This Week in Startups - Employee reactions to Google layoffs, Microsoft & OpenAI codify deal + NVIDIA's new feature | E1663

Episode Date: January 23, 2023

Join Molly and Jason as they react to TikToks posted by former Google employees who have recently been let go. They discuss why Google is letting people go despite their massive profits (8:54). They also explore Open AI and Microsoft's codified partnership (38:39) and the report from the WSJ that activist investor Elliot Management has invested billions into Salesforce (45:06). To end the show, we have another great edition of WLITF featuring NVIDIA's new AI-generated eye contact feature (49:16). (0:00) M+J kick off the show (2:35) Jason is still on the mend + vaccine talk (7:46) Embroker - Use code TWIST to get an extra 10% off insurance at https://Embroker.com/twist (8:54) The difference between Meta, Amazon and Google's layoffs + Employee reaction to getting laid off (18:52) LinkedIn Jobs - Post your first job for free at https://linkedin.com/twist (20:16) Why Google is doing layoffs + more employee reactions (37:05) Meowtel - Book a local and insured sitter on the #1 cat sitting app. Save $25 on your first booking with code TWIST25 (38:29) OpenAI codified its deal with Microsoft (45:06) Elliot Management invests billions in Salesforce (49:16) WLITF: NVIDIA's insane update This Week in Startups 90-second survey - Enter for a chance to win a $50 amazon gift card at www.thisweekinstartups.com/survey FOLLOW Jason: https://linktr.ee/calacanis FOLLOW Molly: https://twitter.com/mollywood

All right, everybody, welcome back. It's Monday. I'm still sick, but I'm going to power through. Lots of talk about. Despite my best advice, he is going to, in fact, power through. The news is too interesting. What are you going to do? Yeah. We've got, there were lots of reactions over the weekend to Google's layoffs and how they were handled and also just the reckoning coming to the culture that in many ways Google created. Yeah, we have tons of TikTok videos. People are trying to process this massive layoff by Google after my Microsoft and Salesforce and Amazon and Facebook. And we have a talk about perhaps reaching peak employment.

It feels like we've reached peak employment. It does. And that feeling is only exacerbated by the rise of OpenAI and Chad GPT and how quickly AI is progressing. Microsoft codified its deal with OpenAI. So we have a couple new details about that, including that Open AI will be, we'll have a lot more access to a lot more real-time information. Elliot management, the activist investors also made a multi-billion dollar deal to invest in Salesforce.

I think we all know what that means. And this is after other activist investors got involved with Google, which resulted in layoffs. Now, it looks like Elliott Management is going to probably pressure Salesforce to make some more cuts. I got to say, I thought Salesforce was untouchable for so long that this is a pretty big deal. And then finally, we have a cool and creepy and fascinating and super useful. we live in the future. Invitya made a kind of insane update to their broadcast 1.4 software. AI generated eye contact. Yes, you don't have to get trained on this anymore. You can just have the software do it. It's going to be rich. Stick with us.

This weekend startups is brought to you by in Brokers Startup Insurance Program helps startups secure the most important types of insurance at a lower cost and with less hassle. Save up to 20% off of traditional insurance today atembroker.com slash twist. And while you're there, get an extra 10% off using offer code twist. LinkedIn jobs. A business is only as strong as its people and every hire matters. Post your first job for free at LinkedIn.com slash twist.

And Meowtel. Traveling soon, book a local and insured sitter on Meowtel, the number one cat sitting app. save $25 on your first booking with code Twist 25. All right, everybody. I can't believe it's Monday. I'm still sick. God, you really are. This is the worst sickness I've had, perhaps in my life.

I mean, this is like five COVID, five times or ten times COVID. I've lost my voice, just upper respiratory, but it's broken. So over the weekend, it broke, and I've been steaming. And, yeah. You're on the road to recovery. I've got another friend who has this right now, and it is scary. It's got, I definitely am like, I'm don't, I'm either not going to leave the house or wear a mask everywhere, because it seems bad. Bad, bad.

Anyway, I'm glad you're feeling better. This upper respiratory thing has been going around. I probably got it from the kids. RSV. RSV, man. Yeah. And so, which is interesting because at the same time this is all happening, there's, There seems to be some ongoing debate and not just amongst like French people of like,

did the vaccines work? I don't want to open that whole thing up here. But there's like a whole like what actually happened during COVID and because the vaccines obviously are not super effective and preventing you from getting something, but they do mitigate the. They're not for RSB though. No, no, no, no. No, no.

Oh, you mean like because there's this whole like sickness right now. Yeah, there seems to be a whole. re-hashing of, you know, who are the smart people, the people who took the vaccine or the people who didn't take the vaccine. And so people are trying to drag me into this conversation. Don't get dragging into that conversation. Who the hell knows? Because.

Well, it's hard to ask the dead ones. Right. So there's this concept. So there's that. People did die from it. And there's also COVID has been like four or five major waves in different versions. Yeah. So they said the whole time it's going to get.

they said COVID was going to get weaker and weaker, right? That's the trajectory of these. And that's like a pretty well-known fact. So if you're comparing the version people are getting now to the version people we're getting at the start, it's like two different goalposts. And so your decision-making might be very different now than it was during the height of this thing, right? Right. And then we also know stuff about age, like what age? We definitely know things about age and comorbidities.

I mean, it's like unvaccinated people had 13 and 53 times the risks for infection and death, respectively. So you were 53 times more likely to die from COVID if you were unvaccinated according to the CDC. I mean, you know, like nobody ever, I think we also sort of, I don't, what is wrong with me? Why would I sit here and get drawn into this conversation? I'm one, I'm totally guilty. I am 100% guilty of being like, I'm, I got four freaking boosters. Like, why do I have to so worry about getting this thing? You did four boosters?

Wow. I mean, I've had four shots, I think. I did three. I did one booster, I guess. I'm, you know, at this point, it's like, you know, my ex-husband's one of those people. He's like, we got to get them all or whatever. And, you know, the thing with my mom and how it's definitely going to kill her way sooner as a result, because it's done so much damage to her body. And she was vaccinated, you know.

Yeah. Yeah, like, I mean, I think there's no, I don't think there's any doubt in the scientific community. Like, ask any. doctor, like my friend's husband is an ER doctor. The people who are in the hospital dying from COVID are unvaccinated. Period. Like, it's just that simple. It doesn't mean, like, the COVID vaccine,

maybe the mistake was thinking you wouldn't ever get it. Yeah. And that might have been a failure of communication. They may be oversold it a little bit. But like, you know, when you get a flu shot, you could still get the flu. Like, people sort of know that. They seem to think, I think at the beginning that, you know, everybody was going to be a blocker and you were not going to get it and you were not going to transmit it and, you know,

it was more like it's going to prevent you from dying. It's going to lower the risk of death mortality. I wish people would do some more research on this. Like, maybe we should fund some research. I just wish I would do some more actual like marketing and information about it. Because like the research exists. Well, I don't think we know. Like, you don't remember when they did the 9-11 commission?

Like they kind of like did a really full. I wish we would get a commission 100%. I did do like a 9-11-style commission on this because it became so partisan and then you add to it, conspiracy theories, and then you add to it. It changes constantly. It would be great if they just did like a 9-11-style commission. I felt like the 9-11 commission did a really good job. Yes. Of like what we knew, when we knew it, how we can avoid it in the future. It wasn't like partisan. It was very informational. So I completely agree. We need a COVID-19 commission badly,

badly, badly, badly. And I hope we don't let that just like die. I hope we don't let that origin to maybe it's just the detective in me. I just would really like to know if this was Pengelins or a lab leak or whatever in between. I just want to know where it came from so we can avoid it in the future. I'm 100%

open to a commission that truly finds that out and tells us. Yeah, tell us. What happens? Yeah, I'm with you. Listen, I've been dealing with business insurance for three decades. I kid you not. Switching providers has always been a nightmare. Too expensive. Take

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My team loves it. Makes life easy. Try in Broker today with the code twist and you get 10% off their startup package. Inbroker.com slash twist. Inbroker, E-M-B-R-O-K-E-R-com slash twist, and use that promo code twist for 10% off. We love the product. Thanks for supporting us for so many years here at this week in startups. All right. And other important news in our industry, these Google layoffs were quite significant. And there has been a lot of hand-wringing about it over the last couple of days. And I think it's worth us double-clicking on because to set the table for this, as we've discussed, Google created the culture of entitlement in Silicon Valley. This is a known fact.

They said, let's make a campus. Let's provide Neiman Ranch steaks. Let's put infinite swimming pool in and volleyball. And you'll never want to leave the campus because our employees are so dedicated. We just want to make it like you don't even have to grow up. You can be Peter Pan here. We'll give you dinner, three square meals a day. We got latte.

We got Wi-Fi on the buses. You never have to stop working. You know, it was, yeah. Yeah, just go all in. And don't worry about doing. any other work. It's in it was cynical right to get you to work more and it was also a result of them having a money printing machine they never had to think about cost because my lord so many people were using Google and so many people were clicking on ads that it was irrelevant the spend

for that business was largely irrelevant yeah and then all of a sudden all at once like a bolt of lightning from the sky yeah it was no longer irrelevant and on Friday Google laid off on Friday and over the weekend Google laid off 12,000 people roughly, sent an email to the company staff. Sundar Pichai, Google CEO,

sent an email on Friday saying that they would lay off these 12,000 people reaching a total number of about 28,000 roles, I think. And then these layoffs, you know, a couple things about this have been really interesting.

The reverberations of the layoffs have been nonstop. And because I think there were a couple big differences. One, when META and Amazon both had huge layoffs recently, those were leaked, which means they were effectively announced in advance. So people were a little bit prepared for these layoffs, and those companies were fairly transparent about the divisions

within the company that would be cut. the information about the Google layoffs was not leaked or announced in advance. It was effectively announced at the same time the layoffs were happening. And even in some, and even like a teeny bit after some of them happened. And then the cuts themselves were not confined to any particular low performing division or, you know, area that we knew they wanted to restructure.

It was like really. I know someone, you know, like a very high-level, high-performing employee who got cut off, who got cut. And then there were sort of lower level, like, last in, first out kind of layoffs. But it was like, it did not feel that there was a big kind of rhyme or reason. Yeah. And so as a result, and then Sundar Pichai's statement about it was very vague, right? He said, we've undertaken a rigorous review across product areas and functions to ensure that our people and roles are aligned with our highest priorities as a company.

The roles we're eliminating reflect the outcome of that review. They cut across alphabet product areas, functions, levels, and regions. Which is like, anywhere you are, you're not safe. Nobody's safe, yeah. And so then as a result, there has been collective of everything you said, right, about how happy and cushy it was to be there. And this kind of like haphazard and extremely abrupt execution, oh my God, people are losing their minds.

Multiple things can be true at the same time. Yeah. What makes this very unique is the culture of entitlement and the packages at Google were so extraordinary. And again, and again, who created the culture of entitlement? Manit. So not created by the employees. This was offered to the employees. And obviously they took the macho lattes.

They took the dry cleaning. They took what was offered to them. They wrote a little bikes. Whatever it is. You know, this was Google strategy is to make it so good. to work there that you would never think of leaving or it would be very difficult to leave. For them to then cut people off was shocking to those people. But for the rest of the world, they're watching this or even in the rest of tech, a lot of people

are watching this and going like, are these people for real? Or like there was this a day in the life of trend on TikTok where people would say like, here's my day and I go to the gym and I go to a yoga room and then I get my machalante. I do it. And people found it, let's be honest, a lot of people found it offensive. Yeah. Of how good these people had it, how well paid they are. So there's a little schoedenfrauda. Shodenfraud. Freud. Shored and Freud occurring here. But what's very unique about this in the Google case is they're all going to TikTok.

I mean, and explaining what happened. And this one is Kimberly Diaz. We didn't contact her. So we assume this is a real TikTok. that this isn't an actor doing it, but she's done a ton of videos. And here's 61 seconds of her talking about her layout. We cut this down a little bit for brevity. I was on a client site, client visit. I had dinner the night before with a client, and I was specifically working for YouTube. What I was doing was working with influencers and creators.

The night before, like meeting all the way up to the CMO. So we had a great dinner, and I was like, okay, great. I'll be there tomorrow. So my colleagues who were also on the business trip that weren't impacted, thank God. I get up at like 6 a.m. or so, and I'm like, okay, I'm going to put the final touches on the presentation, and then I'm going to get ready for this 10 a.m. call. And so I couldn't get into my email, but for some reason, my chat still worked. I think I got in it before they closed it down because it was so early. So I texted my colleague who was there, who was also leading the meeting to be like,

hey, are you having an issue with your email? Here's my phone number. And then maybe 10 minutes later, I got a follow up email from Google that was like, your positions eliminated, effective immediately. And so she was kind enough to share her credit card with me so I could like change my flight and get home as soon as possible. And that speaks to the caliber of people that are at Google. Your reaction, Molly? I heard a similar story.

So, and again, this is the kind of, it is not uncommon when you get laid off to then lose access to your work accounts, right? That's like a super standard layoff procedure. Yeah. What seems to have happened at Google is that they turned off people's access, laid them off, then announced the layoffs. Like there seems to be some ordering things that are happening here. But it is also interesting that seemingly, as we watch more of this woman's videos, she works in creator partnerships at YouTube. And YouTube is one of, of course, Google's fastest growing segments, but according to reports is not profitable.

So maybe they were, you know, I mean, like, again, we don't know. There hasn't been a lot of transparency. And on some level, they don't have to tell us what divisions they're cutting and why and whatever. But yeah, I mean, what's super interesting about this is that like this, Google has had not only this culture of, of, I'm so like allergic to that word entitlement. And I'm trying to figure out a better word, even though I guess it is that. Right. Yeah. Like luxury existence.

I don't know. Luxury. Yeah. And also. And so and and. Cushy and kind of, I mean, I guess entitlement, like as a, as the literal definition of the word entitlement goes, yes, that is the best word here. And they've also had this like culture of outspokenness and, you know, it's sort of, it's funny because we used to speculate like way back in the day when I was at marketplace, like the, we would speculate that it's because of stock compensation that tech employees got this sense of entitlement also, right? It was like, oh, we're owners here. We're shareholders. Like we are just as entitled.

as anybody else to like have our opinion about the way things have been running. Google in particular has got an outspoken employee base. Oh, they do, yeah. And now they have an outspoken laid off employee base pulling no punches out here, name and names. You know, this woman went on to make another video calling it corporate greed. There was like one about a big investor who thought they should have made more cuts. Like, this is not landing that well out in the world.

So there's a lot of cognitive dissidents. I mean, that's really, I think, challenging for people. now there's no way to do a layoff correctly. There are only like degrees of poorly that you can do them. Airbnb nailed it. I maintained forever. Airbnb did it perfectly at the beginning of the pandemic, but yes. So you can, you know, nobody is complaining about the severance packages and all these

TikTok videos and everything. People are like, oh my God, this is incredible the severance. So great job there. But you do have to take people's access off. There seems to be some consensus in HR that like you can't let people back into the building. You have to do it on Friday. You got to do it at like whatever time. so that you don't have the office, God forbid, some office violence occurs or some sabotage

occurs. There seems to be some legal insurance best practice that's now been established that it has to be swift. And there is no goodbyes. There's no goodbye party unless people self-organize it. There's no hanging around the office. Which is different than Google did it in the past. When they did their last little quiet riff, they had said, you know, you have like 60 days to find another job. So go explore other jobs. In this case, they were. just sort of cutthroat about it. If you're a small business owner or you manage hiring at your company, you know that success in 2023 all depends on the team members that you surround yourself with.

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you want to talk to and it helps you do that faster. So post your job for free at LinkedIn.com slash twist. That's LinkedIn.com slash T-W-I-S-T to post your first job listing free. Of course, terms and conditions do apply. But there's a cognitive distance. here between why is a company that's so wildly profitable with so much cash making these cuts? And that's, I think, what she points out in her next video, which we can play here really quick, which is why is this happening if they're so profitable? Answer why layoffs are happening, and that is corporate greed. Carbs don't count this week. Before I went to business school, I didn't really understand layoffs.

I thought it was because the company must have been in real dire financial strain. Like, maybe they wouldn't be able to pay people and, like, keep going. but it is because of greed, and I will show you why. Guess how much Google did in profits last quarter? Like, literally, take two seconds and guess. Did you guess 17 billion? In profit. That's your revenue minus your expenses.

What's about, though, is short-term profits. And so they lay all of us off and what happens? Stock went up, 5%. Yep, they have it. I mean, that she is not wrong. No. This is about the stock price. This is about the shareholders, the large shareholders.

And we talked about this last week when meta, you know, we talked about it when meta did it. We talked about when Microsoft did it. This is about countering for shareholders and large investors the ongoing drop in stock price and creating an air. And look, this is, this is the, this is the bargain of work, right? Work doesn't love you back. No matter how comfortable you feel at any point, priorities can

change, business goals can change, stock price can trump. A bigger investor can trump the needs of, you know, your rank and file employees. And that is true. And I'm talking to a lot of friends who are, you know, highly placed at companies who are having to make really, really tough calls right now and who do kind of want to say to like this poor woman with the macaroons who had a crappy layoff. I'm not going to like say that she didn't. That sucks. Yeah. And this is work, this is business. Yeah, it's not personal. It's business.

I think Google, like, Google, this is a classic Google action in that Google has never been good at people. It is not that surprising to me that they were going to come along and do this like kind of hamfistedly and like screw up the timing a little and just be like, well, you have to turn off the access of the person. Yeah, but you also could like announce that you're going to have some layoffs and people have time to prepare it. Right. There's, there are ways to soften the blow a little bit. It's sort of classically like

non-EQ Google. This is all about these activists investors. To do it this way. The activist investors see an opportunity to buy these shares at a very low price. I just opened jatrading.com today and I was like, oh, I beat the market now. Suddenly I'm back in the game. Now I'm excited to start buying stocks again. It was like really interesting to see my own psychology. Right. Second I see I'm like, it works. I'm like, I should place more bets. But I wasn't placing, I did place some bets in the really down.

market, right? Remember, like, it's really hard to make those bets when things are on the floor. And now I'm like, why didn't I make more bets in the down market? I'm sure it'll go down again. But it's part of the reason I'm trying to be like a more active public market investor is to try to understand this. And the best trade I made was the day Facebook decided they would lay people off. And I made that trade and it's up 50% I think in two months, right? Yeah. So there is something here. And if you remember, this activist investor named TCI, they gave Sundar, this five-point plan, and they said, you know, hey, and I'm just giving a quote here, we acknowledge that Alphabet employees some of the most talented and brightest computer

scientists in its years, but they represent only a fraction of the employer base. Many employees are performing general sales marketing and administrative tasks who should be compensated in line with other technology companies. So this woman who we just saw, who's in sales, this is who TCI was talking about, I think, very specifically. Like, we just want you to fire people who are in TCI. mind, I'm not saying in reality, overcompensated. And there's, and this is the chart that they showed, like, here's the median, here's Microsoft, here's Alphabet. And Microsoft obviously did theirs.

What's also stunning is they let go of people who'd been there for 10, 15 years. I said somebody 16, they have years at Google. And they should have, I think, taken a different approach with anybody over 10 years. I think so, too. I think they should have had people with under over 10 years. They should have brought them into a room and said, your time at Google's coming to a close. We want to celebrate you for the next 60 days. You have the option to wrap things up, whatever, and had a different path for them, probably. I kind of think so, too. Like, I just, there is a way to do this that that is a conscious uncoupling of your employment, right?

That, like, makes people understand that this is a business priority. This is a change. This is, like, these are things that have to happen. We're sad. we've treated you with respect. Like, that we're going to look at, you know,

in a year or two, we're going to look around and look at the kind of like the Twitter effect and talk about the companies that treated their departing employees with respect and acknowledged their role

in creating the entitlement culture and the ones who were just like, we're done with that now. Goodbye. Yeah. And booted them right on there. You know, don't let the door hit you. You know, these companies can run

with a much smaller footprint and if that's what these TCIs of the world, if that's what the Brad Gersters of the world want in order to buy the shares in the company again, management will eventually acquiesce. And that's what we're seeing here. The only company that has in is Apple, which was very slow in adding people.

But TCI was not pleased with the 12,000. So as hardcore as Sundar went, who's... They wanted more. Christopher Hahn. of TCI said to Sundar. I'm encouraged to see that you're now

taking some actions to right size Alphabet's cost base and understand that is never an easy decision and let people go. Okay. Decision cut 12,000 is a step in the right direction.

It does not reverse alphabet's headcount growth in 2022. Ultimate management will need to go further. I mean, it's true. They added... Introduce the amount of employees to 150. Bring them to 2021. And address excessive employee

compensation. He thinks they should pay people less. Let's do go back though and put a file, put a little spotlight on the fact that the median compensation at Google is $300,000. The median. So if you put 100 employees number 50 would be this, the one right in the middle, median. Yeah. Not average because you have some huge paid people there like CEOs and management, but the median, yeah, I mean, it's bonkers. 67% higher than Microsoft. Like, that's pretty nutty.

It's pretty nutty. One thing to take in, you know, to realize here as people deal with this cognitive dissonance, two things. Number one, you as an employee at Google are part of the machine. You know this. They look at you like any other expense item. Slightly more than the nut milk or the office space or the servers, certainly. Right. But ultimately, TCI and these other places do not.

No. They look at you as a line item. And they've analyzed the line item and said, too much, just enough servers, too much nut milk, too many non-technical people, whatever it is. They're just looking at it like private equity, you know, market participants who are picking one stock over another. And they've deemed, you know, a number here. and then everybody who is part of that number

now has to deal with this cognitive dissonance, but how you frame it as an individual, I think is what's critically important. You could frame it as, I am no good. They only let go of this small percentage of people and therefore I was let go.

You could also say, well, I negotiated an incredible salary for a large number of years was amongst the highest paid in the world at my profession. So I did a great job, of negotiating myself out of the job. I was one of the first people let go

because I did such an amazing job, you know, getting compensated. And so you could take a very positive view of it in that way. And then you could also take a positive view of this, as I said on Twitter, which is really tweaking for a certain group of people.

And I kind of made the tweet for that reason. Yeah, you did. Being honest. Yeah, you did. I was like, oh, 10,000 people laid off. Three founders per, 3,000 new startups. You have 6 to 12 to 18 months of runway, go find two of your cohorts and do a revenge startup.

Now, will everybody do that? Is everybody in a position to do that? Obviously not. Well, not a reason. Not a entrepreneur. Exactly. Like, it's an entrepreneur is, what is it? Six or seven, there was that story that was like, there's a genetic predisposition

toward becoming a founder. And they were like, it's six or seven percent of the population. Maybe. That might be true. I have to acknowledge that most people are simply not like of that cloth. I think all people could be though. Yeah. So while most oriented.

All could. Yeah. And that's where I get myself in trouble on the social media because I actually believe all people could do it. Because I've watched all kinds of people do it. I think if you said that actually, it would be pretty inspiring. It's the Earth's surf off the loot part that tweets folks. Oh, well, no, I think people have to take that head on. If the surplus elites term is a little bit jarring, I think, for people.

But I think people should own it. Like you are, if you now push. everybody to a remote culture, what you've done is you've said, okay, learn how to manage people remote. Great. Congratulations, you won that battle. Now you're up against people in Canada. You're up against people in Manila, San Paolo. That's the back channel I heard, too, as well, was, you know, Microsoft has many offices around the world, and it's a lot cheaper in those international offices to hire and find, you know, high quality tech talent. So that's the other thing that's happened, I think, here. Yeah. Which other video should we play?

I mean, I like, we should play the one who is the Google employee who is basically like, yeah, we've spent, we have, we Google created an arms race for spending and coddling that we do in fact need to reverse. Like you had sort of a more of an analysis about it. Okay, let's hear. 12,000 employees were laid off today at Google. I was lucky enough to not be one of those 12,000. But I think the fact that this happened signals a huge shift in the tech industry as a whole in the next few years. Historically, Google has been one of those rest. vest companies. You go there towards the middle or end of your career. They have great culture,

great perks, great pay, and you write it out till the end. You're not going to have to overwork yourself like you will at some other companies and you're getting it to work on things that ideally you enjoy working on. I think Google breaking precedent and doing these layoffs despite the images that they've historically had is big because it shows that at a ton of these big companies, the problems that need solving are towards the end of their lifespan. Think of Instagram, for example. How do you handle someone with 100 million followers like a Kim Kardashian? That's a huge engineering problem, but now that's solvable and a ton of companies know how to do that. It's common knowledge you can figure it out on the internet for free. So I think we're going to see

a shift. A lot of these traditional companies need engineers for maintenance, but they don't need a ton of engineers to improve anything really because we're at the max of what this technology can be. So I think the shift is going to be over to AI, chat GPT, it's parent company, OpenAI, and all of those companies are going to become the new rocket ships that people are going to want to ride to the top. I know it wasn't just Google that was affected, a ton of employees from really great companies were also affected. So all the best to everyone in the job market right now.

Use the comments to reach out. If you're hiring, let people know. If you're looking, let people know. But I think we're going to see a huge shift in the tech industry in 2023. I think that's the most interesting part. First of all, I love him. How darling is he? Like, if you're in the comments, like let people know if you're hiring.

Very sweet. Yeah. I mean, I think he makes such an outstanding. executive point, which is that companies hired for the business they were building when building that business was really hard. The technology it took to build those businesses. I mean, like, you know my opinion on Learn to Code. Don't bother. Machines will be doing that any minute now. So they hired for the companies they were building then. They don't need as many people. The technology is not as hard. The technology itself is commoditized. And the businesses are mature.

So these are now growth companies instead of high growth companies, but they have high growth numbers of employees. But honestly, I keep going back to the fact that so many of those employees, that more than 12,000 of those employees were added in 2022. This is where I think there was massive leadership failure at these companies to be like, hot damn. When cognitive business happens, people tend to point fingers and try to find somebody who's wrong and all of this. I think this guy nailed it. A lot of the problems. Like, how do you scale servers? You know, how do you make a feed of all the followers, all that stuff?

Like, these were very hard technical things. You put hundreds of engineers on it. And now it's like, oh, no, you can just use this piece of software. There's a cloud software for that. There's an open source kit. Boom, press the button. It's done. Yeah.

And so. And we're transitioning to a totally new type of business, maybe. Yeah. With AI. And all the people who are here working on, like, creator stuff, that's not what we do anymore, maybe. And milk it for profits. At the end of AOL's lifespan, when they had millions of people, where they peaked at 30 million people paying 30 bucks a month,

pretty incredible, you know, over $10 billion a year and access fees for dial-up. Towards the end, they just laid off a ton of people, and they just would milk hundreds of millions of dollars in profits per month out of the AOL dial-up business and then reinvested in content businesses that they bought, including my own. And so, you know, it's, he's not wrong here. to the end of a cycle, you want to milk Google search or Chrome or Google Docs or YouTube. You want to milk it for profits.

And that was, I think, one of the other problems here is everybody was, what I started a lot of the videos is like, I don't understand my report was great, my review was great, I hit all my numbers, we hit our numbers collectively, why am I losing my job? And it's like, we need to be more profitable going into a recession, etc. And yes, I'm sorry to tell you everybody, 17. billion dollars in profit is not enough for for late stage capitalism. It's just not. Well, I mean, it has to grow. If your stock price is not going up, exactly. That number has to keep going up. That's the deal. I'm sorry, that's the deal. It can be very frustrating. We all agree there are

things that are very frustrating about late stage American capitalism, but that is a freaking deal. I do think what we're going to see here is like perhaps we just witness peak employment. Like a peak employment moment in the history of humanity. Yeah, actually. Like, you know, the idea that people could be this incredibly compensated and this incredibly coddled, they're no fault with their own. Again, it's a free market. People participated in this on the by side, you know, willingly. But I think this might have been peak. And now with this globalization that's occurring through remote work, globalization kind of changes everything.

And AI. And AI just going to accelerate it even more. I mean, those two things, those two tides are crashing together right now in the perfect storm. My understanding is like when people use one of these GitHub like auto-completing, suggesting development tools, that it's starting to have like a 10, 20, 30% impact on people, making them that much faster. And so you might not need as many developers. You certainly don't need it to maintain a product, but even creating new product, it might take a much smaller number of developers to make really interesting.

things. And then there's a rumor going on Silicon Valley that's Sergey and Larry coming back. That's the rumor. Do we have thoughts on that rumor? I think I think a lot. I think a big earthquake just hit Google. And that earthquake is named Chad GPT. Like no, I do not.

I think they thought they had all the time in the world to keep on incubating the cool stuff, the deep mind, the whatever. And it was like all of a sudden, you don't. Listen, you know I'm a bulldog guy. But us dog owners. We've been totally spoiled with the ridiculous number of dog sitting and dog walking apps that are out there today. There are a ton of places to get a great dog walker or to have somebody watch your dog when you're away on a business trip, on a ski trip, whatever it is.

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And so all the stuff we've been talking about over that past couple of weeks about, hey, this was a non-profit company, for-profit company. Basically, that's been answered. There was a series of blog post today. They're going to have OpenAI as a for-profit company that is owned. Somali, maybe you could tee this up for us, just what's going on now with Open AI and Microsoft. Yeah, so their deal. So basically, a new blog post came out today from OpenAI and Microsoft. that actually just codifies a lot of the stuff we already told you.

It's stuff we've been seeing over the past few weeks. For example, Microsoft and OpenAI worked together to build super computing systems powered by Azure, which OpenAI uses to train all their models. We told you some of that. Microsoft will increase its investment in Azure systems to accelerate OpenAI's independent research. We told you that. Azure will remain the exclusive cloud provider for all OpenAI workloads across its research, APIs, and products.

and then Open AI is focused on learning from real world use of the products. Now, this is one of the things that we didn't tell you. It is fairly obvious because for Open AI to continue to get smarter, it's going to need to interact with the real world. But I would say that even though this is sort of like a bland little line in that blog post, that's the headline. That's the thing that's going to go one of two ways. It's either going to be like the time that Microsoft released that chatbot

that immediately became like the most racist mega-grandpa you ever met. or OpenAI is going to get smarter and smarter and smarter in a safe and way that's healthy for society. Well, reinforcement learning, I think, is the term of art, RL, and it's an area of machine learning. And so you take actions making your PowerPoint, it learns. Just like sometimes if you do a Google search, it might ask you, like, did this give you an answer?

How good was this answer? Or chat, GPT, asks you, how good was this answer? So that reinforcement learning that will happen over time, people driving through certain in a self-driving sense, in a self-driving AI, how do people take this particularly gnarly traffic circle? Well, if you have a million people navigate the traffic circle, you can kind of infer some behaviors.

And if there's accidents, you can infer solutions for it. But that's a major piece of us. It is also open AI, like starting to now get trained on real world, constantly incoming data. and that's a big, that's a big shift. I don't know if that's going to be reflected in its interface in chat GPT. Yeah. But to the extent that it is, it makes it one, way more useful, right?

No more of those like my information stopped at 2021 or I can't give you any information about individuals, like when you like chat GPT yourself. And it's like, I can't tell you anything about yourself. It'll be really, really interesting to see what that interface starts to look like. once the whole fire hose of internet. Maybe not the whole thing, but more of it is turned on. And I think chat GPT is floating this $42 per month premium version. I think the $42 a month premium version is, you know, for $600 a year or whatever it winds up being.

For a business, individual, you know, it's like, do you need a researcher? Do you need a personal assistant? If they can actually do things like book hotels for you or, you know, what we thought would happen with what we're called intelligent agents back in the day. This could be quite transformative. So people are starting to see some solicitation. People are posting screenshots. And I told people earlier, I'd taken the survey to become a chat GPT pro user.

And I put my pricing at 50 bucks a month. So it seems like they're going with $4.20. I'm sorry, $42 and zero cents. Seems like pricing is getting pretty predictable in our market. It seems to be. Open AI, speaking of pricing, will remain. They confirmed, Open AI will remain a capped profit company.

Returns for the first round of investors are capped at 100X investment. Microsoft will invest that $10 billion. Remember, we reported this at a $29 billion valuation and get 75% of Open AI's profits until it recoups that $10 billion. And then after that, if they ever have profits. If they ever have profit.

And that's not revenue, that's profits. Right. So if they have a 20% margin, they have to make 50 billion in profits for no more. They're being more than that because they only get 75% of them. So fascinating. Congrats to Microsoft.

And I think the rumors, based on my sources, are true that Larry and Sergey will be spending more time at Google. This is what I've heard. Yeah, that's a fire. That would be great. It would be great to have them super engaged and thinking about how to manifest this stuff into a product that actually generates revenue. At the core of Google's success, you have to remember. is the Google click-based ad network. The search and the spider and page rank,

all of that was incredible. That was the use case. Then there was a business case, a way to monetize that, which was also in sync. We have to see if chat chippy T can come up with something for that. It might be, you know, just a subscription model. And who in the world is not going to pay $42 a month, $600 a year?

anybody who makes even but $20 an hour, that's only 30 hours a year. If this makes you, if a person works 2,000 hours a year, you need only be 15% more effective to hit the break-even point. Right? So just to go to that math, $20 an hour divided into $600 a year for chat GPT or a competitive product is 30 hours. Average human puts in 40 hours a week times 50 weeks, 2,000 hours a year. 30 hours.

So it's like even a fraction of them. It's not even 300. It's not 15%. It's 1.5. 1.5% of your year. Like, you're certainly going to be more than 1.5 more percent or 5% more efficient with a chat, GPT like service.

And that, friends, is the back of the envelope math that gets you to point two, to round two of peak employment. Peak employment may have, it might be a peak oil. Remember peak oil? We're going to hit peak oil. I have, this is. I haven't, I have only written half of it so far, but the title of my forthcoming newsletter this week is don't learn to code, learn to wire.

Like, become an electrician. Now is the time to do that. mollywood. substack.com. That's right. That's right. And I did see across the wire that activist investor, Elliot management made a multi-billion dollar was making in Salesforce.

So Elliott Management has, by the way, is the activist investor that instigated Jack Dorsey's departure in some ways as CEO of Twitter certainly stopped him from like goofing off to Africa for a year to run the company from there. Moving to Africa, yeah. Moving to Africa. Yeah. Elliot has taken a quote, made a multi billion dollar investment in Salesforce according to Wall Street Journal sources.

Salesforce has $156 billion market cap, so assuming a, you know, single digit percentage ownership. But Elliot is not the first apparently activist investor to come in. one came in saying that they were worried about margins and overall profitability. Elliot usually asks for things like board representation, pushes for operational improvements, like changing up sales and executives. Starboard Value is the one that came in in October and said that the company had a valuation discount because of the subpar mix of growth and profitability.

And I think this is so dishy because, as you know, I think something's going on at Salesforce. And to be honest, I've had a decade of like spidey senses about this company. Like I'm like, they feel like they make too much money. And I can't quite tell how, even though I understand the pricing model. Salesforce isn't cheap. You know, it's a, they have a lot of SaaS products. They've bought over time. Subscriptions were a booming business.

Now people are tightening their belts. Their customers might be renegotiating contracts. So there's going to be. SaaS duration. Sast duration has occurred, as you said. Yeah. So that cycle is well underway. This means more layoffs.

I mean, let's just call it what it is. They said there's a layer of 10,000. I think this means like, you know, 20. Yeah, maybe it means 20. And that's really the only cost they have. I mean, it's real estate, et cetera. But, you know, the reoccurring cost of highly paid tech employees is now these activist investors, they smell blood in the water.

I think that's what's happening here. The sharks smell blood in the water. Oh, yeah. These companies are underpriced. They could be highly profitable if they cut even deeper. And let's see, in their mind, they're like, let's see if you put another 10,000 people out of a job. And we have 20,000 later on sales force employees, what this looks like. I wonder if we see like a slack.

I mean, Salesforce also went out a big buying spree. I wonder if we see like a slack go back up on the block. Problem with that would be, I think it's doing decent revenue. And so you might just want to operate it for, you know, to continue to get profits from it. I guess I sort of feel like at some point other than the stock bump. I mean, granted, we're talking about tens and tens of that in some cases, hundreds of thousands of employees. But like, how much marginal savings can you actually accomplish overtime with cuts?

Like some, but if an Elliott management is one, wanting growth in the bees. They could cut half the step. That's the truth in a lot of the... That's what they would have to cut, right? To really have a meaningful... 20% would have meaningful. Yeah.

Because all that just throws right to the bottom line, right? After three months or six months of the severance payments, once that gets washed out. And so I think what people are doing is they're making two bets. The economy comes back. You know, in three or four quarters, we start to see growth in the economy. and you make these cuts.

And so then the cuts come and they hit, let's say, two, three, four quarters out. And the economy comes back three, four, five quarters out. You have two tailwinds. You lowered costs and revenue started to grow again. So I think this is why savvy shark-like investors are making these bets now. Right. That makes sense. Yep.

All right. Well, that's what's happening at Salesforce. And then we got to be. We got to do this quick. We live in the future. Oh, yes. I saw this go by my feed. NVIDIA has broadcasting software,

so I just downloaded it on my Windows machine on my Dell. It's called Nvidia Broadcast 1.4. But they had this really cool feature where it will change your eyes to make you look into the camera perfectly. And so here, watch this video. It's kind of, this one is pretty good. You'll see his eyeballs if you're watching. are staring directly into the camera instead of reading a script like I'm doing now,

or like reading another monitor off to my right. And it's not real. It's not real. Do you notice his pupil seem a little bigger? Yeah. Also slightly close. Slightly fixed and terrifying. Well, and the only reason it's fixed and terrifying is because he's reading, right?

You make a different, like you don't, if you're just making eye contact with someone, you look away occasionally or you kind of look, down. You know, it looks unnatural because he's reading a script with a sort of a fixed gaze. And then that fixed gaze is right at the camera. So then it starts to be like, oh, bro, okay, you are really staring me down right now. But let's not gloss over the fact that AI made his eyeballs look at the camera instead of off of the screen. Like, that is what? Yeah. It's pretty cool. What? You're going to, you know, the Uncanti Valley is here. This is just on

desktops. You know, like we talked about Lou Skywalker, or appearing in Mandalorian or de-aging in the Obi-Wan series. All this technology is kind of the same. And so you can touch up your appearance in Zoom. InViO, let you look directly into the camera. I mean, all these things are going to the point where you're going to, you know, be able to do all of this at an operating system level. So when you use something like this in video one,

it rechannels your camera basically in your audio. So your speaker and your video, when you're using Zoom, Microsoft Teams, Discord, Slack, you know, we use huddles, you can basically feed in your Invidia studio. So kind of cool how it works, you know, instead of picking whatever your current camera is, creates that new input of like,

here's the NVIDIA camera. It's pretty neat. It really is. I mean, honestly, because so many, now especially that we're doing so much live streaming or video conferencing or, you know, presentations, like we're doing meetings that involve notes,

and it's so it's hard to figure out where to look. Like, we have cameras positioned above our monitor so that it looks like there's a natural eye line as I'm like talking to you the audience, for example. But if I have to look down at my notes, then I'm like, um, looking down here. And I could conceivably, you would never notice the difference between me talking directly to you via camera and me glancing down in my notes to read that it's broadcast 1.4. It's pretty neat. It also, in top of the eye contact, it does a pretty cool feature where if you move around in the frame, it will re-center you.

So for people who are doing a live stream, like if they're DJing or they're a video gamer and I go to the left here, I go to the right, it just recenters you even if you're moving as if a camera operator was tracking you. Pretty neat feature to have tracking built in. Yeah. It's a neat piece of software, and I think it's just the beginning. So I'll be built into the operating system. Yeah, it's pretty bananas. Pretty bananas, friends. See even soon.

You won't need us. Okay, thanks, everybody. On that creepy, uncanny valley note, we are going to leave. As far as I know, we will not be replaced by AI. We should be, in fact, back here tomorrow. But, yeah, AI might be so good that you can't even tell. It'd be great if the AI could get rid of this raspy voice in real time and just make me not seem sick. If you want to help out the show, fill out the listener service.

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Fill out the survey. Have your AI fill out the survey. There you go. Don't please don't lie on the survey. Please don't have a computer lie for you. I mean, eventually, your AI may actually might actually do a better job on surveys. I mean, chat, you know, like, makes up all kinds of lies,

apparently which is hysterical. I mean, it's going to be very interesting when your doctor's AI talks to your AI about, like, your health plan. I think that's going to be like the next piece of this. Everybody has got to, you have to all go read a diamond age, or diamond age by Neil Stevenson, because it is like the perfect, it shows you what this is going to look like when we all have what is effectively

a tablet. It's called a ladies primer. That's just our like constant companion and informational butler. There you have it. All right. We'll see you tomorrow. Bye. Bye.