Tomorrow - Grindset Mindset

Episode Date: October 3, 2024

Rani is out this week, so Josh sits down with guest co-host Jack Raines. Jack is a storied LinkedIn prankster, Associate Editor at Sherwood, and writer of the weekly blog Young Money. Together, they discuss OpenAi's valuation of $157 billion, and the many problems and possibilities facing the future of AI. Disclosures: sherwood.news/disclosures Learn more about your ad choices. Visit megaphone.fm/adchoices

Hey and welcome to tomorrow. I'm your host Joshua Topolsky. I'm Jack Raines, your temporary co-host. Yeah, Jack has graciously accepted my offer of one billion US dollars and to co-host with me while Ronnie is out. And now Jack, if you don't know Jack's work, you can find him on LinkedIn where he is a part of the Sigma grindset culture. Is that, am I using that term right, Sigma grindset? Yeah, no, I love talking about pyramid schemes

and drop shipping on LinkedIn. I mean, now Jack is a columnist who writes for Sherwood News, maybe you've heard of it, little website. And he does a great column that we love called Weird Money. He rose to fame, though, by shitposting, I should say, and on various platforms, including but not limited to LinkedIn, where he did, on several occasions, I mean, and I'm fairly certain

these were jokes, but he did seem to indicate that he'd done some kind of fraud. One of your famous LinkedIn posts was that you were, it was one of these hustle culture guys was that you were like, it was like one of these like hustle culture guys, like who had a life hack. And it was, here's how you could never have to pay for food in New York again. And it was essentially, could you explain like

what your setup was for this hustle? Yeah, sure. So this has been a, this hustle has been a recurring issue in my life. It came up in my job interview with Josh. It came up when I had to meet with the Dean of Students at Columbia Business School two years ago, because everybody was curious if I actually did this fraud.

I did not, for the record, do this. I posted on LinkedIn that New York's expensive, my rent tripled when I moved here from Atlanta, so a personal finance hack of mine was going to random hotels around Manhattan and getting the free breakfast and signing off in people's hotel rooms. And then I would double down and go back for dinner

and eat at the steakhouse and then put it on room 427. And anyway, people, I guess it is plausible to, nobody would actually lie about doing that on LinkedIn and with the stuff you see on there. Yeah, a lot of people thought it was real. I think also it's, the way, now if you haven't encountered Jack's writing, the way he wrote it on LinkedIn was exactly in the mode

of like these LinkedIn posters you see, who are the guys that are like, wake up 4 a.m., work out, like turn on my six televisions, like, you know, or whatever. It was very, like you didn't, there was not a hint that you were kidding. I can read it right now, I just pulled it up. You're gonna read the entire thing?

That might be a bit much. It's not that long. It's not that long. Okay, fine, let's hear it. For the last two months, I haven't paid for a single meal in New York City. How is that possible, you ask. It's simple, free hotel meals. New York has 3,600 hotels, and many of those offer complimentary breakfast. By walking in and acting like you're supposed to be there, you can simply grab bacon, eggs,

and toast at any Hilton or Marriott in the city. The real trick is securing free lunch or dinner. To do this, you dress up a bit nicer and head to the restaurant. Order whatever you'd like, enjoy the occasion. When the waiter comes, he's going to ask ask card, credit, or charge to a room. You say, charge to the room. Then write down a random room number and name and make sure you leave before the payment processes.

With 3,600 hotels, you can do this for 10 years without double-gap. Follow me for more personal finance tips. Hashtag wealth hack. Yeah, no, okay, so like, here's the thing. In the world of LinkedIn, that just looks like some normal stuff that people post. And like, there are people posting like scammy, weird stuff,

like things like that all the time. Anyhow, it did come up when I interviewed you for the job. I was like, now hold on a second, mister. Love your writing, but did you actually do this fraud? You were also mentioned by Matt Levine, the well-loved and well-respected columnist over at Bloomberg for another post that you did where you were talking about how you'd use Tinder to pump the... Hinge is a more tasteful app.

Hinge to pump the Soho stock. You don't have to read the post, but could you just... Now, this was also a joke. Could you describe the joke a little bit? This one actually played out so well. So I claimed that I had made, thanks to Gen. AI technology, I'd made a very attractive female hinge profile using generative AI, who was a 25-year-old marketing analyst who lived in the West Village, Manhattan, who went to Penn State. And I put one of my hinge prompts as, what's your favorite place to go for drinks? Soho House.

And the LinkedIn, none of this, I did not do this. I did not make it happen. Right, you have to change. We have to say, just to be clear, this is all fabrication. You need to clarify. But the post basically said that I did this knowing that like all of these guys

would then get Soho House memberships to take me to Soho House because it was my favorite bar. Little did they know that I'd loaded up on $100,000 of Soho House call options knowing that they would beat earnings because there was going to be this massive uptick in new member signups. So, I was looking forward to making $400,000. Well, then, Soho House had earnings the following day, and they did actually beat earnings, and the stock jumped 20%. Then, it really blew up because people were like, wait, did this actually happen? It was really stupid, but because the stock actually did well, it got to the point that

someone sent it to Matt Levine and he was like, I just don't think any of this is real, but we'll operate under the assumption it is for a minute. He did have a good takeaway. He said, if you can pull off all of this stuff and all you get from it is $300,000, you really just didn't go about, basically if you can create $100 million in market cap and all you make is 300K, you're really missing some value there.

Right, not a good ROI. No, not at all. But you didn't do that. No. It's just very funny. And these I should say are the things that attracted me to Jack's writing. I mean, you is very funny. These I should say are the things that attracted me to Jack's writing. You have a blog. Your blog is Young Money.

It'll soon be one day Middle-Age Money, but yes, it's so Young Money. I think you've got a little bit of time. 27, so I have like three years. How old are you? 27. I haven't been legally allowed to ask you that, and so now that you've offered it up on the podcast, I finally know. Are you not allowed? No, I think that's a discrimination thing.

I don't think you're allowed to ask somebody their age. Like, oh, you're 47. So we don't have to get into those details, but I will be 47 this month. I'm actually I have a birthday coming up. Anyhow. So yeah, so Jack, so Jack joined the Sherwood team and he's been off to the races ever since. I think as far as I know, he's done very little fraud since he's worked for us.

Minimal. Almost no fraud is what I understand. Anyhow, it's great that he decided to join us. There's a lot going on in the world of technology and beyond. I think we've already touched on some areas that go beyond it. It's interesting on the fake Soho house scam that you described that Gen AI was a part of it. Kind of early, you were kind of early on the Gen AI wave when you think about it because that was like years ago, right? Was that a year ago? That was right around, actually maybe right around Chad's GPT launch. It was early, I was early. So, you know, AI, hot topic, I don't know if you've heard

about it, everybody's talking about it. There's news today, in fact, that OpenAI has raised a funding round, how much is the funding round? They raised $6.6 billion at a $157 billion valuation. $157 billion valuation. Their revenue in 2024, do we know what their revenue this year is going to be? I think they're projecting a little bit under $4 billion. I don't know how those multiples work, but I know that's not like a 10X.

3.7 billion, 3.7 billion. 3.7 billion, and by the way, not nothing. It's not no money. It's pretty good. And Sam Altman must be feeling pretty good about himself. Do you think, do we know if there's like a carve out where he just gets like, I don't know, like $500 million just to like stick around?

Yeah, so one of my favorite things about him is that his whole bit for the last five years or whatever has been that he has no equity in OpenAI. He's already a billionaire, so he doesn't really, I guess, need the money. But he was in Congress and they were interrogating him a year or two ago and he basically said, I don't have equity in this company and it threw everybody off Well, right as part of it hasn't been disclosed if or if any like how much equity is getting now But there was speculation that he was gonna get up to ten billion dollars in Equity in this fundraise because some of the investors wanted him to have skin in the game if he was gonna be the CEO, right?

So he's potentially played this out to where, oh, I don't need money. I don't have equity. AI is going to destroy the world. Therefore, I need to build it. Okay, fine. I'll take $10 billion. Only Sam Altman can build and then control the AI that could destroy the world, which is why we need him so badly. Right. that could destroy the world, which is why we need him so badly. Right. So you're saying he got, you're saying that there's an equity grant to him

based on the current valuation that would be the equivalent of $10 billion. Is that correct? So, so far we don't know if he got one, but Bloomberg reported last week that OpenAI was discussing giving CEO Sam Altman a 7% equity stake in the company amid the restructuring to make it a for-profit business, which would be worth more than $10 billion at this valuation.

I mean, that's good money if you can get it. Pretty good. I mean, $10 billion in equity just sounds like, does it even sound like a real number? I mean, it's kind of hard to grapple with this idea of 157 billion dollar valuation. Yes. Right. So, I mean, the numbers are so, they almost seem like so absurd. They're so high that they don't seem like they're even grounded in any kind of reality. We know that the revenue is what he says about 4 billion and change 3.7 or

whatever. What do they project their revenues going to be next year? Do you know? A little bit over 11 billion. Right. I mean, $11 billion is a lot of money. I mean, don't ask about the cost. They're not a lot of start. What's the cost? A lot more. They burn a lot of money. I mean, don't ask about the cost. They're not a lot of start. What are the, what's the cost? Um, a lot, a lot more. They, they burn a lot of money. They burn, they're burning more than $11 billion in 2025. Is that the plan? Open AI. So this year they are projecting a $5 billion loss on 3.7 billion revenue. They have not projected the loss for next year. I'm guessing, I mean, they're losing 1.3 billion more right now.

They're making revenue. So I imagine it's going to be somewhere in there. And where is that money going? Is that to servers? Yes. So it's basically running AI costs a lot of money. Like the compute costs and the energy costs of it are really high.

I'm not a Like tech expert on this but essentially a lot of technologies get cheaper as you scale That's the whole SAS business model. Yeah, I like more Is a scale the more powerful AI gets the more energy it uses the more expensive it gets is my understanding of it Yeah, well, I mean as of right now To it gets is my understanding of it. Yeah, well, I mean, as of right now, to have AI do anything, it requires an enormous amount of compute, as they refer to it, meaning like computing power, right?

And that requires a lot of energy and a lot of like basically like, you know, server, like server space or like GPU. Like you have to own a lot of GPUs or rent a lot of GPUs or whatever it is you're doing. And I'm CPUs, GPUs. I don't really know. I should know this as a,

I mean, I walk around all the time telling people I'm a technology expert. And yet I don't have all the answers to this question, which is like, is either one applicable when it comes to AI? The point is, I guess like the matrix kind of got this right in a way, right? Because in the matrix, I mean, I guess we can assume we can just like this, it is, it's AI, right? And they're the AI, like machines or whatever they are, you know, they have to use people as batteries because

I guess in the matrix, they use people's batteries because there was like nuclear war and the sun has been like, it has been like, there's like just a cloud of nuclear like dust over the world now. And so, um, there's no sunlight and I guess then they don't have any power. And so they're using, am I getting this right? Does it? Can somebody fact check me? Is this the plot of the matrix? There was a war between the humans and the machine obviously because they try to do like an apocalypse move like Skynet So they did create the machines and then and then and then they created like a super Intelligent AI it's just like Skynet in the Terminator films and then in order to Kill the machines or in an effort to kill the machines the humans

Blot out the Sun because that's their means. Oh, that's their power source. And then the machines end up harvesting the humans, keeping their brains active in the matrix, but they use their bodies to create power to run. It just, it checks out. Okay, just in case you're wondering, that's our producer, it's just not like a random person

who showed up on the podcast. So there you have it. Now we know what I consider to be basically like the most likely outcome from the creation of AI, the plot of The Matrix, where people become batteries. There is a funny through line on this and that a lot of the AI startups, like Scale AI is like one of the AI startups, like Scale

AI is one of the big name ones where their AI company is a name, but they essentially help data labeling and training. They basically just pay people money to click on items to say this is a cat, this is not a cat. A lot of the AI, at least like base training data underlying it is just like people with PhDs getting paid money to determine if something is a cat. Sorry, I'm getting off topic here. But the point is that they spend a lot of money on power and computing to run AI, right? Right. And so they're operating at a loss now by the tune of like several billion dollars, correct?

Yes. I'm not saying that it's not a, you know, I'm not saying the business couldn't be profitable, but in order to be, I mean, they have to become like an Apple level or like a Microsoft level business, right? To be successful? Well, at least for an investor, right? Like if you want to make money investing at $150 billion valuation, you're hoping for at least a double, if not triple.

So you're looking at, at this point, almost $500 billion. That's more than metal was worth up until recently. So yeah. Yeah. Yeah. Well, I mean, presumably there's a product that's going to be the product. I've talked about this before. And honestly, I don't even there's a product that's going to be the product. I've talked about this before and I don't even want to belabor it.

I've talked about it on this podcast that, you know, there is yet not yet like a true like real killer app for AI. Although if it just becomes the kind of backbone of a bunch of things, you could see it being, you know, the plumbing, you know, maybe that's how Skynet gets its power. Um, but you know, it's, yeah, it's, it's a fascinating, it's a fascinating, uh, fascinating, uh, path for open AI in terms of like the numbers. I just, there's a lot of skepticism. I mean, what is your take on AI? I mean, do you feel, you know, you're not like Jack, you're not a huge tech nerd. I mean, you is your take on AI? I mean, do you feel, you know, you're not like, Jack, you're not a huge tech nerd.

I mean, you're a normal person. Right. Your interests, your passions are not. I mean, you're very passionate about money, obviously. You love capitalism, hustle culture. You love being on, on, on it, in it, in a grind set. Is that, are you in a grind set? Are you, is it?

I think it's more of a state of being. State of being, you exist within a grind set. It's like a grind set is a form of mindset. Right, I see. It's an outlet in life. Right, so I mean, yeah, I guess, you know, but, wait, what was my question? I'm really fucking distracted by this.

What do I think of AI? Do I like AI? Is that where you were going with that? Sorry, but you know, but so, sorry. So you know, what you and just an average Joe, you know, AI, what is it doing for you? I mean, in business school, it was pretty useful for like speed running account.

Like I thank God every day that I was, I started business school in September, 2022 and then Chad GPT launched two months after that. We were out of the curve. School wasn't ready for that. So wait, what were you doing with it? I mean, nothing crazy. It wasn't like I was using it like during exams or anything.

But if you're working on a homework assignment, you can just like throw in the balance sheet, make sure your stuff balances. Like it just expedites really tedious stuff. So I actually use OpenAI pretty regularly. Sorry, I'm confused about this. Like the things like checking the work or whatever, isn't that the whole, isn't that what you're supposed to do?

Cause like that's what the school's for or not? I think being able to understand and follow the way the numbers are flowing, like how stuff's going from balance sheet to statement of cash flows matters. I think being able to have OpenAI run the calculations versus me potentially missing a decimal point in Excel or getting lost from sheet to sheet. If I understand how it's working but I can just do the computation twice as fast, I think that's a net positive. I'm very pro AI.

I use it for writing sometimes, believe it or not. No! Wait, wait, wait. We're gonna get back to that in a second, but I just wanna be clear that you were having the chat GBT check your work. This is the same chat GBT that can't tell you how many Rs there are in the word strawberry, correct?

For sure, yeah. I just wanna, okay, sorry, you use it for your writing in what way? It's a very good thesaurus. For example, if I want like a synonym of the word aggressive but it feels like it took the edge off a little bit, you can figure that out. I don't, to be clear, I don't use it.

Isn't that what a thesaurus is for? I mean, that's literally what a thesaurus is for. Yeah, but nobody uses a physical thesaurus anymore, so why not just say? Okay, but there are online, there's one on your computer, there's a built-in thesaurus is for. Yeah, but nobody uses a physical thesaurus anymore, so why not just say. There's one online, there's one on your computer, there's a built-in thesaurus, did you know that? Well, there's also one called Chad's GPT, where you say, hey, give me 10 synonyms for,

like, I don't know, abrupt. I want to challenge this, I understand how you're using it. I want to challenge it on a couple of levels. First off, and I say this both as your boss and as a human being just who has to think about this stuff. So one is there are maybe other synonyms or whatever that you're missing completely because you're not doing your own research.

Then I say give me 10 more synonyms. But you don't know if you missed something if you just go with, okay, that one's good enough or whatever. It's also like, don't you feel you miss something if you just go with okay, that one's good enough or whatever the also it's also like don't you feel like Isn't it? I mean using using The power of AI to do what you looking up a word in a thesaurus would do Feels like a real misuse of the talk about like wasted energy

Like we really need to spend server cycles on you finding a synonym? So I did one of those like my carbon footprint test like five years ago pre AI. And if everybody was Jack Reigns, we would need 12 and a half planet Earth's for my carbon footprint. So I can assure you that I'm like, wait, I'm not that concerned with how much energy my searches are using. Okay. I mean, that's a classic For Georgia, that's a youthful perspective. It is you guys live in this world. I'm gonna be gone soon That's why we're going to Mars and you go sure you are. Yeah, you're that's right. You're going to Mars It's gonna be Elon and Jack Rains and that's it Sorry, okay. So you said that you would need 12 planet Earth's to support your carbon footprint

It's probably like 20 now after I keep looking up all these words Sorry, okay, so you said that you would need 12 planet Earths to support your carbon footprint. It's probably like 20 now after I keep looking up all these words. I love the callousness with which you refer to it as if it's not a problem. This makes me wanna do something like as a boss, this makes me wanna tell people they're not allowed to use chat GPT to look for words

that they can find at thesaurus. I might make a new rule for the staff. I'm doing it like as we speak. I just said give me. You can't, I want, you're not allowed to on your work computer. I'm gonna have it made. I'm doing it, give me 10 synonyms for comical.

Humorous, funny, amusing, hilarious, entertaining, witty, droll, ridiculous, lighthearted, and laughable. There we go, that's global warming right there. I mean, I know, but why? You know what I'm saying? So I'm Gen Z, I'm like the oldest possible Zoomer, so it's kind of my culture. The oldest Zoomer.

I mean, I'm just saying, like, you could just open up the dictionary on your computer and type the word in, there's literally a thesaurus. What's the word? Comical? I mean, it's, you probably have to type less. It's literally like, sorry, I don't want to, it's Sherlock, it's like the Sherlock box, they didn't even call it Sherlock anymore,

it's the search box. It's like D opens dictionary, and then it's like, you type the word and tap thesaurus. It's gotta be fewer steps than you write it into chat GBT. At any rate, how many synonyms did it give you for comical? 10, because I asked it for 10. We can do 10 more. No, you don't have to, I have all of the synonyms here.

I don't need 10 more. Okay, I'm gonna present a use case that's very useful. Language acquisition. That was not. No, I agree, that's just me being lazy. It is very lazy. So I majored in Spanish and finance and undergrad and studied abroad in Spain. Didn't practice it for like three years after that.

My Spanish was trash when I went to Spain in like 2021. And so I started doing these, I do these like online classes three or four times a week. There's a lady in Columbia, pay her $8 an hour, which is riff. If I'm ever trying to like translate stuff real time, it's a much better translation tool than like any of these online Spanish dictionary ones. Because once you get longer,

if you ask a phrase longer than like two or three words, they mess up the context. I have a chat GPT on my personal laptop that's like set as a Colombian vocabulary Spanish one. And then I have a lot of Argentinian friends and I have an Argentine chat GPT where it can get the context for like full paragraphs. I mean, it is a very useful tool.

Give me like a real world use case for that. Actual like day-to-day use. Okay, so I'm subscribed to like 10 different like Latin American newsletters and stuff. And sometimes there'll be a like paragraph where there's 20 vocabulary words I don't get and you need the context and the word to understand it. I can paste the whole thing.

It can get that quickly so that I can keep reading a lot faster. It doesn't, and you're saying like Google Translate doesn't do it as well. After two or three words, it sucks. It doesn't, and you're saying like Google Translate doesn't do it as well. After two or three words it sucks, it'll mess up verb conjugations, or if there's like a geography specific word, like slang, chat GPT can pick up on that and Google can't.

Oh, interesting. I mean that feels. It's pretty cool. That feels legitimately like a cool use of AI. It's better at getting the contextual stuff in a translation. It's better at getting words that might be getting used in a certain way based on the context or whatever.

That actually feels totally reasonable. The thesaurus thing feels way less. Look, whatever, people can do whatever they want. This is America. Love it or leave it. As I'm always telling people, these colors don't run. I'm saying that all the time. All the time I'm saying it.

But, like, that one makes sense to me. The thesaurus one is like a little bit like I feel it is lazy, but also I'm not even sure it's more productive than looking at the thesaurus on your computer. That is just like, I mean. I'm a even sure it's more productive than looking at the thesaurus on your computer. That is that is just like I'm a digitally native You can probably even find like a chrome plug-in where it's like you can just search from like You see you don't even have to leave a tab and you can just pull up like thesaurus words. I'm sure this exists Anyhow, I understand what you're saying. Okay, so you love AI. You're a big fan of AI

You use use generative AI to make $300,000 on a big Soho house investment. OK, cool. So do you feel the $157 billion valuation is justified for it? No, I think it's absolutely ridiculous. It's valued more than Goldman Sachs, which is the center of the universe. I mean, come on.

This is just crazy. Is Goldman Sachs the center of the universe? It's the center of my universe. I went to business on. Is Goldman Sachs the center of the universe? It's the center of my universe. I went to business school. Right. So you're saying, if tomorrow, open AI went out of business, what would be affected? How much would change in our world?

I would probably buy a thesaurus, a physical book. That's about it. You'd be like, this is it. I'm going to have to. OK. Got to flip pages. Let's say Goldman Sachs went under tomorrow. What kind of repercussions would that have?

So that's a more interesting one, because one, a lot of people who went to business school would be unemployed, a few of my friends. Okay, you're like on a personal level. The bigger systemic thing though would be like, I have no idea what all derivatives trades Goldman's involved in, but it's like when a massive financial institution goes under, it also just spooks Wall Street where everybody

starts pulling their money out. It's not, yes, there are several other big banks like Morgan Stanley, JP Morgan, whatever, but if Goldman were to just disappear, it would cause a panic. If OpenAI disappeared, it would just annoy people. We have a crisis. There would be a crisis. Yeah, I mean, it definitely, obviously, they're a major institution in our economic systems.

And OpenAI is not even not just a major fixture in whatever economic systems. But OpenAI hasn't even necessarily proven that they have the best model for this stuff, right? Like Meta is working on what is it? Llama, which is an open source project now. Yeah, the only big open source one. Right. Google has Gemini. Do they call it Gemini or do they call it something else? Google's the worst. They brand everything horribly. They probably rebranded it. I don't know.

All I know is I've recently heard a lot of podcasts using Google has this thing. It's like Notebook LM, right? And they're unbelievably convincing podcasts. They sound as good, if not better, than the podcast that you're listening to right now. Which that, to me, I sat and listened to one of these, um, gen AI podcast. I think they were, I think it was

the prompt was that they were told they had been told that they were that the two hosts were were AI and were not real people. And that was the topic of the podcast. And that at the end of the podcast, they'd be turned off. Have you heard this? Jack? Have you listened? I have not listened to it. I'm familiar with the whole thing. I actually push back on the whole, oh, AI is going to replace podcasters. Do I think too many people have podcasts? 100%. Yeah.

I think that people value people doing stuff, especially when it's a more creative endeavor. Like all these like Gen AI movies or whatever that you see all over X and threads, like they're trash, they're stupid. Like, nope, people like the story associated with the creator as much as they like the content medium itself. So I think. That's interesting.

Yeah, I agree with you. People are still gonna listen to people. I think the value, I've said this before, but I think the value for human created things actually rises because of AI. I think that means there's more shit in the world, right? There's more like just general garbage. And like, yeah, there's some people who are like,

I mean, yeah, sloth. There's some people who are like, I made an AI movie or whatever. And it's like, kind of looks like a movie, but it's like stupid and bad. But at some point, I have no doubt that there will be an engine where you can go, here's my story. And then it produces like a two hour movie

based on your story. Like I'm sure that's going to happen. But I think you are right that, I mean, I look, we can't predict the future, but there has not been like, like I don't know, there's been like a widely adopted art form where it was just like, oh yeah, the machine is doing this.

And people are like, it becomes like widely popular. I think it could disrupt the pornography industry before all other forms of art creation. Wow. Okay, hold on. Let's talk about that for a second. You think that by the way, I mean, makes a lot of sense. I think porn is a place where a lot of innovation happens.

I mean, it's argued, it's arguable that the rise of VHS is really about porn and distribution of porn. But, so okay, so you think the porn industry will be disrupted because people will no longer need like actual actors, they can just be like, here's what I wanna see and AI will create this. Yeah, they're literally, like it's a pretty like super black mirror, there probably will be a black mirror

about this if there isn't already, but like, yeah, people just put in their weird fantasies and kind of get it, the screen spits it out. I'm gonna challenge you here. I think, and like maybe, you know, maybe I'm speaking for a minority, I don't know. Don't you think the way that you're describing people

like the story or whatever behind, I'm not saying the narrative, but the story of like the people making something, don't you think there's that, like what makes porn interesting to people a lot of time is like, those are real people doing that thing, right? Like that's like, that the fantasy is not just like, oh yeah, of course you could have like an animation of it.

I don't know, man. I think people can get some like crazy cognitive dissonance and just like separate from it really some stuff like that Yeah, really. I think that's actually a place where where Obviously there's a market for like AI generated porn like no question for sure that's gonna be like an absolute probably already Maybe that's what's underpinning open AI's valuation. You think it's porn? I mean, that definitely exists, first off. I don't think you can use their tools to generate those kinds of things.

I don't really know because I'm not. That's what XAI is for. Yeah, look, I don't know. I mean, I'm gonna find out, I'm gonna do a lot of research on this, frankly, because I gotta get into, I gotta understand more about what's going on in the AI porn universe.

But I do think that it's like what you're saying about, about storytelling or about, you know, having a human create something. I think like porn is going to have, there's going to be some major part of the viewership of that that is going to reject just like computer generated porn. Like I think, yeah, I mean that feels like it's going to happen all over the place. I'm trying to think of, actually on this topic, the closest thing I think we have to this being this kind of technology becoming a widespread and widely adopted accepted thing, CGI would

be one. We've come to accept CGI as like, I still feel like there's a real difference between a movie that uses a lot of practical effects and one that uses a ton of CGI. Like, I still feel like those movies are lacking something in terms of gravity. But we've widely accepted the CGI is like, fine, like, okay, you the scene never happened. Like, these people weren't here, like the Avengers did not actually have this fight or

whatever. But auto tune, I, I feel like, I mean, music production generally has a lot of perfecting elements, but auto-tune, which, I mean, do you even know what auto-tune is? I mean, you've grown up with it your entire life, you've heard auto-tune. Yeah. Like, have you ever heard a person saying

who doesn't have auto-tune on their voice would be a question I would ask for you. Would I know? Well, I mean, if you listen to like an old Bob Dylan record, for instance, like he doesn't he's not auto tuning. Yeah, they didn't have the technology, right. But but you know, when I hear it, I find the sound to be off putting like it doesn't it sounds wrong to me. Of course,

I was a music producer. So maybe that's part of it. But like, that is a place where we've widely accepted that that's voices are now perfect. That like a voice on a record doesn't have Never waivers in like its pitch basically and that like if you listen to like Led Zeppelin like they're not always perfectly Like in key, you know Like right. I don't know. I don't really listen to Led Zeppelin, but no you don't take your word for it They really want to pause for a second. Jack. Jack, are you doing something besides this podcast right now? Yeah, so I actually have something on my other screen.

It's not porn, but I'm looking at the GDP of different countries, because I was curious, where OpenAI's new fundraise valuation would rank, and it's right around the GDP of Ukraine and 20 billion more than the GDP of Morocco. Okay, interesting. Now, and of note, when wheat production in Ukraine was disrupted because of the war with Russia,

it had major worldwide market implications. True or false? True. Yes. We're not, again, going back to open AI, nothing, no worldwide implications to them, like, you know, not being able to ship, you know, AI wheat or whatever their equivalent product is. Minecraft wheat.

Minecraft. Well, I mean, Minecraft doesn't need AI for its wheat. You know? Isn't Minecraft also owned by Microsoft? It is owned by Microsoft. Who's the who's the largest investor in the in in this round for open AI? I think Thrive Capital is but Microsoft may have matched them. I don't know if the terms of like who invested how much were just closed. Microsoft was talking about putting in like another billion or whatever.

Let's see if we can find out. I love this real time. No, Thrive Capital, $1.25 billion. Microsoft, slightly under $1 billion. So, Josh Kushner won. So, there's a lot. So, and what was the number? Sorry, the raise was how much? $6.6 billion. $6.6 billion. Yeah, I mean it seems like that seems right to me That must be awesome. It must be awesome to be like I'm gonna invest 1 billion dollars in a company

I would like to someday experience the feeling of giving somebody a billion dollars. They raised the GDP of Montenegro Okay. Yep, that's you know more context for Okay. Yep. That's, you know. More context for you. That's notable. Now you're in this GDP zone.

We're down to number 146 in the GDP ranks. Okay, but I mean, it is notable. It's kind of a hard metric to kind of think about because like, obviously they're not, it's not one-to-one. Like, you know, like if you spend, it's like you spend $10 on a candy bar, you spend $10 on like a movie. You know, they're like very different experiences.

And they serve different purposes. I mean, that's, my analogy sucked also, so I'm not sure that it's helpful. I just love when people compare big numbers of companies to GDP, even though the more accurate representation is probably comparing like revenue to GDP. Which speaking the more accurate representation is probably comparing revenue to GDP. Which speaking of, their 11 billion revenue would be like the GDP of Equatorial Guinea. Okay.

Okay, that's fair. You wrote about, by the way, beyond just us talking about whether or not there's going to be AI porn, you wrote about the economics of this and you talked in particular about Masayoshi's son from SoftBank. Can you talk a little bit about what your article presupposes? Yeah. So I think Masayoshi's son is the most fascinating man in finance, right? This guy, he was at one point the richest guy on the planet, and then he lost more money

than anybody ever had because it was the dot com bubble that he got rich on and it popped. So he made all this money on tech, lost it. Made all of it back on Alibaba and then lost like all of it in 2022 on like WeWork and all of these other tech companies. He basically YOLO'd his vision fund in 2021. But then he made all of it back again on Arm, which he took public because he was supposed to sell it to Nvidia and then it got blocked by antitrust.

And then he still owns 90% of Arm and it's now worth like $140 billion. So he has made and lost $100 billion three times. That's crazy. And yeah, he just loves the game. Like you have to respect somebody who just loves playing the game. And he has now decided, he has not invested in a single Sam Altman company before. I don't really think he's invested much in any of these AI startups. And he is now at a 150 billion dollar valuation, investing like

$500 million in open AI. And I just- Oh, he's only and I just 500 million and he's like a small-time investor so maybe he'll lead the 300 million dollar series G or whatever it like they're 300 billion dollar round later yeah yeah yeah if it's yeah not 300 million I mean he's great no I mean this is like is there is there a thesis does he have like what is his thesis? Like, why is he? I legitimately think he invests off of vibes. I think it is a near religious conviction in tech with no thought for valuation, and he just goes nuts with it. That's cool.

I mean, I respect that. I love the idea that you could lose, what did he lose, $100 billion? Yeah, so he lost, let me see. We're gonna keep doing this in real time. I like it, that's fine, that's the best way to do it. Net worth loss.com probably. I feel like I can answer this question real quick.

Yeah, this would be a good use for chat GPT. He lost 70 billion, which would be the GDP of Croatia. You're just gonna start keeping, you're just gonna continue to compare things to GDPs. There's a number of billions we're gonna compare it to a country, so he lost one Croatia from the dot com bubble popped. Wow, I mean, but you know, Croatia, still there. Mm-hmm.

Still going. It is. It's very impressive, I have to say. I mean, there's not a real takeaway then on him. You don't have like a big takeaway except that like, you way he invests. You like that he makes these gigantic bets. I respect his just complete disregard for valuation and just rolling with it. I mean, I guess he didn't go, like 500 million for him isn't much, but like 70% of SoftBank's funds is now invested in Arm, which has tripled since it went public.

There's no way he can exit that position. He owns $125 billion or whatever. It's $145 billion market cap. He literally can't sell that. There's not enough liquidity to sell that. He's sitting here with all of his money in this one AI chip company that isn't even growing. Nvidia is a much better company than Arm. He's now saying, all right, more AI, open AI. Why not?

I mean, I guess if it's like if the dog hunts, right? And that dog will hunt. The dog just seemed to be hunting in a big way. Actually, speaking of dogs hunting and AI, you wrote a story about stock picking AI chat botsots. Can you talk about that a little bit? This is a company that's actually building a product around this? Yeah, this is pretty cool. It's this Tel Aviv-based startup called Bridgewise. It was just given the green light by the Israel Securities Authority to release a chatbot called Bridget, great name, for

a company called Bridgewise. Definitely good. And it will give stock recommendations, like it'll tell you what to buy and sell, why you should buy and sell it. And they're working with one of Israel's biggest banks to essentially make a consumer product for this. I think it's hysterical because we are very close to getting the first lawsuits from a stock picking chatbot. We're going to get the first lawsuits from a stock picking chatbot.

We're gonna get the first person making a lot of money from YOLO and call options on a chatbot. I'm a huge fan of this. Is this the kind of thing where you could just be like, look, I got a thousand bucks, turn it into more money? Yeah. And the question here is if it can do it or not, right? The only dividing line here is if it is more right than it is wrong

Mm-hmm. And like how do we know do we have any idea of because if because if a chatbot can make the if if if AI Can make a guess Where it is more often correct than incorrect about the stock market, then everything we know about the market is going to change, right? So I don't think so because I think that the biggest issue with people making stupid moves investing is not the data analysis. It's still the consumer behavior or the investor behavior where you can be, it can spit out good data and it can be right, but say it says that Google stock is the best pick for a year. So you go all in on it and then it drops 20% at one point. You might panic sell and then it rebounds and goes up by end of year. I think we already have ways to evaluate the data, but at the end of the day, are people still actually going to behave optimally? No.

I mean, you, you, I mean, you kind of made the point earlier with, you know, in some of the ways that you use chat GPT, I mean, if you just have a do the last mile, like check your work. Yeah. You can analyze the data, but like we live in a world now where you can make a lot of money in a day's time, right? Like, yeah, like there are ways to to essentially place bets on where the market's going. You have to guess to some extent where you think it's going, right? You have to look at the data. You look at historical stuff. Think about what futures that's gonna look like and go, okay, here's what my bet's gonna look like. I'm talking like options, right? Like this could circumvent having to look at the data. Right. And then you just get to YOLO and it's like,

all right, which call option should I buy that has the highest chance of going up 100% this weekend? And then you just do it. That's what I'm saying. Yeah, that's like pretty cool. But wouldn't it change the entire dynamic of the market if everybody's just basically on a chat bot that will make a better prediction for them?

Yeah, I mean, if everybody was doing that for sure. Everybody will be doing it when it starts to predict the right things more often than not. So that brings up a very good, almost philosophical point in AI in general. Once AI integrates in anything, it taints the data set a little bit, right? Like, it's not, like, this Bridget bot could be perfect right now, but once it starts influencing its own feedback data, then it gets skewed.

It's the same thing with, like, AI that's reading, like, all these, like, all, like, all journalism out there. As soon as it starts picking up, like of user and AI created content on the internet, it's going to have its own, it becomes like a circular reference almost. So I think that it could get less effective the more the people use it is my projection. Right. Okay. I mean, but wouldn't the AI be able to adapt to those?

I mean, presumably if it can look at, you don't think so. Why not? It gets worse. I don't know. I mean, there's an abstract. The output of the AI's decision making is not directly reading back what the AI has done. The output here would be like, OK, I want to turn my $1,000 into $2,000 in the next 24 hours, make it happen. And then it goes and makes some stock,

it makes some investments for you, right? Or it puts some, it lays out some options bets for you. And then you recoup on them or whatever. But the output is not like, you don't see what the AI did. All you see is like, this person made this bet. And now you're saying if enough AI bots are making the bets essentially that somehow their ability to see what the What the future bet is going to be will be diminished. Well, yeah because they're like I

their training data set right now is all based off of like Actors in the market. So a lot of that's like high frequency traders and stuff too But a lot of it's like people like you and me, if it itself is becoming one of the main players, but like the parameters are still key, like it's all basically off of like what other investors are doing, it can just screw up its own accuracy.

Right, okay. Seems like that's like, we can, there's gonna be like a lot of insanity before that part happens. Yeah, I mean mean that's like after like 20% of trades or AI chatbot I mean, I'll probably try out the if it gets approved in the US. I'll use Bridget I don't know how does it even get approved like I guess it's just like a robo advisor essentially, right? I mean, I don't know we can now bet on the US presidential election if you want to go into that Well, we can do that now. It's pretty cool

yeah, I mean, you can, but okay, I guess, I guess is that the thing that opens the door to make, I mean, I think there's like, this is a little bit of a, I think this is a meaningful moment in reality if we get to a point where AI can make better predictions about what the market's going to do than people can. I know we already have lots of bots in the mix and we've got like, it's not like it's just going by some guy on a trading floor somewhere, but I'm just saying if it's a

widespread, if it can be a widespread adoption of a product, they can basically tell you how to make more money in the market on a regular basis. I feel like that alters a lot of things about reality. Yeah, but if it's short-term trades and somebody's losing on that, it's kind of a zero-sum game. There's no world where everybody uses the AI and makes money. It gets less effective the more people are using it. That's assuming that it's actually good. It's probably not. It's actually probably just not going to make that good of a record.

When do we find out? How do we know? They haven't yet. Whenever investors in Israel start flipping stocks based on Bridgewise Rex. It's got to be somehow like, they have to prove that it does it, right? Like, I'm supposed to go to a wedding in Tel Aviv in February, so I can like test it out if you want some recon on it.

Yeah. I mean, I absolutely would like to know if this thing works. Like, I'm not saying that for my personal, I mean, although, sure, like, I definitely would check it out if it was like legal, if it was like regulated and legal in America to use, I definitely would check it out if it was like legal, if it was regulated and legal in America to use, I would want to try it. But yeah, I think you should file a report for us.

That's what I think. You should go talk to the people at this company and go use the product and let us know if it actually does what it says, what they say it can do. Because obviously, the only advantage to this would be it makes people more money than them doing it On their own. Mm-hmm, right. Mm-hmm. So All right. I think we're getting close to time. I don't want to I hate to wind down this conversation, but we need to

pivot to a Segment on the podcast that we call feature or bug Jack you may not be familiar with feature bug, although I would assume you're listening to every episode Bug. Jack, you may not be familiar with feature bug, although I would assume you're listening to every episode. I do listen every also multiple times. I'm just going to contract maybe for the maybe for someone at home or in their car who may not know we every week we take some of the stuff either we talked about or some other

things that we didn't get to and we basically sort of say, you know, good or bad feature bug. Do we like it? Do we not like it? And, you know, I think we've got a few from this episode, mostly really all AI related. We talked a lot about the energy requirements for AI, the power hungry needs of an open AI or companies like it. I mean, I feel like there's an obvious answer here, but feature or bug, the energy needed to power AI, feature or bug in your mind?

Feature. I have a- It seems so obviously a bug. No, no, no, no, you have to, you are thinking, I'm thinking like three steps ahead on this. You were stuck in the now. It is a short term bug. Yeah long-term feature. Hear me out. Okay, I'm listening.

Microsoft and Amazon have both, or Microsoft has signed an Amazon as a negotiations to sign a deal with nuclear reactors to supply energy to data warehouses in Pennsylvania, Three Mile Island. Three Mile Island, classically a place where there has been an actual meltdown. Yeah, a total of zero people died in that. Anyway, nuclear energy, even including Fukushima and Chernobyl, is the safest form of energy we have per our world data, and it is by far the cleanest form. While Germany hates to hear it, they would rather burn coal than do nuclear.

That's their prerogative. I think that nuclear energy is the key to long-term energy abundance with clean energy. And I think that the insane energy usage of AI is forcing tech companies to fire up these nuclear reactors. So high energy usage is gonna accelerate the nuclear age of the United States. Now, okay, it's an interesting take. Honestly, it's a very hot take.

And I do, and I do, I see it. Like I honestly, it's a good argument. Sam Almond is going to save the environment. Okay, I'm not going to say that, but let's just say, I'm not like, you know, look, of course, I was raised to be fearful of nuclear energy for many reasons. I do think it is a viable form of energy. And I think a lot of there have been a lot of advancements in in how we, you know, how we build and use nuclear energy, how we build nuclear plants and use nuclear energy. I do think there's an argument there.

The idea that the tech and demand for it is accelerating the adoption of it is interesting. There are other forms of energy that we could be adopting faster as well that are really great, and it is a concern, I think, if we just deviate away from those to something that does have destructive capabilities. It's not like solar or wind, hydro.

I mean, these are not, they don't, the dangers are not quite the same as a nuclear power plant. I don't know, some of those dams flooding. Oof. OK. Hydro. Not great. OK, fine.

China has some issues with that. OK, hydro. We take that one off the list. Come on, but wind or solar, I mean, it would be nice to see more implementation and advancement in those areas. I feel like we have not fully explored the opportunity. Solar is just long distance nuclear, if you think about it.

Okay, if you think about it, but it's not, okay, it's not like, I don't think that's a great argument. This is a great debate club situation you've got going on. But OK, fine. I think it's a bug. I think the power needs of AI, I think, until the technology is developed to a place where there's clear, like a clear application for the widespread use of it, I feel like it's a bug.

But I think to your point, if it pushes us towards better, newer forms of energy, I feel like it's a bug. But I think to your point, if it pushes us towards better, newer forms of energy, nuclear or otherwise, that is kind of a feature. So that's interesting. That actually dovetails with the next one, which is like widespread AI adoption, like widespread AI use.

Like is that a good thing or a bad thing? Is that a feature or a bug? Both, but I guess I have to pick one that's a cop out. It's a real complete cop out. Um, mm, both. But I guess I have to pick one that's a cop out. It's a real, it's a complete cop out. Bug. Okay. Um, why is it a bug?

Because I think people are gonna become overly reliant on it. I think that it is like an abstract, a feature. And then he says the man who uses it instead of a thesaurus. I just wanna make sure I'm hearing that. I am guilty as charts. I am my own recidemy. You're like, I'm a poster child for it, actually. No, yeah.

I think the issue is, in a perfect world where people had a little restraint and discipline, it's an auto feature if you ignore the energy side of it. We can just do stuff a lot faster when you have your own little co-pilot. I do think people are going to get lazier, rely on it, not do their own due diligence and work and be as thorough with their work because they'll just think the AI is right. People are gonna lose some of the hard skills, whether it's coding, writing, whatever.

I agree. Of course, you can make an argument that there were people who used to do photo retouching by hand and now Photoshop has obviated a lot of that. We moved on and the world moved on and at some point, I mean, am I saying it's actually a feature? Am I like, it's good?

I think the widespread adoption of any new technology is ultimately in, I think typically, ultimately good. I think everybody should have access to technologies that are potentially beneficial. The question is, is it beneficial? Or is it just like burning energy for something that is actually not really, like your thesaurus thing is actually a great example of like.

It's so fun. That as in a widespread use case seems like a terrible waste of energy and also seems like it would diminish people's critical thinking capabilities. But that's, you know, it was one man's opinion. Okay, on that, really quickly, dovetailing from widespread adoption, we talked about AI porn.

Mm-hmm. AI porn. Feature or bug? Feature. There's a lot of... It's hard not to see how it's a feature actually. It could save lives. It could certainly exploit, there's a lot of exploitation in the porn industry. It certainly would hurt, like, you know, I guess would hurt real performers and there

are plenty of performers in the industry that are not, it's not exploitation, but there's not, it's not all of them. It's hard to see that it would be a bug in any way. I guess there's like, there's like a lot of really nasty gray areas like around people using other people's like likenesses. That is a good bug example. That's not just a porn thing though, that's like, well yeah, well like Taylor Swift

had the whole thing where people were making like, not safe work, Taylor Swift, AI generated images. That's a just a porn thing though. That's like, well, yeah, well, like Taylor Swift had the whole thing where people were making like not safe work, Taylor Swift, AI generated images. That's a good point. I mean, like child porn, like suddenly now you can create like what, photorealistic child porn that doesn't involve any children, but it's like still like probably should not exist. Pretty weird.

I mean, so, you know, there's some bug elements of it. Like how do you create like the porn, how do you create like a AI porn generator that like can stay out of areas that definitely people will wanna use it for, some people wanna use it for, like that, I don't know the answer to that. That's probably why OpenAI is worth 157 billion.

Maybe they'll solve that, yeah. Okay, all right, really quickly, there you have it. Okay, really quickly before we wrap up, Jack, we've been doing this thing on the podcast, which is like we're creating a bracket of Elon Musk's worst tweets. And I. Really quickly before we wrap up, Jack, we've been doing this thing on the podcast, which is like, we're creating a bracket of Elon Musk's worst tweets. Um, and I was going to say like we had to, you know, we're going to like, so what we're doing is every episode we'll have the worst of the week, two of them, and then we'll decide which one is the worst.

Then we're going to, at the end of the year, we're going to have an ultimate, the ultimate bracket of what was Elon Musk's worst tweet of the year. Um, but this week he's got one that's so bad that I don't think there's anything else that he could post recently that is, has been as bad. He did a tweet, I'm not going to read the whole thing, but here's how it starts. Very few Americans realize if Trump is not elected, this will be the last election. Far from being a threat to democracy, he is the only way to save it. And then he goes on to say that the way this is going to happen is that the

Democrats want to let, um, want to let immigrants into this country, undocumented immigrants into the country so that they can take up positions in swing States and vote for Democrats. Uh, needless to say, and it's a long tweet, I guess like we're so far beyond even 280 characters. It's basically like a blog post and, um, it's just filled with so many weird, like inaccuracies and lies and it's like pretty racist and, uh and just really bad stuff,

even for him, right? I think it's like kind of like, I don't know, Jack, you don't have to agree. I know you're a big fan, but. Oh no, I wish you would just like not do the whole politic thing. I like when he tweets videos of the Rockets, like going off.

Yeah, no. It's pretty cool. This stuff is just crazy. He's, I legitimately think he has like fallen into this own spiral of like, I don't know how your Twitter algorithm is at this point, but like when I click too many politics posts, it gets just like really weird conspiracies

for a couple of weeks. It's instantaneous. I think he's just been living in that and like feeding himself that. So he has this, I'm looking at the tweet you were talking about. He like thinks there's this entire conspiracy of the Dems flying in 30 million illegals to Ohio and Wisconsin to vote.

Dude, I can't vote. Even if all that is happening, they're not voting in this thing. All of it is a crazy conspiracy fabrication. Also, what I know to be true about any political party is that they're really not that well organized. What he's describing would take such a scheme of epic proportions to make happen. And like most politicians are honestly like pretty bad at like planning and doing anything.

So anyway, it's just a terrible, it's a terrible tweet. So that's going right in. So that'll be competing. And you know, he's really outdone. So I agree with you by the way, I agree a hundred percent if he was not tweeting about politics and like these weird like culture war things that like, I don't understand it.

Like, I don't know what the benefit is as a person who just turned in their Tesla five months early, four months early on a lease, because I just don't want to drive it anymore. It's just embarrassing to drive. I have other problems with it, but I'm like, how is this good for his actual businesses is unclear. Maybe hoping for a break.

Are you using threads more now? I've noticed you post over there. I actually- I kind of like threads. hoping for a break. Are you using threads more now? I've noticed you post over there. I actually. I kinda like threads. The threads I think is slowly but surely becoming more like Twitter-like in the right ways. I have been posting there more.

I'm kind of like, you know, with social media, I'm like a little bit like, I'm kind of like whatever at this point. I feel like it's been really kind of destroyed by the last few years of stuff that has happened. Like Twitter used to be the place that I spent most of my time. And it's just been like rendered completely useless

pretty much. Yeah, I think threads is getting better. And I think Twitter is getting worse. I think like the stuff I get in my feed, like to your point, the stuff I see in my feed and the stuff that is like it it thinks I want and you know, whatever its owner is doing is like really unappealing stuff. Like really not, like people aren't talking.

They're not really having conversations. It's like a bad vibe. Anyway, but all right, well look, we gotta wrap up. Jack, I wanna thank you for doing this. I had a great time. Of course, I learned a lot about you, including your very, very bad uses of AI, JADGBT. Which- That's a feature, not a bug.

I'm not gonna hold it against you. I want you to know, you gotta do whatever you gotta do. I'm not, honestly, I'm not gonna create a rule amongst the staff that they can't use JADGBT as a thesaurus, but I might call it out and make fun of you. As you should. Amongst the rest of the staff. Anyhow, so Jack, thank you for being here.

And that is our show for this week. We'll be back next week. And as always, I wish you and your family the very best. Stay rich. Rich.