Venture Apocalypse?

Speaker

I've got sunshine on a cloudy day When it's cold outside, I've got the month of

Speaker

March the 3rd, 2023 It's a Friday, and if it's a Friday, it's a Friday, it must be that was the week with my old friend, Keith Teer, not so old, older than me, of course, but we won't talk about that. Last week, our focus was a relative amount of normalization when it came to tech, I think. We talked about Section 230, an AI bubble, China-Saudi axis, seemed as if things were coming back to normal after a few weeks of hyper-exuberance and pessimism, but it seems as if we're back to at least hyper-pessimism. We are back in the apocalypse with a venture apocalypse this week with Keith, although your Substack newsletter, Keith, asked the question, are we in a venture apocalypse or are you being your normal, ironic self? Well, two of the writers that I include this week think we are. One is Chamath from Social Capital, and the other is Elad Gil, and they're both very respectable commentators about venture capital, and they both make the same point, and the point they make is companies that raised money in 2021 will be running out of money in late 2023, a little bit later maybe. Chamath draws the conclusion that later stage venture-backed companies will not recover their valuations for about three years, and Elad basically recommends people should close their companies down rather than just run out of money. He's really ringing the bell and saying, just stop, close it down, because this is a really bad period, and they both kind of quantify what this means, and the amount of money raised in 2021 is hundreds of billions of dollars, so we're talking about a very large set of assets that are vulnerable to being destroyed, basically. Have you taken their advice, Keith? Have you shut SignalRank down? No, no. We didn't raise money in 2021. We raised money in 2022, so it's interesting why that makes a difference, but it doesn't. Yeah, there was an interesting piece, actually, which wasn't in the newsletter, which caught my attention on the information about Clubhouse. A couple of years ago, we always talked about Clubhouse. We haven't talked about it for months, if not years. It's a site that's probably a ghost town. They raised $300 million, or they have $300 million, and the piece said that even though everyone's left, they've still got money, but if you're like Clubhouse, and clearly there's no place for Clubhouse in today's media ecosystem, should you just give the money back to the investors, or should you reinvent yourself and turn yourself perhaps into an AI Clubhouse? There's no right answer to that question. I don't know if you'll remember that Twitter used to be a podcasting platform called Odeo, and they decided to close Odeo down, but they offered people to take the money back or let them keep it. Most people let them keep it, and they turned it into Twitter. So if the management team at Clubhouse believes there's still a business there, they should go forward. If they believe that they're just burning money, and they're not making a difference, they probably should give it back or pivot to something else with their investors' consent. But what they shouldn't do, and this is the advice from Eli Gill, is knowing that it isn't going to work, just keep paying themselves to go through the motions. Well, that's not ... I mean, that might make sense to certain types of people. For an entrepreneur, that's insane, just to pay yourself a wage so in two years you have to look for another job. That would be a form of, at least from an entrepreneurial point of view, you're shooting yourself in the foot, aren't you? Yeah. But, you know, people, you can get delusional as well. You can persuade yourself something is going to work out when it isn't. I've done that. I remember my company Just On Me, Vinod Khosla and Keith Raboy and another colleague of theirs whose name is escaping me, basically said to me, look, we're not going to put more money in if you close this thing down. I wasn't there yet because it wasn't doing bad enough for me to draw that conclusion. It was doing quite well. The competitor at the time was Path, and I think we were growing and they were shrinking. So I was still engaged. So you could characterize that as delusional, but ... You've been around. You mentioned Twitter. Some people think this week, Keith, Twitter is dying. Jemima Kelly, I don't think you've got this in the newsletter either, but she believes that Twitter is dying a slow and tedious death. I mean, she's probably right. And then your friends at Substack ask, what comes after social media? Are we, and I've asked you this before, when you put all these pieces together, are we at the end of a social media age? No, no. Because social media is just another word for human interaction when there's technology. We'll never be at the end of a social media age. Yeah, but now you're being purposefully obscure. I mean, we never talked about social media age when someone invented the telephone. If you have that broad definition, then the telephone's a form of social media. Yeah, but I think if you said- And we know what we're talking about, social media. We're talking about the period from about 2000 and what, two or three, with MySpace and then Facebook and Twitter till today. So it's been about 20 years. Yeah, but it's not going away. I mean, new apps will come about. Humans will find new ways of engaging with each other and sharing things and learning from each other. The actual companies may go through even death. I don't agree that Twitter is dying. I think Twitter's being reborn myself as a better thing, but- That's because you're a big admirer of Elon Musk. I don't particularly like him. I'm not an obsessive hater, but I don't get the sense that anyone really cares enough about it one way or the other. No, they do. They do. I mean, the numbers tell you they do. And do you know who cares the most? Journalists. Because it's where they publish- So it's obscure. It's journalists talking to themselves. And I just don't see a future for Twitter. But that's another issue. Maybe we'll talk about that another week. So you don't believe Twitter's dying? No, I don't think Twitter's dying. I don't think Facebook is dying. I don't think Google- Well, no one's claiming that Facebook's dying or Google. And Google isn't a social media company anyway. Yeah, they were claiming that Facebook was dying a little while ago during the- All right, well, we talked about that. And one of your pieces in this week's newsletter is a letter from Neil, from the new head of YouTube, Neil Mohan. What do you think it's about his 2023 priorities or YouTube's? Are YouTube, do you think, trying to reinvent themselves? Or are they still cresting the wave of shared videos? Well, they're definitely the place to publish video, live or otherwise. We're live on YouTube right now, for example. But- Are we? Oh, yeah. Well, unless- We're ubiquitous. We're ubiquitous. So, you know, to answer your question- We're ubiquitous and ridiculous. We are. I think I'm just going to let you interrupt. Go on. What's your next interruption? I can't resist that. Because I wasn't sure. I don't think you knew whether you were going to say ubiquitous or ridiculous. No, look, YouTube is massive and big and it's not going away. And Google makes a lot of money from it. However, it has competition and especially young people are finding new ways to engage with video. TikTok being the obvious example, despite various attempts to stop it, TikTok is thriving. So what Neil is writing in this letter is really a commitment to modernizing YouTube, to include stories, to include AI where relevant, especially for creative things like editing or subtitles, for example. So I think it's just a statement of continuing success with modernization. It's a bit boring, to be honest. I guess he has to say something. There's nothing groundbreaking there. It's just keep on keeping on. And I think they will. YouTube is, you know, for young people a massive time sink because they feel as if they engage with what they want. My kids do. My daughter. I don't know about my son, but they spent hours. It's probably maybe not for this show, but not particularly healthy. Last week, Keith, we talked a lot about Section 230. It hasn't gone away. You have a couple of pieces. One from the markup by Nabia Syed on Section 230 as a load-bearing wall. And is it coming down? Not quite sure what that means. And then another from the Washington Post about Joe Biden finding that breaking up big tech is harder than he thought. What have been the aftershocks of the Section 230 stuff from last week? Well, it's still unsettled the way the Supreme Court works is they listen to a case and then they discuss and they report their findings often months later. So we don't know what the findings are going to be yet. The pieces in this week's newsletter I thought were super interesting, especially the first one you mentioned, because it goes into the history of why Section 230 came about in the first place. And it makes the case, which I'd never really understood this. This isn't how I perceived it, but I actually think that it's correct. That Section 230 first was brought about to encourage platforms to editorialize, to cut stuff out that they didn't like. Well, that's the Google talking point. I'm not sure whether the Google people have got into Nabia Syed's head. That was their defense. Well, see, my perception was that, and this is when I was an ISP, that Section 230 was telling me I'm not responsible for what other people do. What this article says is, yes, that's true. And that remains true even if you take responsibility on occasion. That doesn't mean you have to always take responsibility. So apparently it was to encourage what has happened, in fact, which is all the social media platforms turned into censors. And in the very recent period, woke censors, you know, kind of police guardians of thought in a way. Now I know why you think Twitter hasn't died, because it's not woke. But it's definitely not woke under Elon's leadership. But it doesn't mean it's perfect. He has his own issues. Yeah, he said some. I think we can leave him out of it. You didn't have any links with some of the nonsense he's been talking this week. What about Biden and breaking up Big Tech? That's, of course, back to your friends at the FCC. Yeah, I don't know if you've got it, but there's another article which talks about the FTC giving up on stopping Facebook making an acquisition. Yeah, I've got that one too. FTC drops the bid to block Meta's acquisition of Within. Right. Well, if you read the quote in there, it's all about what a bad time Nina Khan is having. Yeah, well, you must be this. I know you're a big fan of Nina Khan. Yeah, we know that. I'm a great fan of her postgraduate paper.

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So is this? Yeah, I mean, Biden doesn't have much more time in his presidency, at least the first term. Is this the end, do you think, of any serious attempt to rein in Big Tech? Yes, I think it is the end. I mean, apart from in Europe, where Europe is damaging itself by overregulating Big Tech. You know, I mean, the extreme to me is forcing Apple to put a USB-C power connector instead of a lightning connector on the next iPhone, which, you know, why does anyone care? I mean, it just seems bizarre to me. So I think Europe is a bit of a renegade in this area, and money will run away from Europe the more it regulates. It's interesting, thinking out loud, Musk's acquisition of Twitter is actually bad news for the MAGA crowd, who claim that all social media is woke, because clearly it isn't anymore. Correct. They can't claim bias. But, you know, the truth is, I watch MSNBC a lot. I can barely watch it anymore because it is so partisan. I wouldn't use the word biased, but it has a political point of view. It mostly isn't news, it's op-ed. Have you become a Fox News person yet, Keith? It sounds like you're on the road to it. I can't watch that either. I can't watch CNN. I can't watch any of it, actually. That's why we're doing now.tv, because all of conventional television is redundant. Well, we've done 10 minutes, Keith. We haven't even talked about AI, but that remains the main story. You have a really interesting piece from Gary Marcus, one of the world's leading authorities and skeptics on AI. He asked, he co-authored it with Michelle Garner. He asked whether it's time to hit the pause button. What do you think? Well, I think of that as basically being cancel culture on the machine. It's like this machine can say bad things, so let's stop it. I don't agree with it. I understand why they say it, and I think that Gary and others like him are genuine in their belief that the human race is so gullible that a machine saying bad things might poison the mindset of the populace. So I understand that that's what they think. I don't agree with that. I think we're totally capable of understanding the nuances of what a machine says. I also think it's misunderstanding ChatGPT's usefulness. You wouldn't employ ChatGPT as an analyst on politics or racism or sexism or homophobia or transphobia or any of them because that isn't what it's good at. And if you play with it in those areas, it's going to be wacky. But it's super good at being a research assistant. It's super good. Right. So a bigger deal, a couple of interesting pieces you've got. One from Sam Altman, who believes that open AI or AI in general, and he, of course, is the CEO of OpenAI, so he understands it as well as anyone. He believes it can break capitalism. And then an interesting piece in the Wall Street Journal by Henry Kissinger and Eric Schmidt and their co-author of a book about AI in which ChatGPT heralds an intellectual revolution. Is this for real? Is it really as profound as some of these people are suggesting?

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Yes and no. It is profound because it's going to bring something to play that none of us have ever had, which is an unlimited research assistant sat on our computer available to be asked questions or help with a goal anytime we want and have a reasonably good chance that it will do a good job. That's revolutionary. I mean, it just is fantastic. Isn't that just a sort of audio version of the Google search engine? No, it's better than that The Google search engine will give you keyword matches on anything. It can't really answer a question or tell you in a narrative way

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a set of facts or opinions. So it's very different. It's more like having a human being sat there. Now, we human beings are flawed. If you ask me to describe the laws of physics, I'll do a really bad job. Whereas if you... You never do a bad job, Keith. And the thing with AIs is at least they're not like me. They don't interrupt all the time. Exactly. But it is like having a person. In fact, it's like having all people. It's like you can have the whole human race on your desk answering questions and depending on the question, it will become somebody capable of answering. Whereas I can only ask the questions about things I'm an expert at. So it's better than a human being. It isn't more intelligent than a human being because it isn't thinking. But it is able to gather information, facts, whatever you need based on your question and put them in front of you almost no matter what the subject is. And that's the intellectual revolution that Kissinger and Schmidt talk about. I wonder whether the first wave of people to be really impacted by this are writers because this is manifested at least in its first version in text. And most journalists, I mean, we've heard this one before, but it seems to me as if most journalists and writers and copywriters, they're all going to be made redundant because most of them aren't very good. And unless you're at the very, very top of your profession, I don't see how you survive against this. Well, I definitely think we humans will want as much human written stuff as possible with as much creativity and out of the box thinking as possible. And ChatGPT won't give us that. So I think you're right, but I don't think it's... Yeah, but when you speak on behalf of we humans, I mean, we humans, to borrow your language, aren't very original, are usually incredibly boring. I mean, remember when you sit down next to someone on an airplane, how boring they usually are? Most people are boring. Most people have never had an original thought in their life. I'm talking really about the writers that might get displaced. And what I'm really saying is, the really good ones that we love will not be displaced because the ChatGPT will not be able to be as good as them. But who like, give me an example of someone, and you say we love, who would be an example? You know, like yesterday, I mentioned to my wife this novel, which you'll be familiar with as a Englishman, is The Ragged Trousered Philanthropist. Have you heard of it? I have heard of that. I don't know, who's the author? The author is a painter and decorator from, I think the 1930s, but I can't quite remember the date when he wrote, who wrote a novel that was really all about the people in his life. It was a novel about the working class. It's a fantastic novel. And it sits alongside Orwell, for example, as a... Right, I did a show, a keynote show, where the guy used to run one of the big publishing houses, Doubleday in New York, Stephen Rubin, and I asked him the same question. He came up with a novel, but he acknowledged that 80% of stuff can be replicated by AI. 80% of the stuff doesn't work, isn't very good. When it comes to journalism, especially tech journalism, how many tech journalists can survive this? No, I think if ChatGPT was given the Reuters newsfeed and told to select articles and summarize them, it could do a great job at that. And the other sort of, I don't know whether it's an irony or eerily coincidental, uncannily coincidental, is when you or I turn on MSNBC or Fox News or CNN, we know exactly what they're going to say. We don't even... So I don't see how or why AI on any of the television platforms makes any difference. It's basically already programmed to tell you what you already know and what you already think. Yeah, well, you've already seen that phenomenon of people saying, I asked ChatGPT something and here's what it said. They're doing that on TV, they're doing that on radio. The debate I did with Gary Marcus on Intelligence Squared, the moderator did that. So ChatGPT is being invited into the media as a participant already. The question is, will it replace anybody? I think the answer is yes. Copywriters would be my top guests, to be honest, and copy editors. It's great at summaries. One of the articles in this week is the baccalaureate has accepted ChatGPT as a tool for students to write essays. And it's announced that it's going to grade the students not on their essay writing ability, but on their ability to critique the ChatGPT essay. Yeah, I have to say it's easy to be dark about it, but it's also a lot of fun. Meanwhile, in the real economy, lots of news, Snapchat's integrating ChatGPT, according to one of the pieces in your newsletter. And then there's another piece on winners and losers in this race to add AI. What's happening on the ground, Keith? I mean, we can talk in broad terms like Henry Kissinger or Schmidt, but what's happening on the ground this week? The biggest thing on the ground is that OpenAI, the parent company, announced that they now have an API for ChatGPT, which they'll charge for, and it's open to any developer to integrate it. So Snapchat was already doing that. OpenAI launches an API for ChatGPT, so everyone now can develop it. And basically, the same tech is being put into a range of different user interfaces. I'm pretty sure Excel will have it soon. I was able to build an Excel macro to run code using ChatGPT this week. I think every app you can think of will have it built in, and it will be able to do things specific to the needs of that app. How much of a lead? I mean, Microsoft always gets bashed around, but how much of a lead will they have in terms of Google coming up with their own nuclear weapon on this? I mean, we know that's imminent. I don't think they have a technological lead. I think OpenAI and Microsoft have a time lead of getting the tools into the hands of developers and having developers be able to build stuff. Google's tech, I'm pretty sure, is as good and maybe even better, but has yet to be released in a way that can be properly consumed or used. That's obviously coming. I'd say a year from now, not having a chat AI inside an app will be pretty much the same as not having a file menu with a pull-down inside an app. It's going to become- Or a comment section on a content website. Yeah, it'll basically be everywhere. And then it comes down to human use and how we think of it and what we use it for, how transparent we are about that, all kinds of stuff. The one thing I'm pretty sure we will not do is rely on it for facts or opinions. Well, you even managed to find it for video of the week. This is one of your new features on the website. What's your video of the week with an AI focus? It's a video from Forbes that's looking at why AI is going to change our lives and reset everything. I like that phrase, reset everything, because we already do a lot of things. The ways we're going to do those things is going to change. And that's the reset. So the video is a pretty professional, narrated video with lots of participants that just makes the case for the impact this is going to have. I thought it was well worth watching because it's one of those basic videos that especially someone new to the field would learn a lot from. And meanwhile, that was a video of the week. What about startup of the week, Keith? Yeah, my startup of the week this week is self-serving. Very self-serving. You're always self-serving, but shamefully self-serving. Shamefully self-serving. Apologies to Steve Gilmore, who hates it when I do this. And I don't do it in the spirit of... Why are you apologizing to Steve Gilmore? I must be guilty. It's the Jewish side of me. He's always telling me off if I promote anything that I'm doing. And this is promotional, but it's also real. The startup of the week is Evolution IQ. It's a great startup. And the reason I made a startup of the week is because firstly, what it does, it's focused on people with disabilities getting back to work, and it gives them all the tools they need for that to be possible.