think they have to for many reasons. And I think they're worried about it for reasons beyond the nonprofit. They have to like clean up their act a little bit internally, I think. But yeah, I think they need to. They need to fund this to fund the Stargate stuff. And they know that. Yeah, $500 billion, right? Allocated to Stargate.

At least. Yeah. Do you think that's viable? like that project. I mean, in some form, yeah, like they are going to build data centers. They already are in Albaleen and they'll build more. Is it going to be a thing that they actually spend 600 or 500 billion plus on and build? Allman has a goal of like 250 gigawatts and like about like 2030 or something or 235.

It's like that stuff, no. It's like Jeff Bezos said something recently about like, oh, we're just going to send data centers into space and that's how we're going to like keep building data centers and it's like yeah if you're going to actually do 250 gigawatts like yeah like I'll believe it when I see rockets like with data centers going into space so maybe if that happens the power the power is going to be the biggest constraint moving forward it's not even going to be chips if we want to live in the matrix and like be plugged into like tubes underground then sure but I don't think anyone wants that what do you guys think Jensen was how do you think Jensen reacted on

Monday morning when he saw that Sam Altman did this deal with AMD you think I saw I saw reaction partially on CNBC. He was so catty about it. Yeah. Like understandably. Yeah. So he probably had no idea that Sam He said he didn't know.

Oh, he said that. He said he didn't know. Yeah. Yeah, I mean, they used, I mean, yeah, I'm sure he doesn't love it, but AMD is giving away up to 10% of the company in exchange for selling GPUs. So he doesn't have to do that. So he was kind of, you know, being catty about that, which makes sense. I think he's in a much better position. But, you know, it's, I think Open Eye is going to get the compute anywhere they can.

And it's interesting also that, like, Microsoft is not mentioned at all. You know, Microsoft does not mention at all at their conference this week in any of these recent headlines. Their initial hyperscaler, right, that owns a huge chunk of the company. It's totally absent from these current data center discussions. I think that's pretty telling. I think there's been, I think there's definitely beef. there. I think we got time for one last question. I'm curious. Have you guys tried some of, have you guys tried the SORA app and the Vives app? Alex, I know you cover social media for a long

time. What was your take on it? And then, Kyle, I want to get your take as well. Yeah. Yeah, I've been making SORA videos. I played with Vives a little bit. It wasn't really for me. Sora feels like AI Vine. That was like my initial reaction to it. It was like it really reminded me a vine in terms of how fun and lighthearted it was and goofy it was. So I like that approach. I like the mixing real people with artificial. It's better than just pure artificial for me. But it's a very buggy app, you know, and it's still invited only.

I think they have a lot of work to do on it. But I like it. Yeah, it's like a thumbs up for me. Kyle did you try it? I'm a little grouchy about it. Yeah. I think I'm just grouchy about everything. I just like the IP stuff is crazy.

They're like you have to opt out. that's not a good thing to do to people. And as somebody who, you know, my face is out there on the social media apps, I don't particularly enjoy, I think, the direction that it's all headed. And I think meta really, really just disrespects their user with vibes. And it's just, I mean, it's a very Zuckerberg type thing. He knows it's going to make money. But I think there's better things that we could do with all the resources that we're

allocating to this stuff. Vibes is so bad, right? Like, I saw the vibes thing and I'm like, what? This is the definition of AI. I can get on board with the SORA thing because it's fun. I shared a bunch of videos with my friends making goofy videos. Vibes is like I'm watching a screensaver. Like what is this?

All the billions of dollars in compute going towards making 3D, you know, 40 screen savers. Like I just don't understand the direction that they're going here. It's a very Zuckerberg type of direction. Yeah, I think everyone is kind of like moving in the dark here and like figuring out what actually is going to work. And I think Open AI's first stab was clearly more culturally resonant. But I do expect this space of synthetic social media to evolve very quickly and to become much more prominent across all our feeds, whether we want it to or not. Awesome. Well, I appreciate you guys hopping on today.

Two legends in the space. Thank you so much for y'all's takes. And hopefully we get to do this again soon. I had a good time. Yeah, thanks for having us. Yeah, subscribe to Sources.com. Sources. and subscribe to Kyla.

Access podcast. Yeah. Access podcast for Alex, sources for Alex. And then Kyla on Instagram, substack. I mean, she's everywhere. So it's hard not to see Kyla's stuff. Thank you guys. Thanks, Sid.

Well, all right, guys. Hope you enjoyed that conversation with Kyla and Alex. I was really happy that both of them came on at the same time. It was just great hearing each of their perspectives on where we are in the AI space. I want to give a shout out to Alex's new newsletter one more time. It's called Sources. You can find it at. Sources. News and we'll also put a link in the description as well.

Alex also co-host a podcast called Access, where they recently interviewed Mark Zuckerberg. And for Kyla, you can follow her stuff on Instagram and Substack. Let me know in the comments on Spotify and YouTube on what you guys thought about this episode. What were some of the takes that you guys agreed with or really disagreed with? And if this is your first time listening to the rundown, just a reminder, we post a new 10-minute episode every day breaking down the markets. So make sure you guys are subscribed to the podcast. to stay in the loop. Thank you guys again for listening, watching, and commenting. Shout out to

Mike and Connor for all the work behind the scenes. And we'll see you guys back here on Monday. Rosen lasagna, medium power, 15 minutes. Sounds like Ojo time. Let's play. Feel the fun with Play-Ojo. The online casino with all the latest slot and live casino games. What you win is yours to keep with no wagering requirements, instant payouts, and no minimum withdraw. Hey, I just won. Woohoo. Feel the fun. Honey, forget about the lasagna.

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