The Silicon Valley Wealth Divide

We are headed towards the most epic run of IPOs of all time with SpaceX, Anthropic and Open AI all coming out within the next calendar year. What's gonna happen? Let's ask the man that took Twitter public right after this I'm just back from ServiceNow's Knledge twenty twenty six in Las Vegas and the conversations I had there are ones you're going to want to hear. I sat down with the president and CPO AmitZery on the platform strategy powerowering Enterprise AI, Chief peopleeople and AI enablement Officer Jackie Canney, and Chief Digital information offfficer Kelly Romac on what AI really means for the workforce technical leaders behind ServiceNow's NvIia partnership on shipping AI at scale and Ulta Beauty on deploying ServiceNow's technology across thirteen hundred stores. If you want to know where Enerprise AI is actually headed, not the hype but the real story, you can find these videos on my YouTube channel, seearch Alex Kantrutz on YouTube. 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I'm Dick in the Nick Dick and Paul S showow. It's good to know that. It's good to have that Clarity. up from the beginning. Thank you for establishing that It's very interesting time that we're about to head into. We are in, right? But in terms of the financial markets, three major IPOs are on the way. SpaceX, open AI and anthropic could all come within Who knows maybe even the next six months, which is crazy to think of you were the CEO that brought Twitter public. And in fact I showed up to San Francisco in may twenty fifteen Um I got one week in and then week two You steeped down as Twitter C That's right That's right. And and then away we went. So it's good to be. we actually spoke the morning after. We're going to talk about Twitter in a bit, but you're somebody who knows not only about going public process. Yeah. But how important I think the message is you when you go public, how important that message is for what the rest of your company lifetime is going to look like. And how you're communicating with your own team and company about it inside the company. Because interesting thing about an IPO for any company, but particularly for tech companies and particularly in a bull market There's the time before the IPO where you raised your series B and you were valued a billion dollars And that's what the stock price is and what the valuation of the company is until eighteen months later, whenever, and you raise your CEC and now you're valued to two billion dollars. And so there's not really any concern about you know, the stock price. if you're in a fast growing company before the IPO, you're like, oh my options are priced a dollar And now the stock's two dollars. My options are pricing two dollars. and now the stock's three dollars. It just kind of this it's all kind of fine. You know? And then you go and think about not just Twitter in twenty thirteen, but more recent examples like what Dylan Field had to deal with, I'm sure at Figma and cerebrus now dealing with as well You know, it took us, you know, seven years, six years, seven years to get to the price of, you know, thirty dollars a share And then in one day it went to one hundred and ten dollars a share And then, you know, two months later it's back down to forty dollars. So there's roller coaster. becomes this, you go from Yeah Whatever. It's not something you think about having to reinforce with the team or talk about with the team regularly to whiplash and you know, what happened and why is the you know, so my advice to people who are haven't taken a company public before and are about to do it is You need to prep the team for. Hey, we're about to go into a world where The price of the stock can change even though Nothing particular to happen today. Like the stock can go up by fifteen percent, twenty percent in value based on nothing' down fifteen, twenty percent totally on. I think the public underrates how turbulent that could be inside the company Yeah. And this is kind of what I was getting at. The early days are really important in terms of the way that that turbulence actually lives out in your time on the public market Let me just make the distinction between the private markets where you know the numbers matter to a degree. of course but they're not the ground truth, right? a lot of it is feeling and potential. Yeah. You go public, those numbers matter a lot. Yeah. You have to report quarterly. Yeah. And for now we'll see right. So there's conversations that it might be once a hal, but you have to report quarterly.. And ultimately, even if you're not showing profitability in the early years investors to show a path path toward it. And investors who bought in on the IPO promise they need to see that promise of out. What are future cash flow is going to look like? Exactly. I remember before a year year before we went public, I was at a summit at GE, General Electric. And I was on stage with Jeffrey Oommilt, the CEO. and he asked me, you know, how do you think about how you're going to manage your investors once you're public company? I said, Well, we're just going to continue to focus on the long term like we have now. And everyone in the audience laughed. you know, like Yeah good luck. you know, let us know how that goes once you're public company, when all the you know seells side analysts are asking you every two days what the next quarter numbers look like No, you're right. And so look, I'll tell you what I remember covering because I was a Twitter beat reporter for a while. and what I remember covering because I would go on CNBC and talk about Twitter earnings. And I would always look back to the sort of the messaging at the Twitter IPO Yeah. Now I'll caveat it. Well, I won't even caveyat. I'll talk about it. What you said was, look, we see a path that this is a global service. We'll get a billion users. And what's the thing that doggs Twitter every quarter? Yeah. It's like, know two hundred two hundred fifty, three hundred million monthly active users.. But I bought in at this promise that there's gonna be a bill. We' to get to a billion This was what I was going to cavey up, but now I'm going to sort of talk about We could even have beat top line and EBITDA Yeah and grown, you know, bottom line more than we said we were going to grow it. But if we missed an MAU number, this would be down. Exactly. And we could miss top line I mean we only missed top line one quarter by like one percent But that quarter MAU were up over consensus and the stock went up by a little amount Yeah. And so here's this is the point that I was going to bring to it, which is U the hype that you came out of the door with. Twitter. know is basically going to be nothing compared to the hype that we're going to see SpaceX open AI andanthropic come out with. I mean, talk a little bit about what it's going to look like when those companies hit the public markets and then start reporting these coreterly earnings. And SpaceX might come out one point five twowo trillion, open AI anthropic, certainly, trillion each Uh, at least Yeah. This seems like it's they're They have obviously the potential to change software. We talk about that all the time, change tech. but until they do They're going to be sort of measured against the expectations they set. and that could be a very rough road on the public markets for a while. one hundred percent. however I think you've got three very different personalities and stories associated with each company. And let let me just say what I mean by that Youon has the benefit of already knowing what this is like and and like him or, you know, like his the way runs his companies or not like the way runs his companies. he does a great job of the narrative Yeah, yeah, yeah, this is what's going on right now. But let me tell you what's coming. I mean, look at look at Tesla You know, they can they can hit or miss delivery numbers and they can have thirty seven, you know, sixty three Rbo taxis on the road in Austin versus the year ago number of a million, estimated a million But the narrative is, yeah, but yeah, but this is where we're really going And he's just out ahead of it with the public market and the retail investors and his fans and even the analysts and the sell side analysts and the people who run hedge funds. So I think with Elon, even though the initial valuation of SpaceX is a public company, if you mapped it to the amount of stuff they have to launch into space and make productive is going to be like, wait a minute, the math doesn't that math doesn't f. I mean, forget Mars. they're going to have to get to Neptun Yeah and build it and build it He just he just does such an expert job of yeah, yeah, yeah, yeah, yeah. But if you play this out ten years and and I think he'll be I think that so I think he'll be actually fine even though there will be the people that are like, look, his numbers just don't make any sense compared to, you know, Starling has to grow at this crazy amount over the next ten years for this to make any sense. Right. OkayK. beforefore we moveved to open AI. o How much money in the market is there in this belief that Elon will figure it out? So you have Tesla, right? So you have Tesla and there's this belief that he'll figure out robotics. And then you have SpaceX with this belief that figure out space. And I think SpaceX, I am one of the people that believes SpaceX will buy Tesla. Right.. And so Tesla's one point two nine trillion. Yeah Uh It's I get I don't know. Maybe maybe I' Um misreading the market, but I get like a trillion dollar company on belieelief of Elon. But then if he buys Tesla, we're talking about a three trillion dollars company fair in the belief that Elon will figure it out, is that possible I think I think based so, so again When SpaceX goes public And I think it'll actually could it could end up being worth over two trillion dollars on day one. whether that's a fake price or not And, you know, three days later, it's something else peopleople are going to There's so little float, my understanding is there's so little float and the float is, you how many shares are being issued, et cetera. as a percentage of the overall number of shares of SpaceX, and there's going to be so much demand that the day one price is going to go to some insane number. and wear it foots out I don't think is I don't know. I just think that his ability to frame a narrative on a small float You know, he doesn't need but he doesn't need, for example, you know, a bunch of sovereigns to come in and put four hundred billion each into the company. He just does, you know, three hundred thirty billion each into the company. justust doesn't. So he's been able to sustain that retail narrative with Tesla. and I think it'll continue for some time with SpaceX. We'll see how long that lasts, but I do think he'll be able to do it Okay, what is the narrative before we move to open A? What is the narrative I mean, it's just going to, you know Starlink is going to be Starlink is going to be power all You know all interternet connectivity. So it's a starling story. It's a starling story and then I'm sure it'll be spaceat data centered space, which Sam has and O our podcast, we've talked about it's a long, long way off from being true. I think data centers and space is actually like full self driving. If you remember Elon in twenty thirteen said Maybe it's twenty fourteen. byy next year your Tesla will be able to back out of the garage. drive you to work, pull into the garage at work, navigate downtown, all without you ever touching the steering wheel. He eventually was kind of right, you know, he was just like eleven, twelve, thirteen years off The data centers in space thing is the same thing. The amount of the acreage of cooling you know, systems, you would need to launch into space right now. Well, the argument is you don't needat cooling. Well, you actually do, but it's a longer that's a longer conversation. Okay. the amount of stuff You have to launch into space right now to even power a one gigawatt data center is something like fos out to something like sixteen acres of stuff in space. Al So you can't just the capacity to launch that right now is non existent. I don't see it as ever possible. I mean, a piece of space junk hits your thing. You have to send not just an astronaut, a fleet of astronauts Data center never has a plug come on Douo because it wasn't like properly plugged in. It's like, gosh, shit, we have to an astronaut. Let's at least's crazy. Let's least let's at least agree that it's at least ten or twelve years away. Okay. But the story will be, here's what's coming. and I just think If you would ask me ten years ago or how long are people going to buy their Tesla story where yeah they never missed this, but this is what's coming. I would have said it would have fallen apart a little while ago and it just doesn't So I think it I think the same will be true of SpaceX for a while. I have this theory that the Tesla stock will or the Tesla shareholders They've been through this bumpy ride with Tesla. they've been told a couple stories. Tesla, the electric car, the self driving car, the optimus robot Um They will move their money, the retail in particular, will move their money to SpaceX. I think that's probably trer store. Yeah, I agree. And then SpaceX will buy Tesla Okay So If Elon is somebody that can sell vision Sam Altman is not No, I don't think it's that he can sell division and Sam can't. I think it's that the narrative around openp AI is already Sam has gone out and written checks that Sarah Freyar and team not to put Sarah's the CFO. So it's not just her. say Sam has gone out and written checks that the rest of the organization can't cash, if you will. the compute commitments the public commentary about, yes, we're going to spend this much on compute, but we're going to spend three times as much on training the models. And you know when you go, I mean, there have been plenty of podcasts with open AI investors on all these topics, et cetera. When you go and run on the numbers, it adds up to crazy over a trillion dollars worth of commitments that don't have the, you know, and you don't see the revenue model or growth yet to back it up. s kind he's kind of mortgaged a bunch of the company, if you will, that now Sarah and the rest of the executives have to go out there with an S one behind them answer questions, R right? It's one thing for the CEO to be out there. and again Elon's got this history of I'm talking about things that are four or five years out Sam has made monetary commitments, right? Here's how much so and so is going to put into the company. This is the deal for this particular data center. This is the deal for this kind of compute actual dollar figures attached to them and commitments. So Sarah and the team now have to go explain to the public markets and get out there during the road show. Hey, help me not I'm not getting how the bill adds up here, right? I'm not seeing how the dollar commits over here are mapping into revenue over here and when we're going to see profitability. So I just think they're going to have a much, much tougher time. It will still do really, really well on day one because people are going to be like It's the next it's the next stigma, it's the next cerebris I can't, you know, I haven't been able to buy secondary before. I want to be an investor. You have to own one of these things I think they'll I think they'll be under a much bigger microscope quarter to quarter than Elon will. Is that fair? No. Is it probably what will happen? Yes So when I spoke with Sam about this, his perspective was basically like it's tough for people to grasp exponentials And we are in the middle of an exponential.. So you might see our revenue today and you might see our you know, like planned expenditures. You don't? fully grasp potentially is that We see it going that direction And It, you know, that argument is a lot of people don't buy it the counter on it the counter to that counter And I'll let you answer is No, you just keep you keep doing the arguments yourself then we'll end up somewhere This is typically what happens. I just debate myself. All right, but let's just talk about it If you've seen this play out over the past few months You've seen anthropicit capacity limits and open AI is starting to look wiser because it planned for that exponential. So I think first of all, I think Sam is right that people I think people are I'll just insult all your audience right now and say, I think people are generally enumerate and don't understand exponentials. And it's true. if you look back even six months ago with actual committed data center buildout, people were saying, there's way too many there going to be way too many data centers. We don't, we're not going to ever use all these things And six months later with aenta coding and codeX and Claodd code and et cetera They're like, oh, yeah, we' we actually need more because these things to both do, you know forward and backward work and the token usage has grown exponentially. and so he's He's proven to be correct And yet The size of the commitments, the debt load that some of these people are taking on to fulfill some of these commitments and the gap between those commitments and current open eye revenue growth. is you know, he's just got a harder Sarah and the rest of the executives in the company are going to have a harder time. Help me map how you get from here to here. I just think they will. They've got hard numbers associated with them that Elon doesn't necessarily have. Elon kind of does a lot of, hereere's where we're going to go and this is what's going to happen next And people are like, greatreat, I get it. Well, SpaceX is basically given up on the AI project. and I know that might sound extreme, but when you're renting data centers to anthropic, they've given up So is it possible with OpenAye's case that OenAe really delivers on the product because it has more of these data centers. but Still doesnn't get it right economically? I think. so this is This is my admittedly opinion from the last couple of weeks. But one of the things that I see happening that works in open AI's favor is Codex is getting more and more popular. I think if you ask people A month ago You know, if you actually looked at Google trends a month ago, for code. Google Trend is, you know, show me the search results, the volume of search results for this term over the lastess , you know, over over time on code looked like one of these inflection points and codex is kind of bumbling along In the last couple of weeks, I've heard M and more folks say we're, you know, we were ninety five percent clawed code in a couple like Codex fans and now we're Now there's a rapid growth in the number of people moving to Codex. So all of that works in Sam's favor. And should that continue and you see a sort of you know, balance of I don't callall, I don't know, fifty fifty, sixty forty, whatever with the with the growth in agenta codating across the board that's going to continue That could be what saves that could that could be one of the things that saves open AI Anthropic I just think I mean Same thing? No. I think Dario, I mean, that's why I think there're three different things I think Anthropic has just been Um maybe as a result of just not being the lead horse so they don't have the spotlight on them. They were just more focused on we're going to go attack the enterprise. We're going Focus on the enterprise You know, they weren't they weren't even initially going to release Cawed code I mean, they initially, my understanding from folks inside Anthropic is we were just going to be like, wait, this is like a huge competitive advantage to be able to increase the rate speed with which we can accelerate our own work. and then decided, well, actually we should release it because people will find problems with it out in the wild that we didn't find internally and that'll make everything better, et cetera. There are probably other narratives internally, but that's my understanding.way I just think their focus on the enterprise, their consistency of story And Um and the and the public's perception that cloud code is like the the irrespect of what I just said about Codex two minutes ago, that Cd Code is like this is this is the great onlock and going to be the real game changer makes their story maybe the most middle of the road of the three, where I think SpaceX will be, Eon will build castles in the sky and people will buy it and Sam will be put up much more against the Hel me understand how this map did this over here and Dario' threading the needle between the two and we'll probably get a little bit more of a This is the most consistent one of the three I can bet on for long term growth and focus. But the finances aren't going to look that different will. I think that my experence loss from all of them. I get it. My experience as a public company executive is that The narrative and the story and your ability to help the market think about the way you want to tell the story is just as important as the specific numbers in the quarter. And I think, you know the even that's more true now than it ever was Doesn't matter then who goes first because you get a chance to set the direve as opposed to. I think it would be great. I think it would be great for anthropic if they can go first because for this reason, like we can tell our story It's not going to be compared to. But Sam says and we just saw in the we just saw in, you know, opening bell on CNBC that they have this much they had to spend this much in compute. whyy don't you have to spend this much in compute? You want to go first. I mean, I actually think part of The Ilan lawsuit. U, you know, we now all know the verdict of. was You know, when the verdict was announced some people were like, oh, I'm, you know sururprised he pursued that it was going to be that kind of obvious that he was going to Alon was going to lose I think part of it was just you know, throw some throw some wrenches in the works over there and slow them down and I can get out first before any of these things and I'll be first out in market and I can suck a little bit of you know, the air out of the room and right and that'll be great Now you mentioned that most people are numumerate, so let's keep running with that. Yeah. this is going to be the unfortunately, this is going to be the I can already see the clip Unfortunately, many most people are enumerate. And then someone will go find somewhere I made a simple math error and then they'll Oh, our team will do Yeah. I know'ure. Okay, perfect.'re very generous with. Excellent Just get go into that too. So let's talk a little bit then about the money in the market that can I mean, we're going to talk about onene and a half two trillion for spaceX, a trillion for openani, trillion for anthropic U is there I mean, obviously the that is just the market cap not money going in, but there's a lot but the money has to come from somewhere. It''s not to come againain another another advantage to going first and or going second and not going third is there's not infinite There's not infinite capital out there. You're going to want to be in you know, one or two of these things and then probably probably not all three although we'll see and They're they're going to require a lot of capital and The advantage of going first is you have access to Everybody's liquidity. And then you go second, you have access to some of that liquidity. And then when you go out third, like, well, we're you know, we put this much into spaceX and this much into an anthropic and we, you know, I'm sort of capped out on my public, the percentage of money I devote to public equities, etera, etceter. The other thing But let me ask you, go ahead. The investors, the pubet the secondary effects on Right, But they must be making contingencies, right? They go through these planning cycles where they're like, I'm going to want a piece of all of these companies Yeah So I'm going to have much more money available than previously, but maybe not. We'll see. because if you don't do that and somebody else comes in and gets opening eye for cheap You just messed up in a big way. We'll see. We'll see. There's such, as you already said, even though those those market caps are not the amount of money that's sloshing around and on the supply demands side of the shares that are floated It's still there's still big numbers and there's not there's not infinite capital out there. The interesting other thing that will happen is there's been so much ill liquidity in the private markets. You've got all these university endowments and venture, LPs, etcetera that haven't had their big liquidity events. that are now going to be you know, flush with distributions of sppaceX and anthropic and open AI that are going to be able to turn around and pour a bunch more money into the early stage, early stage venture capital again that have been maybe maybe people who hey like already, you know, SpaceX is marked up to this It's on a markup basis. It's now this percentage of my portfolio. It's only supposed to be seeven or eight percent,'s now fifteen percent can invest in new venture funds That becomes liquid. You get your big spaceX distribution. You got a lot of money to go invest in in in venture capital again. So there will probably be six to twelve months down the road A great time to go raise venture venture capital from LPs. Right. And the sort of question is, well, what can you invest in that well eaten by these companies Yeah. Yeahah. I mean that's not the data. is something you have to be thinking about if you're a venture investor for sure All right, let's talk a little bit about where this story can sort of unravel where it could go wrong. I Let me give you one scenario which is I was speaking with an investor recently about D margins that these companies these big AI companies are getting. And I thought, well, they can easily raise the price because the economic value that they're creating is so great that You could double the price and most people would paid that price. This investor said, no They're so close to parody that you're much more likely to see a price war than you are to see um, a a across the board price raise. And then I had to agree with him. So ifree happens, then how do you justify I agree with massive valuations for the open AI and anthropics of the world. I agree with that sentiment. I actually think there's a bigger challenge for them And it's something that is growing in the news, which is the public backlash against where's all the compute going to come from? And whet are these data centers have been already committed to and approved by the county commissioners and blah blah blah. Are they going are they really going to keep happening U I mean, You know, the one that's been in the news a lot is the Utah data center just north of Salt Lake that Kevin O'Leary, the shark tank investor from the Canadian shark Tank. whoever's in char, who's ever actually the money behind this thing and I actually don't know who it is. Why they picked Kevin O'Leary, a Canadian shark tank guy as the face of this is anybody's guess, but this way it's funny when we talked about this before, you mentioned these you Canadians to like, why are you in a U.S. infrastructure project? fine But I would say the bigger problem is he was the face of FTX Not the guy. rightight. Somebody somebody picked this guy and he's going out And doing big public interviews on both the right, you know, it was on the Tucker Carlson thing. you know, you've got the right you've got the right that really doesn't want this thing to be built progressives and others who are like you know, it's going to do this to the environment and it's going to not it's really not going to create a bunch of jobs. It's going to be just this huge problem and it's getting huge It's he's getting and he's not prepared for these interviews I mean, the Tucker Carlson interview was like not dissimilar to Ted Cruz, the Tucker Carlson interview just got crushed.iilated. So I think there's actually going to be a a growing there is a growing backlash against, hey, not in my backyard on these data centers. and well I mean, the commute has to come from somewhere and these things have to get built. And that's going to be Thats a that's a real problem for these companies. should that become a This is like the only thing I can think of that unites the right and the left in the country right now is I don't want you to build one of these things, you know, in my backyard. Yeah, recent Galu poll said seeven out of ten Americans don't want them. Yeah. The other three people don't know what don't. Yeah. The other three people aren't haven't seen what one look looks like. It's probably the other three gota check in the mail or Yeah Yeah They're widely unpopular. If you give a commencement speech and you say anything about AI, they'll boo you out of the stadium. Yeah like we've seen recently with Eric Schmidt Yeah. So that could be a real it's the idea that could be moratoriums. There was one that proposed in Main, that got vetoed by the governor. But it's being brought up by national politicians. The idea that moratoriums could happen maybe tomorrow, but like it's going to be on the ballot in twenty twenty eight. There are going to be pro moratorium candidates. Yeaharian. So the interesting thing about all this is because, you know, you've got What what has Silicon Valley spent the last two weeks gossiping about The Elon, Sam, Brockman, you know, Brockman diaries Um I'm sure he regrets having a diary, but You don't have a diary to? I don't have a diary. I had one in B. I had one in Ber. No, I don't have a diary Well these guys had been like, you know, I know you are, but what am I in court The real challenge is they should be ing Americans understand This is why this is this is why it's important we win Here's what happens we don't build these data. I mean, it's not a hard It's challenging. It's not the most difficult challenge in the world. If we don't do these things You know That's a fairly straightforward sort. We don't do these things. China wins. If China wins We lose. If we're the follower, we don't get to vote on a lot of things happening or not happening. They're going to tell us whether that happens or or doesn't happen. And they're not telling that story right now to people. The try of thing can be too abstract for like a college student who's like, I don't know if I'm going to have a job. I get it. if I was to I get it, but you get Arizona University of Arizona and Eric Schmidt told me about AI and I didn't have a job lined up coming out of college, I would be booing. I mean, I didn't have a job coming out of school as it was when I graduated and if I heard anything oh man, I'd be ready to boo. Yeah, yeah, they're just you better start telling the story like right And there's no time like the present like you haven't been telling it in the past. And again, Americans perception of these guys is they're like bickering about who's going to be the more rich in court And you know, I know you were name calling and et cetera. And that coupled with, now you want to go build this thing next to my house is a bad look. And so they just need to be a lot more Um, focused on the external narrative about this is why this is important to the future of you know our society. And it's not happening at all right now. So let me challenge the economic benefit partart of this Um and see what you think. So another place this could go wrong is are these companies going to create enough benefit for others using them? This is Chamoth had an interesting tweet. He said Wait Chimoth had an interesting tweet? Yeah. I like this one. Iess're all They're all super interesting. So let me read this. In an early meeting at Facebook when I was describing the goals of Facebook platform, an area I oversaw, Bill Gates, Wait a minute. Bill Gates yelled at me. Wait a minute, you gott love an area I oversaw. That's right. Yeah. Okay. He said his quote has stuck with me to this day. This isn't a platform. A platform is where the collective sum of revenues of the participants exceeds those of the platform itself. Yeah. So the platform is something that's so useful that the companies that use you make more money than you make. Yeah. I think that's a good definition There's an article in the information, Anthropic and open AI's share of AI startup revenue rises to eighty nine percent. Y. That's not a platform according to the definition Correct. I agree. I mean, not wrong Um but That doesn't mean they won't be able to be they won't be able to be wildly successful If you're increasing the productivity of of every porch in five hundred company and beyond by notot just ten percent, twenty percent, but orders of magnitude, that's an extraordinary amount of value. Would we have seen a corresponding increase in earnings Well, we'll see. I mean, again, if you look at six months ago and you tried to foot out, hey, we're not going to need all this compute. And hey, these companies are never going to be able to be profitable, you would have been right if that continued to be the trajectory, trajectory. And then along comes aentic coding everything goes. So we'll see. One can easily imagine there are two or three or four more of those unlocks that we haven't seen yet that are coming. Yeah, I mean could it just be that that is that's simply been applied to coding work And it can start working for all different types of work Sure. which is what they want One last thing to run by you, and then we're going to take a break. This is we had one of our commenters talk about the fact that like Microsoft has pulled back a little bit from openen AI and Apple has not participated in this moment. They said Microsoft and Apple come from real innovations and use cases, executing LLMs is expensive, risky trash for grifters, and they know it. There is no paradigm shift without Apple and Microsoft on board. so why should they take the risks of building these models driven by stolen data? This stuff is toxic and they know Could you find someone who has a stronger opinion and is less equivocal in their commentary? Let's see. It's unclear whether that was a choice Apple made orc a inability to do whatever they needed to be doing I've found it It's surprising how Siri, for exam, Siri or IMessage, for example, have been been so impossibly slow to keep pace with ear to be things that AI startups with ten or twelve people have been extraordinarily successful at, like text to speech or speech to text. Granola, for example, does a one hundred times better job of interpreting what I'm saying than Siri does, which seems I would imagine has orders of magnitude, more people and resources focused on it. So I don't think it's that Apple has seen that what O AI and Anthropic are doing is you know grifting. I don't think that's the case at all. And I think I think Microsoft pulling back from the open AI relationship probably has more to do with Sacha's understanding of the dynamics that are going on inside Open AI and with the relationship between him and openp AI and maybe his perception of what he believed to be true and what is actually true and his understanding of where he wants to take Microsoft. Yeah. No, I think that's a good perspective. I love our listeners 'd love to give you guys an opportunity to come in and Of course. I have nothing against that listener. I was just making the f joke about the clear opinion he had. That came through. All right. Let's take a break. When we come back, you ran Twitter. I want to talk about meta And then there's also this really interesting thing that's going on this concept of a permanent underclass that's emerging because there is There is going to be this sort of distinction between those that have won from AI and those that haven't. So let's cover that right after this This episode is brought to you by Orchestra. A couple of weeks ago, I sat down with David Pluff, two time Obama campaign manager, senior White House advisor, and now a partner at Orchestra for a conversation about AI democracy and the massive gap between how this industry sees itself and how the rest of the country sees it It's one of the most honest conversations I've had on this topic. You can watch the full thing on my YouTube channel, justust type in Alex Kantrz. Orchestra is a strategic communications firm helping organizations navigate exactly this moment Check them out at orrchestraco. com Most leaders know how work is supposed to happen, but when it comes to how it actually gets done day to day across tools, teams, and handoffs, they're mostly guessing. That's exactly the problem Scribe Optimized was built to solve. 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That's S C R I B E. how slash bigig tech We finished a five K in ninety fourth place right after a man wearing jeans They still give me a medal I don't want a reward for doing. I want a reward for dominating H Daily Prizeet I'm three hundred sixty five. I play for free and win real rewards, like up to five thousand dollars in cash weekly Ili like that Joker in Denim Beth three hundred sixty five. Winning is everything. Gambling problem call one hundred gambler. twentyenty one plus only must be physically present inew Jery and Pennsylvania Tasason seasa apply And we're back here on Big teechnology podcast with former Twitter CEO, De Costello. Let's talk a little bit about Meta, which was your number one competitor when you were working on Twitter.umber one number one, number two, and number three competitor. I remember Meta and Twitter didn't like each other so much that when Meta built a trending tab, a short lived trending tab on its News feeed, whenever there was a story they picked up from Twitter, they would write social media This people are talking about this on. I didn't knowcial media. Oh, I didn't know that. That's very good. So because They clearly saw you as a competitor. But right now it's kind of a rough moment at Meta. They just went through. We're in the process of going through some large layoffs U their AI models are not state of the art. don't have a cloud code or codex Equivalent. In fact, the consumer use case for AI hasn't really been correct Um And employees are starting to question whether it's worth working there anymore. I'm just going to read one employees comments in the SF standards From the outside, there's massive negative sentiment And there's certainly something there, but the pain of working here is not very well understood. It's this grand calculus of what it costs to live in the Bay Area and what personal sacrifices you're willing to make and what you're willing to do for money On the one hand, I feel massively privileged and lucky to work at a place like this. On the other hand, I'm like, where is my line? What do you what do you make of those comments? I mean There are always people who are isn't There are always people inside the company who are s it's fine, but I don't I like it. I don't love it, you know. Bob's my manager's mean to me, you know I don't know, it's one person's sentiment. so it's hard to it's hard to know what to make about that comment. What would say what I would say specifically about meta is. Mark is extraordinarily sharp and a strategic thinker and the thing that I've been surprised about is the little bit of the death by a thousand cuts on the layoffs. L there's a riff And now there's another if. and now there's another R force sorry, reduction force. playayoffs And that's like that's what drive if you do it once and then you get it in front of the company, you're like, here's why this is happening. you know, and bl blah and we're going here. And so now we're going to all, you know, wish our you know, colleagues the best And the rest of us have to, you know, buckle down and focus on peopleople will like, okay, I get it. You know, they might be sad that Jim is leaving, but then they kind of are like, okay, like I get it. we had to do that fine The doing it, you know A second and then a third and then a fourth time is like, okay, you start to be like, okay, this is obviously not the last time It's going to happen again. It might be me. and then that starts to be like massively anxiety inducing across the company and people just start to look around and like, you know, who's next? So that's just been we and it's and and each time in these layoffs, it's been a slightly different version of the you know, because of blah, we need to X, Y Z. And at some point you just start to realize like Yeah, we al you said that one. That was the same reason as the second riff. And then the third riff was the third layoff was a little bit different narrative. Now we're going back to the second layoff narrative and people just start to go, okay, like this we're just being, you know, we're just being spun Yeah, I mean, I worked in newsrooms for eight years. So every January there was a decisions subject like The difficult decisions Yeah. And I was like, I can't deal with thisore. And that's why I just decided to go out on my own. There's nothing people hate more in an organization than feeling like they're being spun. and that's when they start to kind of turn on management You know, you can get up to you can make mistakes and get up in front of them and go, man, I really screwed this up or we really screwed this up and we should have done next and we didn't. It's my fault I'm a, you know blah, blah blah, I'm fessing up. And they'll kind of be okay, you can do that a few you can do that a couple a couple times a year and be like people are like, okay, I get it. we all make mistakes. But when you start to spin people and the reason for this is because of our like and you said that, you know, same thing nine months ago, whatever, then they're like, It drives people crazy You think people are fooled and they're not fooled. You know, I'm so glad to have you here because Dick, I feel like we could speak every week because there's so much that. you know, I covered social media, I covered AI. you work You're in social media company. you're investing in AI. so mean it's unfortunately we have like twelve minutes left. I feel like we have to do this again. Ben I'll just have to Ben Horowz has this great And a shout out to Ben Horwowitz He ran this management class when he was running when he was running his Loud clloud. and He had this great and I asked him for his outline of it because I wrote a management class I did at Twitter. And I remember he was like You know your job as a leader is not to be you is not to have all the answers. If you try to spin people and you think and I just said this, if you try to spin your team and they know you're like spinning them, like that's like the most demoralizing thing you can do. don't try to con me. There's got to be That's the problem with these layoffs and then layoffs and then layoffs. and now We're doing it again, but this is the reason why? And it people just sort like, okay, like they turn off. No, I'm with you. and o, so here's where I was going with my windup The interesting thing about meta is that Is it really like a social network anymore? or is it like reels? and an AI project Yeah. and is Twitter and a social network anymore or social media? orr is it like I mean, it does still have text posts, but it's kind of like Reels and it's combined with that side AI project I think Twitter's text posts are 've extraordinarily resilient It was like it's like this, you know, It's ability to survive the changes in the way people use TikTok and reels and social media. I do think I do think Ma is Res in an AI project Let me just tell you though. Twitter, I've just went to my home feed. Okay. First post, image. secondecond post, video post video Fourth post, text only, fififth post, video, some guy beating the shit out of someone who tried to take his bike. Six posts. Alex, you've got a weird've got the algorithm wants you I'm not I'm not the algorithm. D't algorithm. Mor minor told only one that to b videos. All right, next text post, nextxt image. All right. Go ahead. Anyway just I'll say this about I'll say this I think you're asking me about about Twitter. I think Twitter is Um, usefulness as a here as a text based medium despite what you're seeing in your home feed has been extraordinary. and I think I would actually credit I like to knowing a little bit about you know knowing a little bit, a tiny little bit about what goes on inside the company. I would credit lot of the recent success. and I hope I'm been actually hurting this person by crediting him instead of, you know the ownership. But I think Nikita Byer as the head of and he's the product's I think he's the only product manager there now And then loads and loads of engineers or sorry, some engineers and a designer Sorry, don't mean insult Elon by saying loads of engineers. someome engineers. But Nikita has Nikita has an extraordinary instinct for product that I think only I would say Kevin Cistrom And maybe, you know, Evan Spiegel was in his initial instinct for Snapchat stories. are comparable. I just think Nikita's got an almost remarkable instinct for no, no, no. this is going to be what helps grow the product, even though you know, nobody else is talking about that right now, we're going to go do this. He's right more often than he's not, and it's impressive. No, it's I mean, I just remember sort of foreshadow of this at the beginning of the episode. but U So I moved to San Francisco in may twenty fifteen And I think I had my first week on the job, second week on the job, you stepped down. Yeah and june tenth And this was yeah, and this was my second week there and this was Twitter and Facebook that was basically my b and The whole newsroom stopped. we're like big big news, hope kn it. And my editor looked around and he's like, who's writing this? I guess I will. And then the next day we spoke about about the fact that were leaving and Jack was going to become the interim CEO. my favorite game, my full time CEO and that was like It was a definite like welcome to Silicon Valley moment. It's like, oh, things haven't really slowed since then. Yeah. goo ahead, your favorite notot favorite. A moment I remembember vividly from that is had that we have all these alerts on our devices internally around The platform, obviously. And I got off stage after telling the company, hey, I'm stepping down. Jackson is take over his interim CEO. I've told this story before, but I hope I get offstage and my phone, you know, and you know, it's super emotional and my phone bings. Elon Musk has unfollowed you on Twitter L like, wow, man, yeah, four seconds I don't know you might dodge a bullet there. You never know. anyway. Yeah. No that was look, I I think it was more like looks and sees Seasons like, don't need to follow this idiot anymore Well she should does he follow you now? I don't believe so, but I haven't looked. No, I always, I mean, always like looking at your tweets. So I mean, I think we could do another full episode talking about Twitter era and the transformation that product. And I actually thought, you know maybe we should have even started there, but I'm glad we went with AIIPs. But it has been a fascinating pro. I mean when I was covering it, I covered like every little tweak to the feed. I broke the news that it was going to be algorithmic. That was a very intense time because Jack initially denied it. my DM's were like, you're a liar, your credibility' gone forever. And then then on Tuesday, I broke it on Friday on Tuesday, they're like, we're going algorithmicarly it's algorithic. But I've forgiven Jack for that. I hope we're all good at this point. Not just a crazy crazy product and clearly like This whole, you know, this whole Twitter's dead thing. I mean, when you were CEO, you saw it after you left, every journalist writes a Twitter deead story. I never wrote it and I never will because For the reason the format works. That's what I's saying. It's remarkably resilient. Yeah. The year I the The day I became CEO, I walked up to the head of communications, Gabriel Stricker, and I said, hey, the at the time back in the day, there were business magazines, tech business two point zero and like Bloomberg, I think, had had dead birds dead Twitter birds on their cover the past year. You know, the death of Twitter. This is twenty ten death of Twitter across media. I just went up to the head of Cs, Gabriel, was like, hey, your goal for the next year is no dead birds on the ma many of the major media platforms. low bar. like the company is not dying. It just is it's a constant And it never goes away. It's crazy. Well, I would say that so the business of Twitter has died to a degree. remains f. I mean, I was People get crazy. People next company to bring it full circle. Yeah. People can dish on advertising dis and dish on advertising all they want. But advertising is undefeated as a business model. What you end up finding is that the average revenue per user is just much, much higher than you can get from a premium subscription So maybe going to a premium subscription and telling advertisers to f themselves isn't the best business strategy. I mean, it never worked for me telling my customers to go F themselves.. But you know, again Te their own Yeah teach their own. Okay, let's end here. You know, we were texting, you sent me this post. The vibes in SF feel pretty frantic right now. The divide in outcomes is the worst I've ever seen. Over the last five years, a group of ten thousand people about atanthropic, open AI, XAI NvidIA meta TBD have hit retirement wealth above twenty million. Everyone else outside the group feels like they can work They're well paying, but less than five hundred thousand dollars job for their whole life and never get there. Worse yet, layoffs are in full swing. manyany software engineers feel like their life skill is no longer useful. The day to day role of most jobs has changed overnight with AI pointing at this permanent underclass I mean, I guess it's tough to feel bad for someone who's making less than five hundred thousand dollars if it's like four doll ninety nine But it is interesting what you're seeing in Silicon Valley today with like these lottery ticket winners at the big AI labs and everyone else I don't know, man.ll say I'll say two things about it Living a life of comparison It doesn't matter It doesn't matter where you are in that stack It's a losing strategy. It's just it's just a life of misery and I guess becausecause you're comparing or you can't buy a house. No, just no just the like I'm here and this person there's no winning that ever. That's right. By the way, you can be look, look Elon has got more money. Elon's going to be the first trillionaire Is he talking about like What's he talking about on Twitter? You know, like' Sam's a bad guy You know, like you you don't get like Man, if I were a trillionaire, life would be great too. You get I'm going to that guy's a bad guy and I'm going to you know, go get this person. I just like There's a great old Winston Churchill quote that I'm gonna botch But it's something like fununctional expertise, while great, is no match for a broad appreciation for the humanities and the human condition in all its joy and suffering. because you just develop this immense understanding of of It's all it looks like things are great for that guy. They can be just as horrible for that guy. It looks like things are horrible for her. Actually, some things about her life are better than anything about yours. And literature is filled with these, Hey man, stop chasing ghosts. Stop looking, stop living a life of comparison and chasing ghosts. than you know, this phantom thing you think you're supposed to have Virginia Wolf to the lighthouse. Great expectations, at Dickens. and I just think there are too many people in Silicon Valley who have functional expertise and not a broad appreciation for the joys and sorrows of that you grow to appreciate in the humanities. and therefore live in this like vortex of like this tunnel vision of like, They got that And I would have that if I went to anthropic and I didn't go to anthropic and that sucks personanthropic is like It's gonna to get this house, but This jerk paid fifteen million doars for the eight million dollars house, and now I don't have it and that sucks. It's just there's no winning. That's right. Yeah. Yeah. I mean, I would say I would say I get that it's worse for the guy R that didn't go to anthropic and now doesn't have a billion dollars. I get that. not I'm not taking the side of someone saying life is miserable in the front. I do get the person who's like It's you know, craze like making a couple hundred thousand dollars and because these opening eye an anthropic folks have gotten this windfall,