AI Reputation and Commencement Booing

Is O AI ready to IPO? How about anthropic? SpaceX is going public, but data centers in space might be a myth And Eric Schmittt is booed loudly by the new grads and maybe they have a point. That's coming up on a big technology podcast Friday edition right after this In the face of ongoing disruption and opportunity, TMT leaders need to deliver tangible results, not just ideas. When pace and performance matter most, PWC combines market insights and deep sector experience with AI, cloud, and emerging tech to accelerate your transformation and drive measurable ROI from strategy to execution PWC can help you anticipate what's next, outpace disruption, and compete. For more information, visit pwc. com Welcome to B big Technology Podcast Friday dition where we break down the news in our traditional cool headed and nuanced format. We have so much to cover for you today on a very big newswek. We're going to talk about the new numbers that we're seeing from open AyI and Anthropic as both seem to be ready to file to go public. SpaceX, of course, filed to go public this week'll take a look The numbers and debate whether data centers in space are going to be a thing. And then of course, it's commencement season. and what does that mean? Whooing AI loudly? And we'll talk about what it means for the AI industry as public approval is as low as it's ever been. Joining us as always on Fridays is Ron John Roy of Margins, Ron John. Great to see you Eric Schmidt's getting booed and Elon Musk has found the largest addressable market in human history I think we got a we got a lot to talk about this week So much to discuss. Yeah, the Schmidt booze, I mean, weren't the only booze about AI. We had three commencements so far where the speakers have mentioned AI and then actually seemed somewhat baffled By people Booing them So we'll get into that at the end of the show, but most importantly, I think we'll start talking about the numbers that we're seeing from open AI and anthropic as both gear up towards filing for IPOs, maybe even this year We could potentially even see the paperwork for Open EI come through as you and I record today, Ron Jon. That might come through, but we already have some insight into how the business is doing and I think it's worth us discussing. A, how the business is doing and also whether these are companies that should go public at all All right, here is from the information. OpenE I generated nearly six billion in revenue in the first quarter, boosted by Codex. OpenEe generated about five point seven billionars in revenue in Q one Nearly one billion more than arch rival anthropic generated in the same period U but It's not all roses. Opening I told investors that its adjusted operating income margin was negative one hundred and twenty two percent in the first quarter. That means for every dollar of revenue the company generated, it lost onene dollar and twenty two cents even after excluding some large items such as stock based compensation according to one of the sources Ranjan Take us to the Wall Street side of thingsings you've spent time on trading desks Is that bad that bed? I honestly think I was watching on CNBC. they had like a Chirron like something like open is open AI the new WWork? I think I mean, you know, like the margins that were actually, the operating income margin that's was released was not that surprising to me. We all know they're losing money likeike we know that Their costs are exceeding their revenues. I guess like the fact that it's at the operating income level, Um, you know, it's not good, but Were you surprised by this kind of number? So actually I want you to go a level deeper. So the surprising thing to some was that it was operating income, right? So that's after you take away the things that typically make companies unprofitable, they were still unprofitable So talk a little bit about the difference between operating income and what we would otherwise see and whether that is a big deal. I'm actually hoping to learn from you on this one Well, no, operating income still would include all the traditional things that go into like what are the costs of goods sold, any kind of R and D, even like SG andA, like all the additional cost people, salaries that still will go into the operating income line. So it's not just Like at that level, it's not that shocking that they're losing overall, you know, one dollar and twenty two cents off of every dollar it's generated. Again, it's not good, It's not good at all. but I think like from they've kind of outlined this business for a long time. What is really interesting? We're going to get into the anthropic numbers as well that the journal had reported on It's so fascinating to me that we've all known years now burning money It's now going to actually just be directly provided to us how much they're burning and how what their business model actually looks like, even though we've all kind of known it's funny It's almost comical to me that like now we get a number like this and people are actually kind of not freaking out, but they're certainly going to be questioning it a little bit more. And I do think again, like as in the reporting, stock based compensation was excluded in this But that's not that uncommon. obbviously like when you think about the economics of the business, it's definitely going to be an SBC heavy like a profile in terms of all of their employees, but Averay I was not shocked by these numbers Okay. And so I titled this episode the beginning of the episode title is is opening I Ready to Go public. And so the question is, why is it going public These numbers. The numbers look bad And I think that the reason why like typically what you'd want to do if you're a startup and correct me if I'm wrong, but You want to get your economics in shape, You want to grow, and then when you start to turn profitable, and you can show a path to lots of profitability, which is what stockholders want, as soon as you can draw that line, that's when you hit the public markets. So why is OpenAI deciding that it's going to go public now Alex, come on. comeome on. It like too naive for Yeah like they can't. They just can't. I mean, they can't G when you're saying, like kind of get your financials in order Like it's not a profitable business. We've all known this Like it's not in isanthropically profitable. We'll get into in a moment, but like they have been telegraphing this forever I think they can't just turn I guess the biggest difference is that theory kind of held where There was the Uber, which again, it took them like six years after IPO to actually become truly profitable at like a unit economics level But uh Thsis had been You spend on sales and marketing to grow Once you have those users and they're sticky, you can just kind of like turn off the sales and markarketing spigot. And then suddenly you're profitable and that's what you do ahead of an IPO But as we've said, the economics of gener or an AI company are just fundamentally different than software that like it's more akin to industrial companies or something because you're paying for the compute costs. So the resourceces in, can scale linearly or somewhat linearly with your actual revenue. So I think that's the biggest difference that Like that No one has figured out the business model And it's this week actually, I think was a pretty big one because it became clear Okay, so this is going to be they punch line of my question which is If open AI is clearly not ready Then why IPO now? I think your answer was premised on this idea that like, all right, well, it's natural to IPO now They just raised one hundred twenty two billion. Okay. Why IPO now And that's where let me give let me give my perspective and then you can sort of rebite me here I think it is entirely a result of Anthropics's success. So you have a couple of curves that are running in parallel right now So you have openAe, which made more money than Anthropic, but Anthropic's revenue and user growth, it seems like revenue in particular has accelerated faster. We have this Wall Street Journal story telling us mind blowing growth is about to propel Anthropic into its first profitable quarter. Right. So they're going to make ten point nine billion in the second quarter. And the journal says it's an explosive rate of growth that will help it turn an operating profit the first time So opening eye is the leader, but anthropic is gaining quickly And I think what opening eye wants to avoid is anthropic going public with its rapid rate of growth That by the way, doesn't seem like it's sustainable, and that's part of this profitability thing. that anthropic is profitable now, but it would prefer to be unprofitable because it would prefer to be building to meet that demand. Remember a couple of weeks ago, we heard from Dario Amode who said, you know, we demand grew eighty X and we really wouldn't like some more normal growth Opening Eye has been building in a way that Anthropic has said is reckless. Dario called it yoloing And they're going to be able to meet that demand. So when is the window to go public? The window to go public is Before Anthrop Because if anthropic goes before you and that story hasn't played out entirely, it's going to look like they're growing faster and it's going to be much more difficult to tell your story to Wall Street that, oh yeah, they're leading us now, but because of our bets on infrastructure, we'll be able to lap them. You'd much rather just go before him for them and set the narrative Or otherwise you might have to wait three or four years to IPO and I don't know if open AI has that long. That's my theory I agree I actually do. I think it was in our discord chat for ome O of our listeners had actually made the comment that You need to view everything these companies do as who can get out to market first L that's it And I would say the last two months That's everything I read through that lens Uh space and SpaceX has already filed their S one. Oh my god, we can get into those numbers this week. We will get into those numbers. Oh my go, those numbers are something else. They have already filed RS one and have positioned themselves squarely in the AI camp Like this is not a space company anymore. This is an AI company. So they're already getting out there and Elon Musk is Elon Musking in ways that we can only just sit back and marvel at. I think so between open A and anthropic, the craziest part of this whole thing to me is like Going public is not It feels like this end state for these two companies that it's supposed to just be a financing event that gets you going to the next level. They don't need to IPO in theory when you can raise one hundred twenty billion dollars. as we said, I think it's five or six times bigger than the biggest capital raise in an IPO ever They're open A five tenes. Yeah, aboutout four times bigger Yeah. so I it's still always been baffling to me. Is the goal just to provide liquidity to all investors onto retail. I mean, maybe that's it, but but I think but I do agree They It does feel like this almost desperate race to get out first And I mean, again, the cynical read on that is just to reward all investors and employees by pushing the stock of these companies on to retail. in this weird, desperate way that makes it feel like They don't actually feel they're worth what they are Yeah, exactly. I mean, if you really believed in the exponentials, would you be doing that? U But again my parents thinkink about a rush. It's not a rush then But this is the thing. If you Here's the argument. If you believe in the exponentials, you're going to believe you're going to need more money to build infrastructure Yes, it's just you know, a one time financing event, but you could get a lot of money from this IPO And you need to be smart about where you get the money And so if you believed in the exponential You would want to take the biggest possible funding round you can. You look around, right? Again, we've talked about this on the show. The Gulf states might not be into funding open eye and anthropic right now Remember Dario said we're going go back on some of our values and take Gulf state money What happened to that? That round never I mean, the big Gulf State round never materialized maybe some came in in some ways U And so then you have to go public. thenen you have to go public. And when you if you do that, it's important to get the most money you can, the best valuation you can because after that, you don't really have You know, another IPO. that you can do. And so what openAI is doing, I'm pretty sure is They're looking around and they're like now or three years from now We might not have three years from now We need that money. We need to be on the market We can't let ananthropic go first set the narrative and then have to like sheepishly follow them. with our stats not looking as good because this rotation into arc products because we have the infrastructure hasn't fully happened And that's to me what's going on right here Okay, I had forgotten your theory, which actually makes this all make sense to me the golf states are not going to be available to be that final final trunch of financing or the next few rounds even, especially with the Iran war. Yeah.. Have you seen what's happened to Qatar I mean, they're they're stuck Their natural gas is on hold because of the stit of hormones. No no, you're right, you're right. I mean, it is crazy to me that is that singularly causing this kind of like almost panic. And I think you could be right because it's almost again, like SpaceX is Targeting a raise between forty and eighty billion dollars. That sounds big That's like a regular Wednesday for private market financing for Open AI or any of these companies It's gotten so stupid so But you're right that that actually makes things make more sense Now Anthropic is in a really interesting position again and I want to go back to this profitability here Profitable also means like you know,re you're making more money than you're spending on the buildout, which like if you're trying to hit that goldilock zone of building out enough to keep growing Um, without mortgaging the company or without going bankrupt. you actually underbuilt if you're profitable. That's the logic. And so I'm curious around on what you think about anthropic in this situation. Okay. so The Wall Street Journal reporting again, like the numbers you start to see four point eight billion in sales in Q one That's supposed to more than double to ten point nine billion dollars in the second quarter Now We are only about halfway through the second quarter So already We're in extrapolation land There's been a lot of growth, but we all know codex show a five point v. showed up from openp AI recently. I've seen endless chatter around peoplee actually switching over from anthropics. So the idea that it's going to be a straight line or not even straight line I'm guessing it looks more like an exponential curve to ten point nine billion, I think is ambitious when we're only halfway through the quarter Again, in any other situation where you're looking to go public, they would be providing backward looking numbers, not predictive of the next quarter and a half U But let's get into that profit. They say they're going to turn an operating profit of five hundred fifty nine million in doars quarter ending at the end of June So I gott to give EdZitron credit on this one. I feel like I go back and forth sometimes. He's certainly a little too bearish and negative on the industry that I work in myself. But like this is where he's great Uh, so In this spaceX U S one document They talk about how Anthropic has agreed and this is one of the big like revenue boosters for them to spend one point two five billion dollars per month through may twenty twenty nine explicitly say In May and june twenty twenty six, it is at a reduced fee. We don't know what that reduced fee is, but that reduced fee could be zero And this is honestly, like the fact that they specified May and june twenty twenty six or the reduced fee, suddenly the Wall Street Journal Gs this leaked investor prospectus saying Anthropic is going to be profitable for this quarter ending and then even adding the kind of like this does not guarantee profitability in future quarters. I don't want to go full conspiracy theory, but like, if you just think And throp it going to SpaceX. Hey guys, you guys are gonna IPO How about we commit to I think fifteen or no, like twentyw eight billion dollars in spend for your business and be the first gigantic customer that's a long term revenue. All we need from you is you cut us a deal on the next two months, give it to us for a significantly discounted or free to make our numbers look good and everybody's happy. and that's what it looks like to me. Okay, this is all predicated on the idea that Anthropic wants to show profitability Why would they want to show profitability? That means that theyul their buildout. No, no, it's Wall Street It's what you all you will still appreciate Profitability, you appreciate control over your business. Like I still think the they miss the buildout narrative. It's going it's not going to be the dominant one going into as these companies go public the losing money again fact that that operating income margin actually surprised people is just a reminder that people have kind of been closing their eyes even though We all kind of know they're losing a lot of money. It's going to move back to that and Anthropic knows that And that's why they very Sartly and tactfully were able to not only come up with these numbers but leak them to the Wall Street Journal and get the reported I mean, I definitely accept it as a theory But It seems May and Je that why May in June That is a good question. Okay. Wh? I don't know the answer to that. Wh Why reduced fee for May and June only So your contention is basically that this was a Boy to leak some numbers to say open end is yolllowing, our revenue is accelerating. We're going to be profitable So buy our IPO that we haven't announced yet notot only to leak numbers to go to the market, those numbers They if they file their S one sometime going into june thirtieth, suddenly you are going in as a profitable company. It changed and as we said, likeike if they go out with that narrative OpenAI can be shouting from the background, but they didn't get their compute right. They're not investing and everyone will look at them and like, How much money are you losing It's it's I mean, it's Kind of brilliant, but I do think, yeah. All right, mayaybe it is this boss move to just be like, listen, like They are, you know, they they might tell the world that they're going to have this infrastructure advantage Hon us They're losing a dollar twenty two cents for every dollar they spend. We've shown an ability to be profitable Go with us Market will love that over. the alternative. Like I told you That's the way that it should be done, except if you're making tricks. to do it So let me just say, Ohh yeah you're right you're right, That is Dream lives, except maybe not exactly in this form esn't that catch up to the company? Like let's say they do go public and you know, they sort of had this sort of sweetheart. You're going to eventually like think about it if you're in Dario's perspective, you're going go public, you're going to get that money If you want to be the CEO of a company that's just gonna have that on your back, being like they never got back to that point That's what I genuinely is still surprising to me. I mean, I think the Drying up of Middle Eastern money and Gulf state sovereign wealth is like possibly the impetus for it, but I agree like It's still like the feeling of urgency when they've been raising this much money, when it's not going to be in aggregate that much more money like in pure additional financing for any of these companies, but it will be a shifting of who owns all of that to public market investors, which is a much larger capital pool But like, why that feeling of like I mean, not desperation, but just that raced IPO still b It's still weird. It still feels weird to me. So I think the question needs to be asked and I don't think that this is the case, but we should at least talk it through. Maybe they're seeing a top. And, you know, I think that's kind of like Thetical to say Uh But like, let's at least explore it So where could the top be? We talked about open eye making this pivot to Codex and we asked if it was coming from a position of strength And you could say, well, maybe not if the consumer chat GPT doesn't have much further to grow. This is from the information article. any I faces another challenge, growing Chad GPT usage Oanyiz weekly active users for the quarter averaged about nine hundred five million users. although the company hit about nine hundred twenty million weekly active users in February. U the lower average figure for the quarter implies that users during the rest of the quarter was weaker In the February Snapshot The company expected to hit a billion weekly active users by the end of last year But warned employees to expect rough vibes as consumer AI rival Google made gains with its Gemini Hm I don't know. that's that's potentially, u Rough for open AI. if it just can't grow JGPT, it seems some contraction. What do you think I mean, I think it is It isn't it isn't because Isn't this the company that is now going to focus maniacally on the enterprise? whichich if that's the case, then I mean, who cares about your nine hundred twenty million active users or nine hundred five or whatever it is? L And again, is the entire game going to be Codex? like do you think Do you think they're going to still go? do you think they go into IPO with a dominant story still being Consumer plus enterpisees even after they told us it's going to be enterpise I think it's going to be enterterprise. And I think again, and this is something I've brought up in all of my interviews recently is You know, a lot of the growth of generative AI has been on the back of like novel uses that's gotten people interested in the technology and sort of established a baseline behavior, but hasn't exactly become the norm. Like I think we're still searching for like what is the key use of generative AI And remember where we've seen these spikes, image generation, voice generation and now this agentic stuff. Question is, what is going to be the mainstream use that everybody goes for and is intuitive and useful for everyone And, you know, that we don't know whether the Codex and Claoud codes are going to be that type of mainstream use or whether there are another flash in the pen I still I don't know. I guess it's still how you define. L just day to day search I consider to be the killer use case Like day to day information gathering and retrieval knowledge partner. I mean, I don't know. everyone actually I don't know if this is like Pressing or romantic or something in between But like the other day, my wife and I were sitting at like separate ends of her couch. And we were both dictating into our computers And we were both like whisper flowing into Um like our computers and I amazing Yeah, I know. but you have to do it especially at a lower voice because you're like because you don't want to whisper into the other person's AI, but this was like it's just scene in my head I know. No I kind of look over and I'm like, oh my God, you are you whispering too Um, she she got it for me. She always saw me dictating and then u like It's ingrained in everyone I know. My parents, like Like it's just the chat experience is already there. That should be reflected. This is what I'm saying. That should be reflected in the billion users of Chat GPT, right? So it's just taking longer to get there than anticipated I'm just making this case. Let's it breathe a little bit. nine hundred nine hundred twenty million users. What do you want? Come back billion million. Yeah think againg, again, the word that has been used is exponential. If it's true exponential growth that's where it should be. If that's what you're pitching Wall Street, that's where it should be. So that maybe if that's leveling off, that's what I'm saying thinking about through the internet the u Thinking through the impetus to go public, maybe it's like, allright, well, this is probably the best story we're ever going to tell. let's go There's been no real numbers around the actual compute utilization or tootal queries per user or anything like that that you've seen is there Just from Google, Google gave this week they're now processing three quadrillion tokens It's gone nine point seven trillion to three point two quadrillion per month in two years, according to Sundar Pachai, who by the way, I mean I won't pile one, but it was a fairly underwhelming Google IO kind of as we expected No big, not a real big moment for them. But anyway, let's put that aside What? just that include Does that include See, already theirs is a little different because they can just route which they are increasingly doing traditional Google search to AI mode and Everyone who is just using Google seearch is now ending up whether they want to or not using AI So I that one still doesn't feel as real to me like or important or relevant like to me, I want to know A people out of those nine hundred twenty million users Are they using it significantly more today on average than they were three months ago or six months ago? That's question stack That matters to me. Yeah. Yeah. Okaykay. justust floating it out there. How about canceling cloud code when you see the money stack up? We've heard from Uber, for instance, talking about how they've like exhausted their cloud budget in four months. Many other companies are also talking about the ROI here and and Microsoft interestingly, although maybe this isn't indndicative of Claud, but Microsoft, according to the Verge. starts canceling Claudd Code license. Licenses, Microsoft first started opening up access to Cloud code in December It was part of an effort to get man project managers, designers and other employees to experiment with coding for the first time Microsoft is now planning to remove most of its claoud code licenses and push many of its developers to use Codot coopilot CLI instead. Here's what Jama says about this and then we you He goes, Microsoft pulling claud is the first but not the last. The issue isn't that the tool isn't useful. The issue is that without context and oversight, the tool can spin forever and generate an enormous cost burden that cascaded across an entire employee population makes using the tool economically untenable. Again, like thinking like, well, is this the top? like if you were going to talk about anthropic that way, maybe they're just like, oh, people are going to kind of get religion about the amount of tokens they're spending and our growth rates is going to slow don't know, if feas I okay, I think we're starting to maybe put together a semi coherent theory accross all this. I'm not going I'm not going coherence. These companies are going to both get a trillion dollars. They're going to get trillion dollars market caps. They're going to raise all the money in the world and we're here like Why are they in a bad position? But hey, this is our job I'm going to give you kind of what I've been seeing happening over the past six months. and it was interesting that This article specifically references this time period of the last six months. is that Cld code kind of gets released and starts picking up It is a revolutionary product And then no one has even thought about token budgets. ever Everyone is allowed to use it who is given access as much as they want. everyvery software engineer specifically just cranks out whatever they want usage explodes, revenue explodes. And then in the but it's an experimental time. There's been a lot of I've been seeing around and a lot of discussions I've been having around even trying to attribute ROI or measure, even individual productivity Was it actually in line with the costs associated with it? People are starting to severely question. So you're starting to see this. You I mean, again, we went from token maxing, which we all knew was this kind of point in time that we'll always look back at and be like What were we thinking But it was. I mean, it was just that moment that everyone's like, okay, we're We're really running with this. This is something new and different. Everyone needs to be using it. And then everyone stopped and was like, holy shit, how much does it cost? And It was we know it's heavily subsidized anyways So like when you put all that together, you start seeing all of this happening, E Chimoth, like to me, and this is like at writer the type of stuff we're working on. we have our own foundation models, but interoperability, model routing based on request, being model provider agnostic on the foundation model side is where I see this going It's not going to be one month. and I mean we've talked about this for a long time, One model rule them all. systems that Route in Chamath talking about I rarely agree with Chamath, but I mean If different models, we're already seeing it like, If it's video, Like VO is very expensive. so seed danceer, cling or depending on the type of request and complexity, routing to a different model is the way I see things going. and I do think The graph of revenue growth for Claude for the last six months, we will never see again It was just something where No one no one was checking anything No one cared. And now suddenly they all stopped and we were like, oh wait. What are we doing Okay, great. So now let's just end this segment with threeree questions for you. First I Do you think so I have now brought out the best arguments I could to you know sort of say this might be the top Is this the top Fine top Well I't actually just answer it the way that you're thinking I Well, it's more again like I genuinely believe over a multiy year period Overall AI is going to become Maybe not Elon Musk's twenty eight point five trillion dollars TAM for SpaceX, but something dramatic But I think we're going to start to see that like Going from four billion to ten point nine billion estimated, I don't think they're going to get to ten point nine billion. And I know Claud Anthropic has proved everyone wrong But the last six months were something different and it's already stopped and We've been I've been seeing that It's being reported on now So I don't think kind of like growth that has never been seen before in the history of, I think, like any company anywhere is going to continue in the same way it was. So I think we are at a that kind of movement and momentum Right. I mean, if you continue to see the type of growth that Anthropic has seen like in three years from now, they would be the entire stock market This ten Xing every year the way that they are is crazy But so I get that. It's like not the top, but it's the end of the acceleration curve which would of this particular acceleration curve, which would indicate to me that it would be the perfect time to go public because that's what you want to show the market. you don't want to show the deceleration, you want to the show the acceleration market likes those type of curves. And that's going to lead me into these next two questions, which is are these companies ready to go public Let's start with open eye Is open eye ready to go public I think I'm still I'm going to say yes because I think they're ready to go public as they'll ever be and The story that they're going to have to tell the market and the market is going to have to buy is one of we are over invvesting in compute and everyone else is going to be screwed and we're going in a good place. and so They they're as ready as they'll ever be What about you I agree I agree. This is a rare moment of full agreement You continue take it Okay, anthropic is anthropic. ready to go publlic I mean with that SpaceX accounting stuff, they better be. And if you put it all together, you get selectivelyaked to the Wall Street Journal, a little S one filing only revealing from an Eitron blog post, some potential shenanigans I think u You've put everything in place. We've talked about a lot. They are I mean, for the the kind of like high level narrative of just kind of like Research lab, nice guys They are a communications Maestro U So it seems like they're tying this all together, so they better go now think I really should just title this episode our anthropic and open or our open eye and Anthropic ready to go public. I agree with you also. makeake it happen, do it. and also honestly like This is such an important cog of the economy that whether they're ready or not, they should just do it. right? For the public, it's sort of like important for us to get a look into these numbers So instead of like guessing like should Oracle be worth triple or zero you can just kind of have a much better So I'm all in favor of That's why that's why they should do it for the public. If you really cared about safety and the good of the people that you're building AI for, go public so we can see whether you're BSing us or not. That is my pitch. I think the listen I think they'll. I mean, bringing what did Sam say He wants to deliver magic at hyperscale. This is how you do it, Sam say you do it the book. showhow us the books. showhow us the books. We're complete agreement here. All right, folks, well, if you want an even deeper dive or a similar actually a somewhat different perspective on this from someone who's actually brought a company public that had high expectations, tune in on Wednesday. ur ex Twitter CEO Dick Costo and I will go through the opening Iy Anthropic and SpaceX IPOs and what is going to happen to these companies and their employees once they hit the public market. All right, we've done two, We've done opening Aye and Anthropic where we got one left, we got sppaceX And judging from Ron John's earlier comments, you're not going to want to miss his reaction to the numbers that we saw in the filing to go public from that company which we're going to cover Right after this This episode brought to you by Google Chrome You think you know a browser, but Gemini and Chrome, that's new. It can help you with practically anything on the web, like restoring a vintage motorcycle from a fifty page restoration block, or finally break down that long article you've had open for weeks. Gemini and Chrome is here for it. Ready to make anything online makes sense? There's no place like Chrome. Check Rponssees set upp required compatibility and availability varies eighteen plus I cashed out my entire four hundred one K thinking someone stole my identity. A fake email cost me my dream home after I sent my personal information to a scammer. My AI agent wired thousands to an account I'd never seen If billions of people feel unsafe, that's no longer a security problem. It's an economic one. At Gen, we're building the trust layer for a more fearless planet with products and technologies from our global brands, Norton, Lifelock, Avast, and Money Lion See it in action at genendigital. com And we're back here on B technology podcast, Friday Edition. Let's dig in to this delectable spaceX S one, the prospectus to go public This is from Bloomberg. SpaceX shows a four point three billion dollars loss as Musk targets a record IPO. SpaceX filed publicly for what stands to be the largest ever initial public offering revealing billions and losses and super voting share plan, a super voting share plan allowing Elon Musk the company under its control, SpaceX had a net loss And four point two eight billion on revenue of four point six nine billionars for the first quarter. comppared with a net loss of five hundred twenty eight million on revenue of about four billion a year earlier. Um you know, I was I was asked to go on CNBC to talk about this stuff this week We didn't actually get to the basics segment we talk mostly about open eye and anthropic, but I went deep into the numbers here. And the more I look, the more angry I got. And Ranjan, I get the sense that you have a similar feeling I don't know if I'm angry. it's more I was shocked So okay. so open AI at a hundred negative one hundred and twenty two percent operating income margin. I'm weirdly okay with that A SpaceX at a total of eighteen point seven billion dollars in revenue of which eleven billion is Starlenink And that's the whole thing and it's a two trillion dollar company. I just I don't know what how we got here. I thought this was such a bigger thing, a bigger like vehicle of capital and cash and everything that this this genuinely shocked me What was your right option? I'll explain why I was mad. mayaybe annoyed is probably the better Be mad because mad be mad. How I be mad. I'll be mad. fine screw it This is my mad face Okay. so this is what annoyed me. SpaceX told us that it had the biggest total dressable market. all time twenty eight point five trillion dollars That was the market Okay So I'm thinking you know, you're going to go to space and do all these things, build the Mars colony What is the biggest sort of revenue driver there. ninety three percent. O those opportunity of that opportunity is AI with enterprise applications accounting for the vast majority SpaceX thinks of this twenty. Uh six point five wit twenty eight trillion dollars twenty eight point five trillion dollar tan Um twenty two point seven. trillion is AI enterprise applications What I mean, this is like this is This wasn't your business a year ago Now you acquire XAI and all of a sudden, AI enterprise business applications are What you're going do Um Obviously like your grock AI application has trailed Google Anthropic and open AI you're not seeing anywhere near the level of business. and I'm just saying that not a hatater, looking at the numbers. You're trailing those businesses dramatically Losing money And you're just not in position to capture this twenty two point seven trillion dollars. Now maybe you could say our business is going to be data centers in space Um, but I I don't believe in data centers in space. If you Have something go wrong in a data center, which by the way, everything industrial, you have stuff go wrong all the time You send a technician If you have something go wrong in a space data center You have to send an astronaut I'm just not anywhere close to sould that that is going to happen? And that SpaceX has this twenty plus trillion dollars total addressable market that it's going to capture. you just Renned You're AI warehouse closes one to anthropic Are you a neocloud? are you a builder hard to Re really wraped your head around the story here Even SpaceX, what was kind of fascinating to me is The actual like space segment was which is the one that has made money over time which has still been declining overall and actually like you know, renting out or building rocket ships for others to launch All of the growth is supposed to come from Starship, which is actually not even started yet and is just pure R and D but still forecasting out all this growth. Obviously Starlink, Starlink is very profitable. eleven it's like eleven point seven in revenue four point four in profit, bill billion in profit. So it's a very profitable business But then those aren't even the key parts of the story. It's just a very vague kind of picture of AI with again, I still this one was all worth it just for the line that it's like the What was it the largest actionable largest addressable market in human history Just for that line, this is worth it though. I mean, do you believe in data centers in space? Do you think that's going to happen? It could, but normally you would do that. And then IPO. Now I'm gonna say, don't be ridiculous. Don't be ridiculous, R'a? What I know, Okay fair. What planet are we living in? A You must be in space. Yeah You're right, becausecause instead what you would do is buy Twitter, have its revenue drop by half Um and then, uh, And then also launch a very successful innovative satellite internet company. Then IPO and then build your first data center in space I mean, Jeff Pos ss it's going to happen He talked about it on CNBC this week. He said the two to three year timeline is a little ambitious, but Blue Origin, which is hispace company, recently submitted plans to the FCC to send fifty one thousand six hundred data center satellites into low Earth orbit as part of an initiative dubbed do you think? Project Sunrise. Okay, I'm reading this now All right, may maybe Elon and Bezos can do it or they just send them. they have some sort of networking. They're all satellites up there. They're off Eth. they're cooled by space and they can somehow People are going to protest that Do you think people protest the space centers in space? Data centers in space People protest everything I know what that's wass like. Parks the Park Slope food co op block for me is getting protested. So Oh really? I don't know. Wait why? Yeah. Oh, international politics, of course Because no one no one really sends a message on international politics like a grocery store. a co op in Park Slope.. It must been for us right. I was thinking like, maybe data centers and space is going to be my should that be our entire political platform? Because it does solve a lot of challenges that are surrounding data centers and It seems like actually this perfect answer to it. It's still funny just because like I actually am excited to see why it angers people I don't know, mayaybe there's like space purists I don't I don't know, it could be ere's my I mean, fifty one thousand ace jk there. That's the thing. L it's all fun in games until an astronaut dies because they hit your data center in space. Could you imagine like the reaction of public when like we lose a spaceship because We decided to make studio Gibil' in space instead of And you're right. maybe Maybe I'm going to get into space junk. I'm going to go the other way Space junk is bad Let'sace J. Let's b. The next stop space Junk. That's talked about data center and sppace, Rand and I will be out there booing. Signs up Yeah, no more space junk All right, so speaking of the commencement addresses, I think we should talk about this where Eric Schmidt, the former CEO of Google was booed This week at the University of Arizona's graduation ceremony notot only him There was a woman named Gloria Caulfield, a real estate executive who gave the commencement at University of Central Florida. and she was booed. And then this guy, I love this guy, Scott Bortetta, the CEO of Big Machine Records. He got booed and he kind of yelled at the graduates at Middle Tennessee State University. He goes, deal with it. Like I said, it's a tool just kind of mouthing off at these graduates. U Further evidence of AI's reputation problem, which we've been talking about, it seems like it's really hitting a fever pitch now. Oh, I think I mean It's still interesting to me that like, why do you Why is Eric Schmidt speaking at this commencement? and why is he bringing this up? like That part is still kind of just odd to me in general and also are people specifically Do you think they're booing Eric Schmidt or AI or both I mean, both, but more AI. I mean, you would watch this he's very he's very Booable. Eric Schmidt is very booable. Yeah. Every time AI comes up, sayay what you want about Eric Schmidt. Every time AI comes up, that's where the booze get really loud. And you had two other examples. So it's they're booing AI This was something that I thought was interesting from Bco Capital Blke, which is a fun follow on Twitter. One of things is one of three things is true about Big tech's AI narrative One, nobody can tell a compelling story about how AI will be good for society. twowo, it hasn't occurred to them to tell that story. or three, they believe it'll be bad, but it's not their job to fix it and I don't know what's more damaged Oh, I yeah. I agree. Isesn't that capture at all No yeah, it does. it does. And I think I mean, we've talked about this a lot. AI has a PR problem. You wrote about it today. I think like It's still baffling to me, but this is where Dario going out saying there's going to be a decimation of jobs. no one ing an actual likeike u positive picture of what this looks like or how how how does the world get better No one has actually painted that picture. I mean, the metal layoff stuff this week, did you Read about it.s so dystopian talk about it. Yeah Well, so so meta, I think it was eight thousand people It's ten percent in the workplace Or do they call them Medinens or anything like that? Metamates, Metamates God, do they still do that? Is that real? Yeah Well, the eight thousand are no longer metamates anymore. If some consolation to that. No No longer metamates. There was leaked audio of the Yes all gohead talk about this. This one was incredible. and like Come on, Mark Zuckerberg's communications team I know he's not listening to you right now, but still try to explain to him how bad this line of messaging is. This was internal. This was internal. wasn't was le can we have the exact I'll read the language because we have the exact read the language read the language. So they were asking about being, you know, so there's like this narrative, Okay, Meta's monitoring all the keystrokes. Some people are like, they monitored my keystroke, then they laid me off because they know how I do my job. This is how Zuckerberg explained it to the company. The AI models learned from watching really smart people do things. The average intelligence of the people who are at this company is significantly higher than the average set of people that you can get to do the tasks. So if we're trying to teach the model coding For example, then having people internally build tools or solve tasks that help teach the model how to code We think it's going to dramatically increase our models coding ability faster than what others in the industry have the capabilities to do. We don't have thousands and thousands of extremely strong engineers at their company Okay. I'll just say that Sounds logical to me I don't know. I me me What do you think? That's my point. it does sound logical. It is like so Coldly correct Yeahet. And I also did love that he threw a little shade. he's like, and we've even got this guy Alex over here, Alexander Wang, founder of Scale AI, who ran a business that had kind of the dump people doing the coding, those contractors. But you guys, you guys are smart. so us training on your keystrokes is a lot better. likeike s it's wild to me that that becomes the kind of narrative knowing that this is going to become such topic, if they're really doing this he started to get there and you start to think like Our models will be better because of this, which will make you more money and Facebook more successful, and you more successful Okay, that's att least somewhat of a reasonable thing, but You are smart, so you should almost feel honored to be trained that your keystrokes are being trained off of versus those less intelligent contractors Just at every level, come on I mean, all right, just just to contextualize it to be fair here, like those keys like This is the way we've talked about in the past Why they did this? We talked about what This is the way that AI is being trained right now. It's watching people go through environments and using that as reinforcement learning So In some ways, I get it, but I do agree that like There's an overall, this is such a difficult. I mean, can you actually possibly a message we're monitoring your keystrokes in a good way? No, should you be doing that? I don't know, it's sort of a toss up. It's kind of cray. No. But the thing is Oh go ahead, go ahead go Hold on Wait, okay, what if I come in You know, we are actually at an existential point Our models on the last benchmarks were laughed at by the industry. We've had we must for the entire future of meta and your jobs, all of you, We need to improve our foundation models The best way we have decided we can do that is to all come together. I will monitor my own keystrokes and we will together train these damn models and get back in the race That's my pitch. I love that. No that would be much better. That would be a much better way to put it. I mean the one should have said, I'mm I'm training my I am monitoring my own keystrokes, dramatically open his computer And he's getting he's getting monitored too. Yeah. Yeah. You can see you can see Net Nanny on my computer as well. No, I think This is one of the things. I mean, obviously like I was going to say something positive, but I'll just say this that like Silicon Valley cannot get out of its own way on this. and I think it's clear Let's go to Mark Andreason and I know this is bait because like Mark Andrewon iss going to go on Joe Rogan to say baity things so that people will pick it up And they'll be like, get outraged And Andrereson will be like, look at these babies. So I understand that this is bait. and I'm going I'll take it anyway. Andreeson, who is making the case that AI is going to help our productivity, managed to say while making that case is stunning He goes he was talking about the bots, right? He says the bots never get frustrated with you. They never get sick, they never get depressed because their girlfriend breaks up with them and they never file HR complaints Even if you think these things, don't say these things. Like you're not the botching of the storytelling on this front You know, we talk a lot aboutc so fine. criticism, but like This is going to have real implications. You're going to have candidates talking about kill switches, moratoriums, you're going to have data centers not being able to be built The country is gonna turn on this stuff. The booze matter is my point booze does matter Um, I think like is Do you think it's solely a function of that kind of personality, including an Andrresan just has not lost in a long time. I mean, they lost on crypto Net Net, but like It's just it's this complete invincibility. but still, you know, Trump comes into office and David Sachs becomes the AIsar and These companies become the center of the economy like Do you think it's simply that or do you think like like what would be somethingomet that would have to happen to actually stop this kind like make people a little bit more cognizant of what they're saying And realizing that baiting people like that is not a good thing Well, the technology would have to stop, right? Because ultimately like say what you want about tech in the US. It has its march has continued unabated and the technological progress has been obbvious for everybody to see It's incredible the technological progress that we're seeing and it hasn't lost. And honestly, like It's it is at a point where it's going to be diffused in a crazy way AI So I think their belief is whether they like me or not, this is going to be this is going to just, you know Get everywhere soon and maybe they're not wrong. I don't know I wonder like though it's not a politically strong message for sure Do you think in China A any of the like leading AI figures equally dickish as like many of those in in the US. Well you think I mean' timea allowed to be You don't You don't need to seell The idea Because it doesn't matter. it's going to happen no matter what And the US. the public does have some ambi it in your they're obviously not their' latitude , but they're not They can't be trying to sell the idea because if you're trying to sell the idea, this is the worst possible way to do it Like in your minds. I mean, in Andreon's mind, I think when he talks about AI, he's trying to get people excited about it. But I ultimately think that like M Do doesn't ye, I don't know He probably cares more about the business leaders than the public and thinks that I want to get I want to speak to the business leaders and it doesn't matter what the public is here because they're not my constituency I guess I cannot imagine being sold like trying to sell this. If this is You're selling. comeome on. He wass an entrepreneur You have to learn the art of selling at some point, but u I'm looking up the uh The founder of Or the CEO of Dobbao, the basically Chaty BT equivalent run by Dance A guy Alex Ju I'm going do some more looking into this. I'm curious now, like are there big personalities who are just saying ridiculously stupid things? No Well you know what happens to big personalities in the China business community Yeah Yeah. Okay, fair. How many interviews has the deep Sk guy given in international media Its in point Yeah he is there true. be a thing, keep a low profile make the country proud. I don't want to say maybe we could learn something, but maybe Just tone it down a little guys. We're going into an election year. Don't ruin this for everybody Well I can say One thing onene thing is guaranteed, this is now a political issue Right? Somet me that's polling like this the politicians will some politicians will learn to exploit And that I think, like Um That is where you could end up getting derailed I The largest consumer facing artificial intelligence product in the Chinese speaking world, Dou Bao, is named after a steamed bean bun That is how you make people friendly and happy. All right everybody. Have a great holiday weekend. Ranjan. Great to see you as always. Thanks for joining. All right, see you next week. See you next week. Thanks everybody for listening, and we'll see you next time on Big Technology podcast Our head of accounting here at Fanatics Casino has filed another complaint about how rewarding we are. I th complained this month. 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