Jun 15, 2024 ยท 2024 #21. Read the transcript grouped by speaker, inspect word-level timecodes, and optionally turn subtitles on for direct video playback
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Checkmate!
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Speaker 4
Hello, everybody. It's Saturday, June the 15th, 2024, halfway through June, almost halfway through 2024. But according to Keith Teer, the editor of That Was The Week, my guy, when it comes to news about technology in Silicon Valley, we're at the end of the game. That at least is the implicit conclusion of his newsletter this week is that was the week newsletter checkmate the game is over at least according to keith or certainly perhaps in a sense the ai game keith can we all go home now are we at the end of the game is
everything finished well you know chess competitions always have multiple games so this is checkmate on on the current board uh There can be subsequent games where things change. People can make mistakes. People can make good moves. But for this phase of the game, what's happened is that OpenAI has pulled off the impossible, by getting Microsoft and Apple on board, integrating it into the front end that we use as experience, sitting on top of their platforms. And that is the place to be. That is a great place to be. They've also, therefore, locked Google out, temporarily at least, of being in that position. So Google... Google's offering is restricted to Google and isn't being platformized in the same way that OpenAI is being platformized. So in a sense, OpenAI is now conclusively the winner of this first phase. One can draw conclusions about what might happen next. And in my editorial, I talk about rumblings already at Microsoft that they might want to build their own internal product.
So let's be clear, Keith, because I have to admit, Maybe I'm the dumb one here. What exactly are the deals that OpenAI has put together with Microsoft and Apple?
What will it mean? Well, To do what OpenAI does is super expensive, and their Microsoft deal is mitigating expenses primarily. They got Microsoft to put up almost an unlimited amount of computing and storage power, mainly computing power, using NVIDIA chips, who are another big winner in this first phase. And that means that OpenAI can build its models at great scale at pretty much zero cost.
So this is the classic Silicon Valley win-win. Microsoft gets a big chunk of OpenAI access to the algorithm, the code, but doesn't have to pay. And in exchange, they give services to OpenAI.
Correct. And so it is a win-win. Microsoft being Microsoft itself, they're incredibly uncomfortable having somebody else's code sit on top of all of their products. So little by little, having just made that acquisition that we talked about a few weeks ago, I forget what it's called now, but Reid Hoffman's AI company, they are now busily, with one of the old founders of DeepMind,
Yeah, it's interesting. You called it Reid Hoffman's company. It's actually one of the co-founders of DeepMind. What's his name? Mustafa, who worked at Google and then got thrown out. It's not Anthropic. It's the other one that got
It's very incestuous. And, you know, microsoft has an itch that it always scratches which is wanting to to own its own code base i i experienced a very similar thing i got microsoft and google as well when i did real names in my case it was microsoft and google that was my checkmate
and microsoft checkmate for anyone uh so um you're talking about an itch and incest what is this actually resulting in though is there a You know, this is supposed to be a family show, but I can be rather vulgar. Is it just mutual masturbation? Is anyone actually benefiting from this?
Well, you have to stand back a little bit and acknowledge what computers can now do that they couldn't do a year ago. And the answer to that question is dramatic in terms of night and day difference between what a computer used to be able to do and what it can now do. and Microsoft because it owns an operating system and a lot of web services, Google because it owns web services, and Apple because it owns an operating system, Android and iOS being the two that dominate the world, the battle is to deliver that performance to users through interfaces. And normally you would expect Microsoft, Google and Apple to do it themselves. But only Google is doing that. OpenAI is doing it for the other two.
Let's be clear. Let's bring Apple in. We've talked a lot about the Microsoft OpenAI relationship in the past, Keith. But this new Apple OpenAI relationship, is it similar to the way in which Apple essentially paid for the Google search or Google paid Apple to put Google search on all the iOS platforms so it's in every iPhone? Or is it a different arrangement?
What are people getting? What is being exchanged here? Quality of service for Apple. They get to plug the iPhone into the best AI currently without paying. And therefore, and we should get into Apple because that's only part of Apple's play. It's not the most important part, I think, but it's part of it. And what OpenAI gets is distribution through Apple to, you know, a billion or more users of Apple products. And it's free on both sides.
It's all sounds. Very biz-dev-y, Keith, and we're in a frothy period in economics, so it's always the biz-dev guys that do well and make the deals. But what will that actually mean to an iPhone user like me? I can already put the OpenAI app on my iPhone. How will this change the iPhone experience?
Well, that's not very hard. You just download the app.
Words and timings
Well,that'snotveryhard.Youjustdownloadtheapp.
Speaker 1
Yeah, but if you look at the number of OpenAI downloads compared to the number of iPhones, it's about 10%. What this will do is give OpenAI 100% and it will be built into Siri. So there'll be nothing new to do.
So Siri will essentially be turned into, or Siri now be powered by OpenAI. And Apple have waved the white flag on AI and recognized that whatever powered Siri in the past was inadequate and that they're upgrading it and using OpenAI.
Yeah, the Apple Worldwide Developer Conference distinguished between two kinds of AI. You could think of it as world facing or inward facing. Inward facing means on your Mac, on your iPhone, on your iPad, your own data. And outward facing means asking questions about the world. And OpenAI owns the outward facing. And when you ask Siri something that needs an outward facing query, it will say to you, can I forward this to OpenAI? You'll say yes, and it will just happen.
Well, let's say you ask Siri, where's that spreadsheet I did last week about such and such a company? It won't need to ask OpenAI. It will know the answer.
And so what Apple have done, and by the way, there's a huge underlying story here. What Apple has done, both Apple and Microsoft in the last week have tried to expose your private data to an AI platform. And it's night and day how different they approached it. Microsoft built a product called Recall. And Recall literally took a screenshot of everything you do every five seconds, including your microphone, your camera, everything, and built a database of your stuff using screenshots and capturing.
They built it into Windows 11. You can turn it off.
Words and timings
TheybuiltitintoWindows11.Youcanturnitoff.
Speaker 4
uh and then uh there's a lot it's automatically on so if you use windows 11 they will automatically take this screenshot of all that was their original idea as you
can imagine there was a massive backlash to that surprise surprise well then they made it opt in and and now they've made it um uh a private beta that only certain
I don't know the product you talk to. They used to have, and they abandoned it a long time ago. Now they have Copilot. Copilot is basically an artificial intelligence that comes up in all different contexts. And so it's Microsoft Copilot. Now, contrast that with Apple. What Apple has done is said, we have AI models that can run on your phone. There's no need for the cloud. and your data never leaves your phone. And so when you ask questions about your data, it's you talking to you, and there's no third party in the loop at all, not even Apple. And so they've built this kind of secure, encrypted...
Yeah. Now they also recognize that there are times when you need more computing power than your phone has so they've also launched the apple intelligence cloud which is also encrypted and even apple can't open the encryption there's no keys for apple to open it so nobody can get to it so so what
what this suggests keith is that history is really repeating itself we're just going to go another battle between Apple and Microsoft's utilization of OpenAI technology.
Yes, I think that's exactly right. No, but wait, all of the Apple stuff I just described is Apple's own code. They're not partnering with OpenAI there. They have built their own models. They're only partnering with OpenAI... for things OpenAI is good at that Apple doesn't intend to address, which is everything that is not related to your data. If it's not related to your data, they'll let OpenAI answer. If you want to know what's the history of Byzantium Rome, that's an OpenAI question.
But it's still a big bet. If you want to know the history of Byzantium Rome, you can still Google it on your iPhone and You get reasonable response if you know your way around Google. They're betting, or somebody is betting, OpenAI is betting, that in the long run, if you want to know about Byzantium, you want to ask your Siri and the response will be much better than if you use the traditional Google search on the iPhone.
Yeah, I would separate out productivity from quality. The quality of the answers on Google, you know, Google doesn't really do answers, right? It gives you 10 blue links. But if you do the work, you'll get to the answer. And Google wants to... It's not that hard. You just click on one of the links. Yeah, but you'd actually end up reading quite a few because...
Well, you usually, if you want to know Byzantium, the first thing that will probably come up is Wikipedia, and you click on that, so it's not that big a deal.
Well, compare that. It's like the difference between reading a book and having a highly accurate summary of a book. Open AI will give you mostly way less hallucination these days, by the way. It will mostly give you a very, very good answer that's a summary with all the right bullet points.
It's linear. You sound like you work for Open AI, Keith. I'm not sure that will be as simple as you're presenting. Let's talk about the Byzantium one then. So let's say... We know how you do it on Google, on your iPhone. You go through probably Wikipedia and you click on the link and you read that. How will it work? You'll go to Siri and you'll say, tell me about Byzantium. And where will Siri be getting its information about Byzantium, from OpenAI?
Siri explicitly will tell you it's going to work in AR.
Words and timings
Siriexplicitlywilltellyouit'sgoingtoworkinAR.
Speaker 4
It's ironic, Keith. My iPhone now is thinking that I'm asking it, Siri, which I never talk to it. So something creepy is going on. Go on. So basically, Siri will- Shut up.
Siri, what is the summary history of Byzantium, Rome?
Words and timings
Siri,whatisthesummaryhistoryofByzantium,Rome?
Speaker 2
Byzantium, later known as the Eastern Roman Empire or Byzantine Empire, has a fascinating history that spans over a millennium. Here's a concise summary. Byzantium began as a Greek colony founded by Bezos around 657 BCE.
Okay, we got it. This is not a series show, Keith.
Words and timings
Okay,wegotit.Thisisnotaseriesshow,Keith.
Speaker 1
Let me show you. Andrew, just one thing. What I've also got, and you can't really see it because my phone is focused on me, but I've also got the document. So it was speaking, but it also gave me the full document that is, I don't know, it looks like about 200 words that gives me that summary.
And then, okay, so we got that. I'm still not convinced of its value. I'm still not convinced certainly that most people will either understand or have any real use for this. So let's get to Google. What's Google doing? Is it an alternative economy where Google is cooking its own and serving it up, whereas eating its own dog food, whereas Microsoft and Apple now are using the open AI technology to power their AI?
That's right. I mean, Google's been at work for a long time on this, and like everyone else, was caught with its pants down last year when open AI launched.
It was a corporate pants down, not an individual one, but they were an open AI, you know, is measured by its capability to build models and produce products. It's way ahead of Google.
You've always said that you've never really convinced me and the markets don't concur with you. I mean, Google might not be at $3 trillion, but its market cap is also extremely strong.
Yeah, well, look, Google's world is complicated. I don't want to minimize it. Google has to do a few things simultaneously. The first is it has to maintain usage of Google Search. In order to be as good as OpenAI, it has to build AI into Google Search. But it has to do it in such a way that clicking on links doesn't go away because Google makes money from people clicking on links.
Yeah, although you have a piece about its astonishing growth, which most astounding business results of all time, Open AI's growth, although it's still early days.
Even if I had the resources. It's certainly not something that would... They can't pull it off now. Well, they certainly couldn't pull it off with the regulars. I mean, Keith, what all this suggests to me is, I don't know what the word is to describe the beginning of a chess match. It's like the baseball analogy of what inning are we in? There's no checkmate here. The game has barely even started.
Well, yeah, I agree with that. If you think of it as a championship game, rather than a single game. I think the checkmate pertains to a single game, but there's still a championship. What is the single game? The single game is who owns the primary user interface to users for current AI. And the answer is OpenAI, except for Google's interfaces. It's not there, but everywhere else.
Well, but that's still a very significant exception. Plus, we have no idea of really the next Google, of a couple of kids in the garage inventing something that will just astonish everyone and blow the market away.
That can easily happen. That can easily happen. And that's why it's a very specific checkmate. But it is, you've got to acknowledge... that OpenAI, despite all of its troubles that we've talked about on this show, has played a great game. I mean, who would have bet that if you go back five years, you wouldn't even have thought this kind of level of AI.
And is all this in parallel with all the corporate unrest, the resignation of some of its founders, the debate, to put it politely, about how OpenAI is being used?
No, I think that's more symptomatic of the political canvas that this all sits on top of. Open AI obviously throws up a lot of people claiming that the human race is at threat from AI's growth. And not to use modern language too much, but the more woke you are about tech. the more likely you're going to agree that there's a threat. And internally at OpenAI, because it started life as a not-for-profit based on a human progress foundation, the employee base is made up of both opinions. Scientists who just are doing work, but also anti-scientists who fear for the human race. And I think what you're seeing with the change in personnel is all that shaking out. with the scientists winning.
I'm still not convinced that this is the revolution that everyone seems to be talking about, both The supporters, the naysayers, the people who believe that AI is apocalyptic. I just don't see how it's going to... We already have AI with the internet. This is just a slightly more sophisticated version.
Well, that's a chicken and egg, Keith, because if I needed to use it, I would. I just don't need it. How is this going to dramatically change how most people use their iPhones or the internet?
Well, it's really about getting tasks done. Let's take your week. How many interviews do you do a week? Too many. Let's say it's 10. Let's say one a day. Let's say one a day. Now, how much work do you have to put in ahead of an interview to be ready to do the interview?
Because I do it. I prepare for things all the time. And I use it to prepare. And it gives me citations. It gives me summaries. It massively saves me time. And so I bet you, if you just turn it on on your iPad and ask it about the person you're interviewing and the recent book they wrote or whatever it is, you'll be amazed how much more productive you become.
Okay, so it's going to improve our productivity. Maybe you're right. Although there are, of course, still the pessimists. One of the more interesting pieces that you link to in this week's newsletter is the Checkmate newsletter is one by Ted Joyer. Is Silicon Valley building Universe 25 a very dark vision? of how we are falling into a dystopia. And you sent me this this week, Keith. I got about two or three other people sending it to me. So it's clearly getting a lot of visibility. What does Ted Joyer fear?
Yeah, Ted Joy is becoming a bit of a thing, isn't he?
Words and timings
Yeah,TedJoyisbecomingabitofathing,isn'the?
Speaker 4
Because he's basically a jazz... Yeah, I mean, he's an excellent writer on music. I've talked to him. I've always tried to get him on my show. He never seems to have time. Maybe he could use OpenAI, give him a bit more time to do other people's shows, but...
he's a very very talented music historian and he's an abstract thinker which is I think at a premium at a time when there's a lot of change you need abstract thought so he does think abstractly and he discusses the human race as being in a state of what Durkheim called anomie which is basically losing a sense of purpose in life and he does he talks about the things you would need to have a sense of purpose being rules-based repetition. So he's basically, you know, there's quite a strong line between that Durkheimian vision and authoritarianism. Because the more libertarian and free-form life is, the more aimless, he believes, humans become.
It's... it's not only the phone, it's really what you do on screens generally, which he is mainly focused on young people and mainly focused on social media, including TikTok. I mean, of course he's describing something real. TikTok is a mindless entertainment stream that can last for hours if you allow it to. And so he's not entirely wrong in how he's describing things. So then the question becomes, Is that a complete picture of the average brain of a social media user? Are these social media users really that robotic? Or are they actually consciously making choices that represent only a partial view of who they are and what they are in their life? He talks about suicide as well, by the way, as one of the consequences. Yeah, and Durkheim wrote a lot about that.
So is this just... 2.0 of Durkheim's criticism of industrial society, digital industrial society, is going to make us even more isolated, alienated, depressed.
It is. I don't think there's anything original in the essay, but it does remind us of how repetitive human challenges are through the ages. almost anything in civil society, which is a Gramscian word for life, almost anything in civil society that is a distraction from purpose, which is a Calvinist idea, this Calvinist idea of purpose, anything that's a distraction of purpose is considered fundamentally damaging to human organization. And so the ability of the human to have freedom of thought and leisure and absence of goals, just enjoyment, is not considered good.
Yeah, exactly. Whereas I think the goal of humanity is a total absence of purpose and just pure joy. And so... To me, anything that removes work and structure as a precondition for life is good. You're a bit of a hippie, Keith. Do you believe in free love, too? I've never paid for love, Andrew, so I must.
Well, finally, let's get to the end here. We're living in an age of where everything is being driven by the open AI revolution or the AI revolution. Your startup of the week is Databricks, would it be fair to call Databricks one of the plumbing companies of this new AI economy, Keith?
One of the winners described their results as sensational growth, rather like open AI. They're all in the plumbing system. Everyone in this plumbing system is getting exceptional growth, so to speak.
Yeah, and I use the competitor, Snowflake, which is bigger but growing slower. So you need to organize data in this world if you're doing software. Software doesn't any longer really play without data. And so data is the new oil.
Databricks gives you a place to push your data, to analyze it. And this week they announced visualizing it. So it's basically a place to manage, organize and understand your data.
neither they're they're a deeper level mainly for enterprise customers whereas openii is building a platform for consumers really and everyone databricks is just a little piece of the jigsaw that deals with managing and organizing data and it's mainly things like marketing data for e-commerce companies things like that well
the jigsaw is all finished by the end on our on our big data show uh your x of the week is by alex kantrowitz you've had him before about three three trillion dollar companies and microsoft apple and nvidia uh what's interesting about this the fact that now we have three three trillion dollar
companies it's just symptomatic of the value in um in tech you know tech used to be small compared to the rest of the economy and GDP terms and value terms and What's happening is as billions of humans are plugged into tech and as tech starts delivering Things to humans that are must-haves more and more The tech companies are getting bigger and bigger and bigger. It wasn't that long ago that we got the first trillion dollar company now They're three trillion. I've predicted the open eye will get to ten trillion, which I think it will and and um you know it tech is well that's it another word for value it's where the value in in human capabilities is going yeah i think speculating on open ai being
worth 10 trillion is is is rather silly but um going back to NVIDIA, I understand why Microsoft and Apple are valued so highly because they're complex companies. They are the plumbing, but they're also the toilet and maybe the user. What about NVIDIA? I've asked you this before. Are they the Cisco of all this, that they're booming massively now, but they're only one piece in the plumbing? Why are they valued so highly?
Well, because they have a monopoly on chips capable of driving the AI industry. let's call it a revolution. NVIDIA's chips are the only chips capable of scaling and delivering on what these companies are trying to achieve. So their sales are through the roof.
They're miles away. They're not even close in terms of capability or scale. They will get there. I agree with you. I do think, I mean, Cisco is still a very valuable company. So saying NVIDIA is the next Cisco might be true, but that's a big company.
But if you ran NVIDIA, what would you be trying to do? I mean, surely they should be the ones buying Databricks and becoming more than just a chip manufacturer.
Well, their roadmap is very incomplete. So they don't need to move into adjacent markets yet. They can grow much bigger just by keeping doing what they're doing. They've already announced the next two generations of their chips and what the capabilities will be. And that's the next two years worth. They kind of do an annual upgrade cycle. And the prices come down and the capability goes up. So it's a Moore's law phenomenon. And as that happens, the number of units sold will increase because the price comes down. So their total addressable market is on fire.
Well, finally, Keith, when we look back at this period and think, you remember that time when NVIDIA was worth $3 trillion and then just chuckle like we used to chuckle about the 90s when you had all these... online dog food companies worth hundreds of millions of dollars? Or is this for real? Are we in a boom? Is it a period of irrational exuberance or is all this real?
Well, it's just my opinion, but I think we'll chuckle for a different reason. I think NVIDIA is going to be worth many times more than $3 trillion 10 years from now. And we'll chuckle that we could have bought it at $3 trillion.