This Week in Startups - Big Tech earnings breakdown w/TechCrunch's Alex Wilhelm | E1731

Episode Date: April 28, 2023

TechCrunch's Alex Wilhelm joins Jason to break down the big tech's Q1 earning reports (0:53). They discuss Google's culture of entitlement, Microsoft's AI momentum, Meta's year of efficiency, how Amazon may be in for a few quarters of pain, and Snap's double-digit drop (21:11). (0:00) Nick kicks off the show (0:53) TechCrunch's Alex Wilhelm joins Jason (1:23) Reflecting on SVB contagion  (3:48) First Republic Bank and BuzzFeed's stock  (6:16) Uber's profits (8:23) Embroker - Use code TWIST to get an extra 10% off insurance at https://Embroker.com/twist (9:56) The SF boom/bust (14:52) More on BuzzFeed (19:41) Miro - Sign up for a free account at https://miro.com/startups (21:11) Google's earnings (25:28) Google's culture of entitlement (31:40) Integrating ChatGPT into your workflow (35:47) AI innovation in hospitality (38:12) Crowdbotics - Get a free scoping session for your next big app idea at http://crowdbotics.com/twist (39:23) Microsoft's earnings (43:19) Meta earnings (54:29) Amazon's earnings (1:04:08) Snap's earnings  (1:11:34) Thoughts on TikTok FOLLOW Alex: https://twitter.com/alex FOLLOW Jason: https://linktr.ee/calacanis Subscribe to our YouTube to watch all full episodes: https://www.youtube.com/channel/UCkkhmBWfS7pILYIk0izkc3A?sub_confirmation=1 FOUNDERS! Subscribe to the Founder University podcast: https://podcasts.apple.com/au/podcast/founder-university/id1648407190

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slash startups. That's M-I-R-O-com slash startups. And crowdbotics, great ideas can change the world. And crowdbotics is the fastest way to turn those ideas into code. Get a free scoping session for your next big app idea at crowdbotics.com slash twist. All right, everybody, it's Friday. It's this week in startups. And Alex Wilhelm is with us. He's the editor-in-chief of TechCrunch Plus go sign up and subscribe for that. and Alex has been on the show dozens of times and he knows tech and you're like a classic journalist you don't get involved in

too many you know superfluous social whatever cultural issues you like to talk about the business and the tech yeah to a degree I do think I'm recently castigated because I I popped off a little bit during Silicon Valley Bank and do you have it just hit the zeitgeist at the wrong time with the wrong people in the wrong way, I took

rhetorical for both of us, but like I got more flack in like 30 minutes about my SVB take than I got in two years. And I was like, oh, this is why I mostly talked to my friends. Right. Yeah. No, it's, what was your take on the SVB situation? Okay. Don't, don't, don't, I've already been, I paid penance for this. So don't shout at me. But I was like, no, bail out the rich before the FDIC announced that they were going to make the deposit. But what I didn't realize was how stream the effects were going to go, et cetera, et cetera. So I learned, but people took it as like, oh, the media hates us. You know, they're all communists.

And I was like, I'm sorry. I apologize for my seven word tweet. Well, I mean, this was a subtle issue because I agree with the sentiment of don't bail out the rich, people who are placing bets. I don't feel like United Airlines management should get bailed out or I should get bailed out as a venture capitalist. I'm generally anti- bailout. But yeah, when you look past, and I didn't know the extent that Silicon Valley Bank was used by my kids' school.

The public school in my district is a Silicon Valley Bank customer, and they were not going to be able to pay the teachers. Right. This was not, you know, the name of the bank played big into this. And then the good news is the management and the equity shareholders, not the good news. The fair news, the equitable news, was that they did not. get bailed out. And all we did was enforce FDIC, but I too, you know, I took the opposite side of it, which was like, holy cow, what I'm seeing from the inside as a venture capitalist now who does random acts of journalism, it's supposed to a journalist who covered venture capital. Yeah.

I watched the bank run for Silicon Valley Bank occur in my feed, email, phone calls. And at the same time, people were moving it to Silicon, Silicon Valley Bank to First Republic. I was about to say. The First Republic people were moving out of First Republic and putting it into Bank of America or J.B. Morgan. And I'm like, wait a second. Bank runs can cause other bank runs. And then I was like, wait, I think there's a word for this. I think there's a word for this. It might start with a C.O. Contagion.

Yeah. Contagion. Yeah. Well, okay, look, if we're going to bring up First Republic, before we get into this earning stuff, did you see what happened to their stock today? First Republic? We got demolished another 30% or something? I mean, it's over.

Yeah. It's over. Okay, good. That was my question. My view is that this goose is cooked, but I wanted to make sure I wasn't being too pessimistic or negative. You know, it's down 40%. It's got a market cap now of $685 million. 52 week high was 171, and it's trading at $3.67.

So, you know, like Silicon Valley Bank, an incredible brand with incredible people who work there. Yeah. And this, like, really custom banking where you can get somebody on the phone as opposed to cookie cutter banking at the big four or five, it really does serve a place in the world. And not just for rich people. This mom and bank, mom and pop stores, main street stores, they get to have a banker and they get to get a line of credit, all the stuff. So we've got a serious problem.

And I hope somebody buys this asset and maintains it. I mean, imagine if, I don't know, what's a big tech company that wants to be in banking? Oh, Apple. Apple, yeah. Apple, yeah, Apple. Yeah, I was about to say Google, Google, wallet, Apple will be number one. Yeah. Yeah.

You know, Microsoft not so much. now that I think about it. But Google for sure. For sure. Yeah. Amazon probably would take a swing. So if we're spitball in here, an Amazon First Republic takeover, it would cost them, what, like 12 minutes of revenue?

Look, I mean, First Republic is now worth like two BuzzVeeds. That's bad. Your bank should never be worth a low multiple of BuzzFeed stock, right? I mean, it's been a while since you and have caught up, but I mean, the BuzzFeed situation is bonkers. they were making $200 million a year and I think their stock was trading at less

than their revenue. Oh yeah, their revenue multiple went below one if I recall correctly. And by the way, did you know that Lyfts Revenue Multiple is also below one now?

I did not know that. I just saw that. I think 0.9 last time I checked or something like that. I think Uber is 1.8. But like those businesses have also been repriced pretty extensively.

Yeah, it's, if you refuse to show profits and you know, you just go for the growth number, which was rewarded in the SERP. In the zero interest rate market, it was rewarded. I can tell you, Dar is having a hell of a time turning around a battleship and saying, oh, we're supposed to go in the other direction.

It's like battleship aircraft carriers do not turn. They're not like speedboats. It takes a little time to turn them around. I'm just in awe that Uber isn't more profitable. And I know it's a complex business with a lot of tech that goes into it. There's insurance questions. and markets and support. And there's lots of things.

But like, when I use Uber Eats, I am paying markup, fees, delivery fee, and tipping. I am paying like 3x with the food costs. And you think it would just rain money down from the sky. Right. Well, it turns out human beings in America doing service jobs went from a $7.8 minimum wage to a, you know,

to a $15 minimum wage in some cities. And then in order to compete for them, you kind of got to hit $25 to $35. or Americans are just not going to do those jobs. You close the borders. We have no immigration. We've got nine million job opening. So as weird as this whole economy is.

But you know, the good news is I think if you look at Facebook doing the layoffs, getting rid of management, redundancies, there is a path to have your stock recover. And my understanding is that Uber is taking all that very seriously. And I think you're going to see the free cash flow. I think they are reporting in the first week in May, like so that maybe next few. feels right. Yeah, they're going to, I think they're going to surprise some people. People are, because what I always knew, having been an early investor, unless I don't have inside information now, was nobody would change their behavior, maybe like the bottom one or two percent, if you raise the price of a ride by a dollar.

Right. And nobody changes their behavior. So I think now that they're, I don't want to say a monopoly, but a doopoly with DoorDash and a, you know, almost a monopoly with Lyft suffering. I think they're going to start printing money. That's my hope. I'm still a large shareholder. I'm talking about it. Yeah, no. I mean, look, as someone who has depended on Uber and a Lyft for, it's been so long now. I was in college when Uber rolled out in Chicago.

And I actually got to go to their like Chicago launch party when they were just black cars. Like that's my, my history with the company. I have given them so much money over the years. Yeah. I would like them to persist because I still depend on them, you know? So I'm here for that. Listen, we work with super early stage companies at my investment firm launch. You know, pre-Series A, maybe you got a couple of thousand dollars a month in revenue.

You've raised a couple of hundred thousand dollars, maybe a million dollars, right? It's the early days, year one or two of a startup. And I'll be honest, a lot of times startups, they don't have their insurance. They haven't set that up yet. They haven't set up their accounting properly. They're getting things cleaned up. In fact, I was recently had a great startup, but they didn't have D&O insurance. That basically protects your directors and officers.

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dot com slash twist. On the cost front, though, that's going to kind of bring us into earnings because I feel like everyone's trying to show off operating leverage these days, which is such a weird thing to discuss because two years ago, you and I were talking about literally anything else. Right. What are your new initiatives? Tell me about yourself driving unit. What about VTOLs?

What can you add to this party in this mix? And now it's like, what can we take away? How focus can we get? And, you know, people were hiring and buying office space two years ahead. of plan. That's what I think their best practice was. So if you're Facebook,

Microsoft, Uber, whoever, Twitter, you're like, okay, what am I going to need? Imagine saying today, how many people and how much office space do I need in 2025?

Let's buy it now. I mean, just encourage, we'll just grow into it. It's hilarious. I feel like you can't have more of a flip on that. I mean,

when I was at CrunchBase, we were expanding and we were in like one floor of our building, then two floors of our building, and then it was like two and a half floors of our building.

And we were counting down until someone else left the other half of our floors we can move. That company is now fully remote. And that office space is either empty or occupied, I think, by someone else. It's pretty wild. I was in San Francisco on Monday. I had our accelerator come back in person for the first and the last weeks. Hey, is a really great feeling. And then this Founder University program, which kind of comes before an accelerator,

where we put 25K into companies that are just like haven't even incorporated yet. I had a hundred of them. And I was at Fenwick's office for one. one and Wilson Sincinnis for the other. They're nice enough to host us and put out a nice spread. And walking between the two, Phi Dye to Embarcadero, I mean, Alex, compared to what we saw just three years ago, it was like being in a dystopian sci-fi film where you're like, oh, I am the last person.

It was like a Twilight Zone episode. Like, remember the Twilight Zone, my favorite Twilight Zone episode is the one where, uh, time, I think it's called, where the guy is in the library and he wants to read books. He's got really thick Coke bottle glasses. Uh-huh. And he goes into the vault with like all the great old books. Uh-huh. And the vault closes and he gets locked in for 24 hours.

When he comes out... This is a... This sounds great. This is amazing. I'm not going to tell you anything after this. Okay. Because that happens in the first 30 seconds. When he gets out of the locker, because it's a time 24-hour locker, he has been reading books all night.

His dream is to just not have to talk to people in the library, but just actually read the books. He comes out in the world. world's change. I'll just leave it at that. Oh, okay. I can guess, but don't threaten me with a good time. Put me in a vault. 24 hours are just books? Dude, that sounds amazing. It's, that's what's just so great about this episode. I cannot wait to talk to you about this episode. And yeah, for folks asking about Uber May 2nd, but it's, um, your, that office is not being counted in the 30% of offices in San Francisco that are vacant. Yeah. So now you start to put in the shadow vacant. It's probably 40.

It might be 50%. I mean, I don't know how they ever recover. A rebuttal to this because I have a big soft spot in my heart for San Francisco. I lived there for 8, 9 years. Amazing city. Amazing city. I'm a West Coast boy originally.

This is in my DNA. And because both my sisters went to Stanford, I've been bopping around the Bay Area since I was like 8. And I just love it. People, I think, forget that SF is and always has been a boom town. And it will be. boom again and then it will bust again. And we are currently in the trough of

of pain. And I fully respect that there's work to be done. Let's not get into politics on that. But like, I think SF will once again have its moment. It wasn't cool 10 years ago, or 15 now. 15. I am. And I'm sure in 10, it'll be cool again. I do think it's a boombust

cycle. I did see it.com, web 2 now. It does go through these things. It's not the first time that it got hollowed out. But, you know, it got built up too. And so it got built up and then hollowed out. And then the remote work thing combined with the safety issues. And again, not to get political, putting it all aside, you used to be able to sell somebody who was, you know, had a family who's a CFO, let's say. Oh, you want to be the CFO of Uber,

Airbnb. Oh, you want to be the senior CTO. You got a family. Oh, great. Bring your family to San Francisco. Let me show you, Dolores Park. Let me show you the, let me show you Pack Heights. Let me take it a Presidio. I mean, it's gorgeous. Somebody take it to Tahoe. We'll go to wine country. And you could sell it. Yeah. And it's a hard sell now. And you had to sell it against, hey, it's expensive. But it's, delightful. I mean, when San Francisco is on, it's on. It's just stunning and beautiful. Yes. To be able to go to Tahoe for the weekend and ski or to go to Napa for the weekend and drink wine or to go south to Santa Cruz and surf. I mean, it is extraordinary. Which is what makes it heartbreaking. I'm really rooting for it to turn around.

BuzzFeed, 55 cents. Yeah. What's the market cap? I mean, I'm almost shocked to say it out loud. $76 million. Oh, I'm so sorry. First of all right. First of all right is 8X, the BuzzFeed market cap. My mistake. I mean, it's, it literally reminds me of the dot-com era where cash on, cash on the books became greater than, yeah, the valuation. So you could basically fire everybody, turn the website off and make a profit. Yes.

Now, there are control issues because my understanding is Jonah Peretti controls, I think, some amount of BuzzFeed. But how is the news in the media business with the BuzzFeed news shutting down? Because that was a pretty elite group, was it not? Super elite. In fact, I actually used to pay BuzzFeed news. They had some sort of like, give us $5 a month. You don't get anything for it, but you can give us money.

And I always said, sure, I'll support the team. to me, it had already been sufficiently desiccated by layoffs and exits that when they finally stomped on the last bit of it, it wasn't the biggest shock. I think it was kind of sad to see the end of an era because the hope was there's a company, does all the silly stuff, it makes money, and you spend it on news, huzzah, what a cool model isn't that great. And it turns out it wasn't. BuzzFeed, though, I don't have a lot of emotional connection to the non-news side of it. but I will say that it feels like a relic from a different era. It does. It feels like Yahoo.

Suddenly it feels like not even Huffington Post or, you know, AOL or something. It's kind of. Given that I currently work for some combination of the course of AOL fused into Yahoo. I take that personally. Well, I mean, the thing I will say,

you know, I'm friends with Jim Lanzone, it is incredible Yahoo staying power. So Yahoo finance, Yahoo Sports, like some of these services, and they actually read-in mail are pretty fantastic. So I would actually take the Yahoo back,

but I would leave the A, the AOL and the you know, some of those other assets that just feel like they're just on cruise control, whatever. Well,

we're on the podcast and we both have to behave. Tell me about Jim Lanzone because I've, I've slacked with them once because all I got. You know, Jim Rancenet, and he is a great steward of brands.

And he can manage the two, you know, when you run a publishing brand, a house of brands, if you will, like Kondaynest or like Yahoo Today with TechCrunch and other assets. I think they still own Engadget, my own brand.

You know, you have to be able to balance what the advertising and corporate folks want to do to destroy brands and compromise them. And what the editorial group wants to do to make them excellent. And, you know, there are some people who can take that tension, extracting value from a brand, you know, making it hum and then, you know, not destroying it. And what most people, what happens to most people who are in those positions is they're, they're just like shutting things down. They don't appreciate the fact that, you know, the Engadget reader is different than the TechCrunch reader, is different than the Yahoo, you know, finance folks, even

though finance overlaps with this is a different audience. And the brands mean something to those audiences. Yes. He understands that the brands mean something to the audience. And it's okay if they overlap. you know, like what the overlap between Engadgett and TechCrunch is always going to be 20%. And what somebody running the Huffington Post might do,

some mid-level manager, Wank might be like, oh, and they did this. They took joystick, this incredible video game site that we had created, and they're like, we'll make it Huffington Post gaming. And it'll just be HuffPost slash gaming. And it's like, oh my God, that's death to the serious gamers who have been with this brand for two decades. And I think Jim Lanzone understands brands

and how to be a good story. of brands for the people who love them and the advertisers who love them. But it's consolidation is how typical MBAs minds work. And they think efficiency and consolidation and who can we fire and what can we cut. And it would be like saying, you know what, you're directing this Marvel movie, you might as well grow go in there because he's popular. and you're like, I'm sorry, what? Yeah, yeah.

Yeah, Grogu, you know, from Mandalorania. He'd be great. Why don't we make him one of the X-Men? I knew that was a Star Wars reference. I wasn't sure what it was referring to. It's like, I'm going to make Yoda part of the X-Men. And you're like, what? Okay, but there hasn't been some great crossovers in comic book history.

So like, you know. Great. That's great for a one-off gimmick thing over the summer when we're kids. It's not good for the long-term, you know, health of the brand. So he's got to be careful. Yeah. There is nothing like a good whiteboarding session. Don't I know it?

Man, when you're there, brainstorming ideas, collaborating, and you get those vibes that everybody's dialed in and you get your best ideas, you're putting your best foot forward. Well, it's hard to do, right? You've got people spread all over the planet. We all work remote now. We'll, Miro, Miro is a great tool for you to take your idea from inside your head and get it out there to the rest of the world. You think, Miro, I want you to think zero to one.

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That's iconic. Faster inputs equals faster outcomes and velocity is how startup wins. You all know that. So go to sign up for Miro right now. For free, Miro.com slash startups. M-I-R-O-com slash startups to sign up for free. Earnings. Great to catch up.

Yeah, I've missed you. But let's talk earnings. So we're going to start with Google. And I just want to say that Google Cloud, after many years of losing money, demonstrated operating profit in the last quarter, ring the buzzer, give them 10 points. That's fantastic. I'm sure that Ruth Porat, the CFO over there, has been looking through the numbers to make that all work out. I presume there was probably some trimming here and there.

But what really took my mind here when I read this earnings report was that revenue was actually up just 3% year over year. And that's a really small number and it's very close to zero. It's, which is stunning. If you'd think about this collection of stocks, could we really call them like high-growth stocks anymore? You know, when you get to single digits, they're not high-growth stocks. But what is great is that in an advertising recession down market,

there's some profits, right? Because Facebook hit some down quarters and meta, Facebook Facebook calls it. Same diff. Everyone knows what you mean. Yeah. And so I do think the fact that they cut those 12,000 employees and they told everybody, hey,

a little bit back to the office, a little more focus. It's not enough. They haven't gone full Zuckerberg, but Sundar doesn't have that ability because he's not the founder. And he's got a, he's a consensus builder. And so I think the the act of them getting their act together and cutting costs and getting earnings up

you know a non-founder has a harder time with that because they just can't come in and say here's what we're doing they have to build consensus amongst leaders of groups you saw Susan Wojekki left YouTube you got the deep mind people you know it's all these different fiefdoms little kingdoms and so it's just going to be hard for them to make change I don't think they're going to fall as far behind on the AI stuff as people think I think they're just more thoughtful about releasing stuff because they're Google, because they have antitrust issues, because they have a monopoly.

So they just got to be careful, you know, scaring people. That's my understanding. It's like they just don't want to scare people at how good this stuff is. But now that cat's out of the bag and Microsoft's going for it, you'll see more coming out. And it is important for them if they're going to be third to Azure and AWS to make it a sustainable business. I think that's, we talked about this early on the top of the show, and just everybody's trying to make these businesses sustainable. Yeah.

And they got too many employees at these companies. So I would expect them to cut more people to hit the numbers and get this to be a growth story, get the stock to move. So 190,000 employees, I think that number was inclusive of employees they've cut, right? So you're coming up on 200,000 employees and you want to streamline operations and make things move faster. Is that a thing you can do? Is that like, is there a corporate story where, a company that's this rich and then that large and human kind of capital has managed to

actually become more agile because poor companies can just cut tons of stuff because they're out of money. Google is still incredibly wealthy. And so I wonder if there's like a natural inertia to just being that rich and that makes it harder to actually make the hard choices to get faster. When you're sitting on, ungodly amounts of billions of dollars, tens of billions or in Apple's case is hundreds of billions of dollars, it's kind of hard.

And when Sundar's taken down whatever tens of millions of dollars in stock, hundreds of millions of dollars, yeah, it's a hard message to say, we need to get rid of this entire group. We need to lay these people off. And did you see the TikTok reaction when Google made these? I mean,

just every person who six months ago was making, here's my day at the Google office in New York, and I'm getting a macho latte with soy, and then I went and I got a back rub, and then I did yoga, and then I did some email, and then I went home. And you're like, I think it did more non-work than work.

Yes. But okay, sure, maybe I'm just an old Gen Xer who like to grind. So yeah, there is communication issues. I'll be honest, none of these companies because of their cash positions, it's a really interesting point you kind of alluded to there. None of them had to make any of these cuts. So then you say, hey, why are they making the cuts? These are sacrificial cuts.

These are motivational cuts. These are entitlement cuts. Great irony of irony. Google created Entitlement culture. They were like, let us do your laundry. There's a coffee bar on your floor. And guess what? There's going to be a coffee bar on the other side of the floor so you can walk half as far.

And yeah, we upgraded the beans to Blue Bottle because Facebook has fills. I mean, entitlement culture was bonkers at the peak. We lived adherence in the Bay Area. You lived it. You saw it. It was nuts. It was great. It was awesome.

Until all the Dill went away. Well, and I think. people and I don't blame employees for when somebody says, well, do your dry cleaning for saying, okay. I mean, just to say okay when somebody offers you something is nothing wrong with that. But I think they want to scare employees into performance, perhaps back to the office eventually, and it is a power play. I think it is as much about getting people to perform as it is about getting the bottom line.

So removing M&Ms or whatever sacrificial, you know, services go away, massages, whatever, that's good. Getting some costs out is good. But I think it's really just to motivate people to work harder and to maybe take back power. Because the power dynamic was flipped. Power dynamic was flipped. But I don't think it actually ended up landing in the hands of like the individual Googler. I think it ended up just so diffuse through the middle management setup. that the company didn't realize how sticky it became to make decisions and do things.

And it's reasonable. If you have a ton of money and you have a big problem space and your competitors are rich, you do a lot of stuff, you know? I mean, Microsoft makes hardware still, you know, and Google tried Stadia. And Amazon, they had a halo brand they just shut down that was like wearables. Microsoft tried a wearable too. So these companies are always going to kind of, I think, expand outward. And there might be periods when they just rapidly contract to fix that.

But I don't think it stems the long-term problem, which is how do you run a business that's this big, this rich, and this essentially almost its own nation state without there just being inherent bloat? There's going to be bloat. There's always going to be bloat. I think it really is when the founders say, hey, we're going to ship this cadence. I'm building smaller groups who are building these elite projects. And you'll see it once in a while where they take a couple people out of the building. And they're like, this is the war room.

This is the group that's going to do Bard. and, you know, they've made some combinations of Google brain and deep mind. You start seeing people move to different buildings and being on like SWAT teams and, hey, we're going to release this product in 30 days. It can be done. Yeah. But, you know, there was a lot of distraction. I was, and I don't know if you were on the episode where we talked about it, but I was like,

people are doing petitions at Apple. I'm like, can you imagine Steve Jobs coming to work one day? And people are like, oh, Mr. Jobs, there's a petition on your desk from 800 employees. He'd be like, oh, okay, great. Can I see that list? And then he's like, yeah, hold on a second. And he just looks down the list. He takes three names off of it.

I bring these three people to my office. And then the other 997, I just take this to HR and just fire them all. And turn off their badges. But that's not just the founder dynamic. That's also the fact that if you have a very firm perspective on where you think things are going, you don't have to listen as much to other people. But if you are, as you noted, a consensus person with founders over their shoulder and you don't have anything like a controlling stake at the company, like I'm sure Sundar is very wealthy. And shout out to him.

Well done. But like, I don't think he owns more than what, a point to the company. Oh, much less. Yeah. Yeah. Yeah. Yeah. And he doesn't have founder authority like you're saying.

He's got the founders in the border of his shoulder, and then he's got to try to keep really talented people in the game. But it's a profitable company. It's an ad-based company still largely. So Cloud's de minimis when compared to the ad business. It's moving up. Yeah, moving up. I mean, seven and a half billion in the first quarter, up 28% year over year.

It's now bigger than YouTube's ad business. And the only thing bigger than it is search. Now, you're right. Compared to the aggregate revenue portion, it's, you know, 12% whatever. But like, it's the only growth thing there. And as we're going to see from Microsoft in just a second, like that remains. The main is the story that the cloud is really pulling these majors forward. Like 3% growth at Google, 7% of Microsoft.

But what was the biggest and fastest growing thing? It was Azure, their public cloud. So it's the same story with Microsoft, although it does feel like there's a little bit more operational discipline, I would say, in Redmond than Mountain View. Just because they've been already through the founders are gone, new CEOs come in. And then they've already gone through the next stage of that, which is, okay, that didn't go as we planned. And so now we need to find the next essentially tech person to lead the thing, Saja in that case. And there is a vibe going through Silicon Valley after Twitter reduced their headcount by 80% or so. That was extreme.

But that sort of got Zuckerberg on board with, okay, I could go with 10% less. I could go with 20% less. And so now between Elon's 80%, you know, and Google's 6 and Zuckerberg's 15, there's some consensus of we can do more with less. And how much less with AI is going to be a big question? Because meeting developers who now are going faster, I was on a website and I've been playing with the plugins. I don't know how much you're doing chat GPT4, but I've been playing with the plugins.

And I'm like, hmm, this does feel like the bottom 30% of what I do. 30% of what I do could be automated in the next six months. Now, that doesn't mean I lose my job. It means I get back 30% of my time and I can deploy it somewhere else. So either way, there's a massive efficiency coming to America, to the world. And I think that is going to change the percentages, the single digit percentages we see here, those things could double through the combination of attrition of cost and efficiency of who remains. This is a double win that I think is on the horizon.

And I think this is what works us out of this recession. So I like nearly all of that, but I want to clarify a point on the, on the use of chat GPD, because one thing I think a lot about is GitHub copilot, which is the thing that helps you write code. And what I'm trying to figure out is, are we getting to the point where self-driving cars are today in terms of copilot because my, my Subaru can stay in the lane, it can tell me when it's slow-out and see it. It can't do interest-city stuff. Okay, fair enough. But it's still really great. So is co-pilot for GitHub going to be like my car or is it going to be like, self-driving autonomous vehicles pretty soon

and actually be able to do whole things for me or just assist. And if it's the whole thing, then, I mean, fire half the staff. But if it's just the help, then you're right. Thirty percent back. Everyone's more efficient. But it's not like a sea change. It's more of an acceleration. Yeah. So I think your analogy is correct.

We're at level two self-driving where you kind of take two functions away. So I have adaptive cruise control at seven car lengths, three-car lengths, like even my backup ice engine suburban that I have in case my Teslas are, you know, something against the fan and I need to get out of Dodge with gas because of zombie apocalypse. Sure.

That has, it doesn't have lane control, but it does have adaptive cruise control, right? And then you have on your Subaru both. So highway, you're good, you know, like the chance of getting an accident on a highway, if everybody had that is pretty low and does give you back. It's just less arduous to drive, right? That's what I find is I'm less exhausted after a two or three hour drive to Tahoe. I do think your analogy is correct except on the low end tasks it does 100%.

So I'm trying to think of the right analogy. Highway driving versus city driving, sure. But there's a lot of like items of research that we do as journalists or, you know, I was doing a research of LPs because I'm having my angel summit up in Napa. And I was like, you know,

I'm going to invite some of the big endowments whatever, see if anybody wants to come. And, you know, I asked it for the large endowments. Then I put it in a table. Then I said, sort it. And I was like, this is something I'd pay somebody $35 an hour to do. I might use Crest Space for. So I'm paying a subscription.

And it's just kind of doing it. And then I, I'm playing with the playground on Open API. And I'm like, okay, give me the people at the Ford Foundation. I want the Twitter handles. And then I'm like, you know what I really want to do is I want to follow them on Twitter. And then I want to follow them on LinkedIn. I want to like a post or I want to DM them or email them. Now, I can't do those last two or three.

things, and that would be the left-hand turn into an intersection. Right. But I had 17 developers show me they did it in an hour when I said, this is the next piece I need to do. They're like, I wrote the code for you already. It's like it took me an hour. So I, this weekend, I'm going to start playing with some of the dev sandboxes. And I haven't done development since Basic and Pascal and, you know, the 90s.

And so, you know, I do think it's going to go faster than self-driving is my long answer to your short question. really hope you're right. But here's the problem that I see. When I look at all the stuff Microsoft is doing, they are doing co-pilot for X. They're building AI into exchange or into dynamic CRM or whatever. I don't, cool. Fine. That's great. Thank you. But what I want is a new separate program that is at the OS level that can interact with everything for me and that I can give increasing complexity commands to. I wanted to say, go to my email, pull 10 names, drop those into a Google sheet, send that to Bob,

and then I want you to grab me 10 stock prices, print them out or whatever. You know, I just, I want, I want Siri, but amazing. And I want to have these, these functions that are now possible things to LLMs. And my vibe is if LLMs can write code, as they pretty much can,

and if they can take complex spoken assignments and figure out what to say next, why can't they write code and figure out what to do and say next in a way that we couldn't before, and then let them just do a lot. And so if, if this is a, it's, everyone is Friday,

I'm very tired. So like, that wasn't the best explanation what I'm trying to say. No, no, I think it's a great one, actually.

You're describing a workflow. And then you're describing, you don't want to have to stitch the workflow together. Yes. And make sure it works. You want to tell an AI what the workflow is and have it done. And, uh,

I am using plugins right now. I was able to get on plugins this week. Somebody at, uh, at, uh, at an open AI was nice enough to push me up the list. And I started using, Expedia and kayaks.

And I have a trip next week where I'm going down to Laguna and I'm speaking about AI in the hospitality space of all things. And it turns out like a lot of the first things are hospitality things, open table, kayak, Expedia. And I'm like, okay. So I start asking them,

can you please tell me what are the closest airports to Laguna? Because I know I can go to Long Beach, etc. And then give me a list of flights, sort them by length the flight and then distance to Laguna and it couldn't get that second piece

but I got the first piece and I was like okay it's almost there and then the next piece I would normally do if I was going to be there for a week was tell me the top rated restaurants on Yelp and then search the web and look for eater listings of the hot new restaurants give me a list of those

and tell me what the top three dishes that each place are and put them on a map it's going to be able to do that by the end of the year And then when I can do that voice, that's going to be, that's the thing. Because then I can be typing and also talking and I can get two things done at once. But back you're wondering about the hospitality section and a sector in AI. My first thought was, that's ridiculous. My second thought was, where are labor costs the highest percentage of COGS?

Probably hospitality. Yeah. So, of course, I'm going to go AI first. Yeah. So, I mean, that makes a lot of sense. A lot of that stuff is going to, we're going to see what we saw during COVID, I think. I don't know if you had this experience where a restaurant that had

couldn't get waiters and you're like, yeah, two for lunch, we don't have a reservation. And they're like, yeah, it's going to be half an hour. And you're like, but there's a third of the tables are open. And they go, yeah, we don't have enough servers or back of house staff to cook the food.

So if we see you, we're still not going to be able to serve you. And you're like, can I sit at the table in an hour? And you're just like, this is a very weird moment. And then they put toast or one of those systems in where they get rid of waiters. You order it yourself, you pay for it yourself, and they took two thirds of the, they just have runners now, right? Yeah, pretty much. That's all San Mateo right now.

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So cut out the hassle and get back to building that perfect product. When you think about CrowdBotics, I want you to think getting time back to focus on your product and customers, product drives everything. So let the folks at CrowdBOTics show you how it works. Schedule a free scoping session and get your detailed build plan at CrowdBOTX.com slash Twist. That's CrowdB-B-O-T-I-C-S-com slash Twist. I'm going to drag myself by the scruff of the neck back to the earnings thing and just say a couple quick things.

Azure growth, 26% in the next quarter, so pretty good, looking ahead. And Microsoft is already attributing 1% of Azure's growth, which is their public cloud,

to AI in the next quarter. And Jamin Ball, who used to be at Red Point and is now at Altimeter, I think. Anyways, he does a lot of really great analysis on tech stocks.

And he said, I think, that that 1% works out to like 450 million in revenue for Azure AI already as a run rate. That tracks. Yeah.

Yeah, so that's actual real, you know, nine figure dollars. That, I think, matters a lot. And then elsewhere in Microsoft, I'm not going to go through this all like LinkedIn and so forth, but Windows not so good, everything else, medium good, company made. It's Q3 net income, fiscal Q3, calendar Q1. Jason, $18.3 billion. That's cash in the bank. We got it.

We secured the bag. I mean, they could buy, you know. It's a billion and a half a week. It's $200 million. a day. It's amazing. I'm so poor. It's a money printing machine.

It's a money printing machine. Yeah. And they did layoffs too. And they're getting people back to the office. I do think that cloud is going to see significant gains because of AI, because every company I'm working with, to spend $1,000 extra. So you have a $150,000 developer. Sure.

And you spend. $1,000 on AI credits for that developer to be faster. So you spend 8% of their salary or something. But you make them twice as fast or 50% as fast. Like, this is a pretty good bargain. It's like paying for Grammarly for a writer. You know, and you're like, okay, grammarly is $10 a month and you're going to not make as many spelling errors.

I don't need to get a proofer for you. Great. So it's, I think we're... Oh. Yeah. I just had an idea. Jason, so you're describing essentially the ability for software to increase human productivity, and then you're looking into the cost of humans, and then kind of working

that back to the efficiency of software and how it's a good deal. This actually means that we could essentially tie the price of software to the cost of human labor, and as humans get more expensive, it becomes effectively more valuable, ergo you can charge more for it. So what we should do is raise the minimum wage to $100 an hour, and then every tech company will be worth $40 trillion. I figured about. Well, this is going to be the natural tension that occurs.

we're going to see, the concept of a 10x developer is changing. That developer who, you know, was Supergirl or Superman and they could fly. And the other superheroes were like Batman or the Flash. They can't exactly fly,

but they can do some cool stuff. Yeah. And it's like, okay, guess what? Everybody in the Justice League can not fly. And you're like, hmm, okay, that changes the dynamic. Well, people who were, you know, a 2x developer, not a 10x developer,

they're going to become 7x developers. and the 7x is going to become a 10. You're just going to have a lot more really fast developers, which means software is going to move at a faster pace, and it's all going to be deflationary. So software will get cheaper and talent will get cheaper. You could already see on the websites like Fiverr and stuff like that that people who scrape things like Crunchbase or Pitchbook or LinkedIn,

those jobs of like, hey, I can find you leads for a dollar, are now. I can find you 10 leads for a dollar. I can find you a lead for a penny. I can do a scraping job. I can do, and that's all because of AI and scripting. So it's just going to be continued deflationary impact until I think there'll be a choice of either redeploying those people's times or, you know, reducing headcount and reducing costs. And so you'll see a bit of both. Looking at meta, I think that's a, so anyway Microsoft crushed it again incredible job can I do my meta segue because I was thinking what happened when you were finishing your sentence I was going to do something like

you know what else is not driving efficiency the metaverse hey oh hey well you got to give him credit he's like I don't want to get disrupted so I'm going to do a crypto project and then he's like the world really doesn't want me to

control crypto after I screwed up elections and dozens of countries and created you know, you know, all kinds of psychological issues in young children and eating disorders.

So he pivots off of crypto. Remember that crypto project we're going to do? Libra, whatever it was going to be. Then he hasn't pivoted off of Oculus and Metaverse, but he certainly has not talked about it. And he's talking about AI a lot more in these earnings calls.

So he wants to win. I bought the stock at $94. The Monday after he said he was going to cut 10,000 people, it's the best trade I've made in a while. And his stock continues to go higher because they had negative revenue growth for three quarters. This made people believe that this was, okay, you're AOL. Right. This is the start of the slide down. You hit a peak and now we're going on the other side of the hill.

But he cut headcount significantly. I know there were 4,000 more layoffs recently, 11,000 were in 2022. But now the other part of the financial playbook, Alphabet, Google said they're going to buy back 70 billion. He says he's going to buy back 9 billion. And so all of that put together, I think has led people to believe that he wants to win. And he is nimble. So you look at Google, not nimble. Microsoft, super nimble. Zucker, Zucker, most nimble. And so if you're going to place a bet, you're going to place a bet on Microsoft and Zuckerberg right now, and you're going to move your money out of Google into those two companies.

And if you don't agree with that, you can send an email to Jason's email address and not mine. But to kind of carry on your point, they did post revenue growth 3% in the first quarter. Obviously, to your point, not a growth stock. But if you go from negative growth to positive growth, it's literally night to day. Like the sun comes out. There's a future in front of you. Cash flows might expand, especially if you're not. laying off people. My beef, though, with the company's results is all that's great. And the

company had net income of $5.7 billion. That's a lot of money. Congratulations. They're spending on the metaverse stuff is still incredibly high. I forget the exact number, but I think the operating loss on reality labs was just around $4 billion in the quarter. Unbelievable. That's huge. They're not being nimble of getting away from that. I think it's going to be hard to slow it down. and I think he still believes Apple is going to release their headset the end of the year, which we keep hearing, and that he needs to be part of that. And so while AI is clearly going to change everything,

he still believes, and Apple still believes that AR is going to change everything. So is it possible for us to have two platform shifts at the same time? Of course it is. We had cloud computing and mobile happen at the same time. And that was awesome. Yeah. Because you combine the two.

Your photos were suddenly on, went from being on microSD cards and offloading and external hard drives to all of a sudden mobile me becomes iCloud and it works. And Google Photos works, right? They bought Picasso or whatever. And now we had something on our mobile phones that was a huge problem and arduous and everybody's going to Best Buy to get memory cards and memory card readers. And now all of those are collecting dust because it's all abstracted to the cloud. via mobile. Well, now you put AI and AR together. Well, who knows what the, how those two come together, but the mind does start to think about really interesting applications. Yeah, and I'll just say this. I'm a, I'm a long-term VR bull. I'm a short-term VR bear because I just bought a new gaming PC

the other month. And I did not buy fancy nerd goggles for it. And I'm just, I'm waiting for the reason to do it. And I'm going to do it. I have a, I have a sim racing setup. Like, you know, I, I didn't have a child until recently, so I had a lot more free money. Yeah. But I, you know, I'm going to do it. And I just, I just don't know yet. So to me, like it almost feels like they're like the iPad. It's like the pre-Ipad smartphone. When they're taking an old OS idea, putting it in the wrong form factor, it's not quite there yet. But something's going to break the logjam. And maybe this is the right long term bet. But at $4 billion a quarter, It's a hard thing.

It's a hard hall option to keep paying the the radon, you know? Every single Thanksgiving and Christmas, somebody's going to bring the new Oculus. I'm going to try it. I'm going to do the try. Oh, my, and goodbye. I'm going to put it on and go, wow, they make great progress.

And then I'm going to hand it back to whoever brought it and be like, thanks. And I did it again this Thanksgiving. I played a game. That was like a breakout game. I played a Star Wars game. I got about 30 minutes of time twice. And I was like,

That's enough for me. I want to play Age of Empires or like a real-time strategy game like StarCraft 2. Those are more appealing to me than these VR games, as impressive as the technology is. But do you think there's a material difference between VR and AR in this regard? Because I am a VR, I am VR not interested and I'm AR fascinated. So I remember the first time I put on, maybe actually the only time, I wore Microsoft's HoloLens product. This was years and years and years ago, probably like, oh gosh, forever ago. And they were still in like the development form.

They're like, you know, big wires coming out of them. And I got to play with an AR kind of like Roblox type game or sorry, Minecraft type game in the real world. And mind blowing. And so going back to our AI idea about combining workflows together and having more speech built into these products and so forth, you're still going to want to have the ability to have written text appear to you. And so there may be some sort of ability to take AR and AI.

and make them into something that's quite interesting in a unified sense. But I don't actually think that's a gaming context. I think that's a work slash life context, not an entertainment context. I agree. And that's exciting to me. So yeah, I can see that. It's like a guide. You know, you're like, hey, Siri.

And then all of a sudden this person pops up. And you're like, can you get me the legal assistant? And the legal assistant pops up. And now you have like Princess Leia being projected from R2D2 in your field division. And you're like, hey, I need to do a non-disclosure agreement for with this person. I wanted to last, you know, a year. Sure. In what jurisdiction do you reside?

You know, like California, what jurisdiction do they reside? I'm like, London. They're like, oh, okay, well, you're going to need to file one in London because, you know, it doesn't apply the California law to there. And, you know, you need to answer these six questions. Would you like to answer them now? And the ad is like, oh, I actually have four of those answers for you. Boom. Like that, this is a compelling future.

And the minority report or Blade Runner where he's like, move five to the left, zoom in here, go there. And he's talking to the computer, like analyzing a picture. That's the stuff that's going to get super interesting, I think. And the workflow you described being super frustrating for you, get me these earnings reports, send it in an email, put it into a Google sheet. You combine that with AR, and it's happening on a desktop over here. And you mentioned, I'm working over here.

So, hey, I'm doing a podcast. I'm talking to JCal, and I'm like, I asked you a question, hey, what was BlackBerry's earning decline? You're like, hold on a second. can I get Blackberry's earning decline in a chart from the peak to the trow? And it's like, boop! Comes up on the screen. Yeah, I'm coming right up.

This stuff is going to be incredible. Congratulations to Zuckerberg. He's staying remote too. That's another interesting sort of rub to it. And it seems like he will keep cutting people until morale and performance continues. So the beatings will continue until morale improves. I use that in a headline, but I flipped that. I said, the layoffs will continue until investor morale improves.

And it seems to have finally worked out because Facebook of all of these companies were talking about that they had the best post-earnings share price appreciation. People were very excited about what they were doing because they returned to growth. They cut a lot of people. And they said the magic word, which is AI, a million times on the earnings call. And investors lost their shit and they were so happy. This is where AI would come in helpful. Hey, AI, can you tell me for each of these earnings calls how many times AI was mentioned? and we could just chart that

and we could just chart it over time for the last four quarters and say I loved a friend of the pod, Brad Gersoner's tweet I think I guess he went to mid-journey and I heard there's a discord my kids were and my wife were on the

at dinner in a discord doing mid-journey making Jedi bulldogs and here's what Brad made he made Zuckerberg looking like he was on the juice on steroids

It's taking PEs, PEDs. He looks like Westbrook. Or he looks like. Westbrook's taking PEDs either, but. No, he looks like Superman not wearing a blue, a blue speedo. It's a bit much. It's a bit much. But what I like about that particular thing is it captured the core elements of Zuckerberg's face, but it actually aged him a bit.

And he looked. Yes. He looked there more like he was like 45. I don't know how old he is today, but he looked older there. And I don't think it didn't look bad on them. No. Maybe that's predictive AI via mid-jury. This is what I'm witnessing with all my friends.

I hit 52 years ago. All of my friends who are in their 50s now are like, you know what? I'll be dead soon. I might as well have the best body of my entire life in my 50s. And they're like, you can do it, Jake Al. All you have to do is work out four times a week and eat chicken without the skin on it. And you too can have the best body and look like, you know, Jeff Bezos or AI. Zuckerberg. So you just have to sacrifice food and lift heavy things. Yeah. Sure. Sounds good.

I'll lift heavy things. I'll do cardio. But like since I gave up drinking, I'm going to eat candy. Like like non-negotiable. Like like you're you, you, I will die with a kick. What do you got to go to? Are you a chocolate, sour candy, uh, your equal opportunity? What do you, what you're your, what are your brain? There's three main candies of subverticles. There's chocolate. There's fruit. And then there's sour. And to me, each has such a high peak to it. you must visit all three mountains on our regular basis. Very cool. Wow.

Look at that. So you like to climb multiple summits. Sometimes on the same night while consuming some California-based vaping products. And you can just, yeah. Herbs will enhance the flavor. I can confirm from a friend. Yes. Anyways, Amazon.

Hey, speaking about green things, Amazon makes a lot of money. AWS is doing well, but actually had lower, I think it was operating income than last year. Did that worry you, Jason? You know, I'm a shareholder in Amazon. I believe in Amazon. I believe they're not fit. I think they need to keep laying people off. Amazon web services growth is slowing.

And I know what's happening here. I am not concerned about the slowdown in cloud computing. We talked earlier about people who were signing leases for two years from now, hiring people from two years or now. The same thing happened in cloud. People were provisioning, and they were basically like somebody who didn't have to keep track

of what's in their pantry, just filling the pantry. So they were, you know, developers were putting up instances, never turning them off, and they just were not, you know, managing the pantry as tightly as they should.

Now, when you saw the layoffs happen last year and you saw the contraction, the contraction in the economy, everybody said, what is our spend? Now, I was, I'm not going to say specific names, but we had like a couple of different email products we were using. They were costing thousands of dollars a month. And we had a bunch of mailing lists,

and we were getting charged based on the size of the mailing list. And I'm like, we haven't emailed this list in a year. And I said, do me, Fabri, can you put that list for Founder University for our Angel Summit or our Angel University? Can you just put those on a substack? Because substack's free. Actually, I put them on a review before Twitter got rid of review.

RIP review. RIP review. And so, but I was like, wait a second. Substack is free. I, I, I, I, I, I, sent this list once a year, maybe twice. I don't need to pay a monthly fee for this. And so, boom, all of a sudden, $40,000 less in email fees across two companies. Okay, you talk about hundreds of thousands of emails now.

Yeah, no, I'm just saying, that's, that's a material savings. Material savings. It's a small car. Yeah. It's half of a salary of somebody, right? There you go. And so, I think that's what's happening is. everybody looked at their Amazon bills.

And when your revenue is going up, top lines going up, you're like, whatever, who cares? This is like, not that much money. But when you have to get rid of two people in your department,

you're like, you know what? Do we have stuff we can move from the live storage to the glacial storage that doesn't need to be as fast? Oh, we had these instances running. Oh, we have this many CDNs.

We don't need that much. Or let's renegotiate. And so the great renegotiation has occurred. That's what I think the slowdown is. It's not usage. or utilization. People are using the cloud more than ever. It's just people are negotiating harder with their cloud providers and they're tidying up.

And that's why you're seeing this belt tightening, which means people aren't being wasteful, which means I actually think these businesses are stronger than the percentage growth decline is shown. Hard agree with all of that. Also, we're lapping some pretty impressive results from a year ago, which were predicated on not the same belt tightening. So the fact that we're still seeing double-digit of growth across all three major cloud providers is very impressive. The only caveat to what you said. Okay.

Is that in Amazon's earnings call, I was going back through it today writing about this exact issue actually. And they said that they were running growth in April for AWS was running 500 BIPs below Q1, which means five percentage points, if you don't do Bips out there. 16 minus five is 11. 11 is very close to nine. And nine's a single digit growth rate. And that doesn't change our thesis about cloud. But for Amazon in particular, given that their e-commerce business is unprofitable internationally and occasionally unprofitable in North America, they can't really afford to have their main growth engine and profit source slip a gear.

And so I agree with you. I think that growth return is a couple of quarters out. It could get a little rough for some of these companies. They have competition, too. We just mentioned that Azure has the Open AI Chat GPT, the sexy new product, the new cars on the lot. They got the new Prius. They got the Tesla Model Y, whatever the hottest car of the moment is.

And so, yeah, you could see people saying, you know, I'll use Azure for this. And then Google Cloud is a distant third. But, you know, you do have competition in the space. I do like their advertising business. I think that's like, sure, drop to the bottom line. That's growing double digit percentages. And then Uber added that. DoorDash has an advertising business.

You're starting to see these advertising businesses in places where you didn't expect them. and when you've got a marketplace like Uber does or Amazon does with third party sellers and then you, or DoorDash does with restaurants and then you say to the folks who are in your marketplace, would you like to come up ahead of your competitors?

Would you like to, what pages would you like to be shown as a, you know, what did the double dash on DoorDash you to get to do a second thing? It's like, hey, can we show your ad after somebody orders from this restaurant? Do you want to show your boba or your,

you know, liquor, you know, restaurant? and it's like, yeah, I think I would pay for that. Sure, I need more business. These businesses, I was in an Uber, and I was just thinking, they know I'm watering an Uber black. Okay, great, there's a signal. They know my zip code.

They know my address. What are the chances they know the value of my home? Oh, 98%. Yeah. And what are the chances they know the cost of my hotel? Okay. The hotel I was staying at, you know, in Japan, you know, I was staying at the park high.

It's not cheap. It's like $1,000 a night. the one from, what do you call it? Not White Lotus, the other one. Lost in translation. There you go. Yeah. So I'm at that hotel.

There was 800 a night. It was during the marathon. But they know in Japan, I'm staying at this, you know, five-star hotel, four-star hotel. I mean, what's that worth to an advertiser to know, hey, would you like the people who stay at the top hotels in the world? This person's been to Japan, Austin, Miami, and L.A., and L.A., and L. the last year and their hotels cost $800 or $600 on average. They're four or five stars.

This person is staying at holiday end. So it was J-Cal during the Weblogs Inc era, me and Brian Alvey were splitting a room at $150 a night hotel. I'm not kidding. We would get to do a bed. I'd be, we'd sit there and we'd work until 2 a.m. And then sleep a couple hours and have breakfast together.

And, you know, that advertising information is extraordinary. Do you want the person who bought, I just bought a $300? Well, not $300. $200-some-dollar waffle machine for my daughters. Got this incredible one. Man, from my own heart. That's good.

What's it called? It is the, what's the name? God, I'll tell you in one second. Okay, because I'm a good waffle guy. Just to flex a little bit. Yeah, please. Tyler Florence, the chef from the Food Network, just sent me the one to get.

So I get it. And so it's that brand I love. Anyway, I'll suddenly have to show. but it's like a four, you can make four or five waffles at a time because I got three daughters and I had the single one and I'm literally like making one waffle at a time

and like these three like baby tigers are going to rip each other to shreds over one waffle every seven minutes as one makes four every four minutes. So pretty different, different ballgame. I love that. But the advertising point is very good

and I'll tell you why. Because when you think about Instacart, people think about a delivery business, kind of. But they also make software for groceries. That's another thing. They also have a simply

amazing amount of inventory for advertising. Because when I'm going to buy a thing, most of the time, I don't care if I'm buying Oreos or chips a hoy to pick up. For example, they came to mine.

But they have a lot of advertising space there and they're using it. And another company swiftly, I've known the founder of that forever, also working in the grocery space, explain to me how much CPG brands are, this was Henry Kim, how much CPG brands are willing to pay

for like last touch advertising if they can change a sale on the ground. And so there's a ton of space here. I just think it's interesting that we're talking about these major tech companies ad incomes. Like who would have thought that like the apex point of a tech company when they reach real scales, they can finally sell ads? But that does seem to be the case.

I mean, Apple Microsoft. And then we. Bottom one. By the way, it's the Breville Smart Waffle Maker Pro. This is the only waffle maker that had an LED, you know, an LCD screen and like set it. at this level of granularity of Christmas. It's absurd how good this thing is.

And it's, it's full the brand for me? Breville. Oh, I found it. Yeah. Oh, my gosh. B-R-E-V-I-L-L-E. Now they got a kid.

The Smart Waffle Pro Force slice. Yeah. It's no joke. I mean, you could save 50 bucks if you want to get the two one. Maybe a family of three could get by with that. I had to go industrial. These kids are killing me. I needed four waffles at a time.

one for me and one for each of the kids. People who are watching this are not watching this on video. You can't see this, but like, it's literally has a feature

called waffle IQ. Intelligent automation dials in your cooking time perfectly to suit the waffle style, including Belgium, classic chocolate and buttermilk. Like, oh my God,

I love that. I'm that idiot. And I probably saw it on an ad where it was trying to upsell me on the $39 one that I saw on wire cutter that I was like, that's good enough.

And it was good enough for two years. Now that you've got the twins, it's no longer good enough. They're not spreading a waffle. Once you're over 20, good enough is no longer an okay thing

is my vibe. Let's talk about Snap before we go just really quick. So Snap had, if you didn't notice how Snap only has two responses to earnings which is up 20%

or down 20% like why is the stock so swinging? It's just, I want to give them a hug almost because they just get wrecked so much. Advertising, the advertising business is finicky. advertisers, you know, during a down market, we'll pull back.

They will pause ad campaigns. They'll push them back. And I think, you know, performance-based advertising, like Google Search, or like we just talked about, Amazon's, you know, marketplace stuff, these things are very close to the purchase decision. The closer you can get to the purchase decision, the more scientific it is, right? So, okay, the waffle maker costs $279. I can pay $8 every time somebody clicks on it.

Now, if that waffle thing is on the New York Times, it's like, okay, yeah, this person looks at recipes, maybe I can pay 80 cents per person, and I got to hope that one out of 10 actually, you know, clicks, and that's how I get to my eight, you know, clicks past, you know, they're not looking loose. And so this is why Google has always, you know, with intent and being closer to the sale, and Amazon, obviously even closer to the sale. Uber might be very close to sell. Hey, I'm going to the Warriors game.

where are you going to go out for drinks after, right? Right. So this is, I think, the core issue that's Snap, Twitter, Instagram, certain ad networks are going to YouTube are not close to a transaction, so they're getting brand advertising. Brand advertising, half the time it works, half it doesn't. Nobody knows which half works. That's the classic statement.

And so it's just a little less predictable and, dare I say, essential as performance-based. is the right word. I mean, essential is the right way to frame it because when you have a reduction in spend across the economy and things slow down, you cut the non-essential things first

and brand advertising is the first thing to go. I don't think it's a shock or a surprise that we've seen so many media layoffs in the middle of a slow down in advertising, spending and generally, especially on the brand side. I mean,

a lot of this money just evaporated out of the economy. Snaps revenue dropped under a billion, down 7% year every year. And then the numbers just get brutal. It had a worse operating loss, a worse net loss. It did have more operating cash flow, but, man, just, it's hard to find a lot that was exciting about this. And they got some really tough questions on the, on the earnings call.

Okay. One of them was particularly rude. I saw it trending and I didn't actually listen to it. I don't know if we have, we do have it queued up here. Did you hear this? I did. I haven't heard it. So I'll hear it live for the first time here.

Let's play this too. Our next question is from Rich Greenfield with light. partners. Hi, thanks for taking the question. I got a couple. You know, I guess given the infrastructure and creator investments that feel pretty vital to reversing the pressure you've seen on engagement and advertising, I guess the question is sort of why aren't you scaling back your AR investments? You know, you talked about off-site partnerships and I saw last week things like AR Coke machines or vending machines. Like, why not scale back AR investments until you're in a better financial position, you know, obviously it feels like meta's got the luxury of sort of walking and chewing

gum when I look at like their metaverse investment. I'm not sure you have that luxury. So how do you think about how do you balance sort of what you need to reaccelerate your core business versus sort of investing in the future? And then two, you know, I guess you just sort of hype, you know, a big picture question, Evan, of just obviously you've got what now is going to be another quarter of revenue declines, at least based on your internal force. casting Q2. What gives you confidence that you can return to robust growth? Because I think, obviously, the big challenge here is investor confidence in you and the team.

Yeah, that's a little rough, walking chew gum at the same time. But fair, do you think? Oh, absolutely fair. I mean, the reason why meta can have its stock go up 15% after its reports earnings and the fact that it lost $4 billion on the meta versus the same time is because its core business is gold. Tons and tons of gold. It's just,

it prints bricks of money. And I just pulled up Snaps earnings. I had all the numbers. I mean, their net loss in Q123 was $329 million, and their revenue was $9.89 million. When you're running like a negative 30% net margin on a gap basis,

you have fewer options. You have a less robust, you know, amount of maneuverability room. Yeah, that question came from which green field. I know him, yes. He's a particularly sharp elbowed.

He's a bit of a provocateur, yeah? Well, okay, so here's the thing. I don't think that question was actually rude because I... No. I think it's the venue that made it seem so rude because most people get on the call and they go, J-Cal, amazing quarter. You guys are the best. Thank you for taking the question.

Just a small point. Can I clarify? Of course. Are you seeing channel flow with the sales? Thank you so much. What an intelligent question. Oh, thank you so much for the question. And then you gave me a bull-and-answer.

and then nothing happens. Oh, yes. Oh, yes. I just passed gas and it smells like roses. Yes, exactly. Yeah, so he asked the question. I mean, basically he said out loud what everybody's thinking, which is, come on, your business is struggling here.

Get focused. You got to get focused. And he said he's going back to the, he was the one who said, hey, we're going back to the office four days a week or whatever. We don't have the luxury of that. So he's an enigma to me. An enigma to me too. I've never spoken to him.

I don't know them at all. I do like stuff about Snap. I do like that they stayed independent, that they had a very different take on social, that they managed to capture new demographics, that they've done investments into original content and creator stuff earlier on. I wore Snap spectacles.

I thought they were awesome. They're a killer brand. But ultimately, they're a small social network in a world of much bigger companies is that have better ad, I don't know, leverage. This is the Twitter problem all over again. Yeah, I mean, are you essential or not? And in a down market, people are going to just cut, you know, and simplify, maybe we'll just

focus on the two or three things that are working, and we won't be as experimental with our ad budgets. And so if you were experimental on SNAP or Twitter or TikTok, you might cut that and just focus on your Amazon, you know, ads and your Google ads. and your Facebook ads, right? So you can only focus on so many things back to the, you know, walking and chewing gum. I think that's part of the issue here. They do have an impressive number of people

using the service. I mean, it's 350 million people or something. Like, people are addicted to the service and it's an audience that is valuable. It's young people. So it's valuable to brand advertisers. But in a down market, advertising gets walloped and they are going to keep,

they're going to need to keep cutting costs and to show some profits here and show growth. I know we have to go through over time, but just before I bounce and go back into Babyland, this is a question about social media, but what's your vibe on

people that want to ban or not ban TikTok from the United States? So it is crazy that the United States would not demand reciprocity with China. It is also crazy to think that the Chinese government would treat Americans differently than they treat their own citizens.

Their own citizens are tracked in apps. They're tracked with facial recognition and they have a social score. And if people don't pay their debts, they are scarlet lettered inside these apps. If people don't, if people smoke on a train or eat food on it, they will can have their social scores a la black mirror uh that famous episode where you're waiting each other so uh we would have to be completely naive to think that the chinese government the CCP would not use this as a weapon against americans the obvious answer and this has nothing to do with your politics you just need to look at what wawa or any country

would do or swap out china for russia or iran or north korea if they owned this app and they had this amount of access to Americans, you'd be like, well, I'm not giving Putin access to this many Americans, period, full stop. So it has to be divested. And the investors who are in that company want to return. This is the greatest IPO of the next couple of years. So if the board wants a return, the investors want to return, and it's not going public, why? Well, I know why it's not being divested. Well, one, I agree with all that, by the way. We're on the exact same page. I was just curious if we were in alignment here. But the reason why it won't go, it won't be divested, is that the last thing that I read about this was that the Chinese

government doesn't want to appear to be forced to do that. So they want to save face. Yes, but also it kind of makes a point that this thing is not controlled by China, but yet it can't be divested and go public because Chinese government says no. So we're on the same page here. I mean, it basically proves the point, as you described it. Yeah. Yeah. Investors want to go public.

Investors want there to be afloat and free trading of the shares, which would then, if it was a freely traded company, it would not be owned by CCP anymore. and there's a person from the CCP on the board and they have said no. Why would they say no? It's an asset. It's an asset. It's obvious.

Now, if you want to be Taylor Lorenz and you want to be like, well, TikTok, the creators need to make money and we have not thinking about that when we have no proof. That's just complete naivete. I like, I like Taylor, but I need to agree with her on this. Yeah.

Yeah, I mean, it's just, it's literal complete naivete. You all, I mean, it'd be like, for people would be like, oh, well, no, I met this Russian spy. And they didn't spy on me. And they didn't compromise me. And it's like, how do you know that? They could have like swapped out your SIM card when you were at the bathroom.

Like you're dating a Russian KGB agent. Yeah. The thing that I would say is that I don't like, there's a certain vibe amongst certain people in tech. And this is actually across every possible group in the industry and even the media covers tech, in which there's this like almost like a point of pride that we're all like outside in the dark smoking cigarette saying, well, we're always being tracked by American apps too. Who cares?

That's weird. And to me, the answer is, no, we can fight surveillance capitalism at home. And we can also point out that there's a greater national security risk when it involves a hostile foreign power that is trying to exterminate a part of this population. So, yeah, we're on the same page of. We should probably stop talking. Yes. I mean, your analogy is exactly right. Yeah.

I think we could be absolutely, we could be absolutely against what's happening to the Uyghurs. in China, while also looking at the American prison system saying, hey, we got too many people in prison and the death penalty is not deployed fairly here, but these are two different things. Genocide and, you know, our incarceration system being flawed, these are, both can be solved and addressed and they could be different magnitudes of risk and or wrong in the world. All right, Alex Wilhelm, you can follow him on the Twitter and go subscribe to TechCrump. punch plus, you know, get that in there, support a great independent editorial. And on Twitter, he is part of the first name club, Pat Alex.

Yes. Thank you, my brother. Jason, thanks for having me on, as always. And a real treat. And I'll just say this, may summer come quickly, may we all go surfing and let's all go a nap because we need it. Yeah, exactly. Everybody get a good nap.

And see you next time, everybody. Bye-bye.