$100 Million AI Engineers, Vending Machine Claude, Legend Of Soham

0:00AI engineers are getting athlete pay. Anthropics set up Claude, allowing it to run a vending machine in an experiment that tells us a lot about where AI is today and where it's going. And Sohan Parekh has a job at so many companies, there's a chance he's working at yours as well. That's coming up on a Big Technology Podcast Friday edition right after this. Welcome to Big Technology Podcast Friday edition, where we break down the news in our traditional cool-headed and nuanced format. Matt, we have so much to speak with you about today, including the news that Mark Zuckerberg may be offering contracts of up to 100 million or more to AI engineers who want to come on board to his super intelligence team.

0:43Of course, Facebook disputes that or meta disputes that. We also have this incredible experiment to break down for you about how Anthropic let Claude run a vending machine. And then, of course, we got to talk about SOAM. who has taken so many jobs, especially with YC companies, that who knows, maybe he's working for yours as well. Joining us as always on Fridays to do this is Ranjan Roy of Margins. Ranjan, great to see you. Welcome back. Good to see you. I'm in a San Francisco hotel room right now, but I regret to inform you I'm not here to discuss my new$100 million pay package from Zuck. I'm not on the list.

1:20You never know. I'm not on the list yet. We might be able to podcast our way into it. Never say never. I'll take a cool 50, Mark. Just a cool 50. Okay. Now, we should start there because we talked a few weeks back about the talent wars and what Mark Zuckerberg might be doing in offering so much money to AI engineers considering coming into Meta and becoming a part of his super intelligence team. And in the two weeks since that discussion has really heated up. So we now have news from Wired. It says, here's what Mark Zuckerberg is offering top AI talent. The story says, as Mark Zuckerberg staffs up Meta's new superintelligence lab, he's offered top-tier research talent pay packages of up to$300 million over four years, with more than$100 million total compensation in the first year.

2:10Meta denies the idea or the numbers. It says these statements are untrue. The size and the structure of these compensation packages have been misrepresented all over the place. Some people have chosen to greatly exaggerate what's happening for their own purposes. I mean, I don't know, Ronjan, how do you get multiple people saying that they have a similar size deal? I think they've, opening, I reported 10 of these deals. How does that happen? And how do you end up with a denial there? Yeah, I think let's get to what it actually means for the industry second. But first, I'm still kind of curious about Andy Stone, the meta spokesperson's response in terms of saying that the statements are untrue and like this kind of blanket denial and saying that people have chosen to greatly exaggerate what's happening for their own purposes.

2:59Because how does it help an open AI? In my mind, I get there's the downside of this, that potentially the market might get spooked that Meta is kind of spending too frivolously. But in reality, I have to admit, this kind of makes me think war rage Zuckerberg is here, and he's ready, and he's going to win AI at whatever cost. So to me, it's almost a positive signal. I don't know why they're denying it. Well, I mean, I think it makes an internal cultural thing a bit of a problem. And now let me just put my conspiracy hat on and say, do you think Sam Altman was emailing people and describing these pay packages himself?

3:43Because he had a message to OpenAI this week that really put Meta on blast. He's not happy that Meta has been recruiting some of his top people. He says to the OpenAI team, missionaries will beat mercenaries. meta is acting in a way that feels somewhat distasteful what meta is doing will in my opinion lead to very deep cultural problems i mean is it possible that it's a uh a return attack where he's leaking this to the media and they're running with it and now everybody else who's a meta engineer is saying hey where's my 100 million because uh in the wired story that i quoted they said a senior engineer makes 850 000 per year now i'm not crying for this engineer but if that is the salary and you have somebody coming in who does similar work and they're making what you think is$100 million, maybe you want to go to OpenAI.

4:34Okay, okay. Actually, that is an interesting theory. It's almost so logical that it almost kind of like leaves the realm of conspiracy and actually I could see it happening. Again, it would be so incredibly rich, the idea that OpenAI, a company that has spent at all costs raised ungodly amounts of money is losing ungodly amounts of money kind of takes this approach at a competitor. But I can definitely see that, that it would cause a bit of internal strife on the meta side. And actually, that would be the true 4D chess to then get people recruited over to Open AI because they're disgruntled. Some people have chosen to greatly exaggerate what's happening for their own purposes.

5:23It's just one of those statements that says a lot about saying anything. Andy Stone knows exactly what's happening. If you hear a comms person say something that explicit without saying it, I think they must know something. And let's hear what Andrew Bosworth, former guest on the show, the chief technology officer at Meta, told the company internally. He said, look, guys, the market's hot. It's not that hot, OK? So it's just a lie. We have a small number of leadership roles that we're hiring for, and those people do command a premium. I noted that OpenAI is countering the offers. I mean, if you get even close, it's a truly absurd amount of money.

6:01Satya Nadella is making$79.1 million this year. So could you be like the OpenAI researcher who worked on O4, and now you're going to make more than Satya? So on face, it seems completely absurd and ridiculous. But then in the grand scheme of things, if those 10 people are the, you know, like difference between building the next great model, especially that meta has been, you know, on its back foot a bit, it actually from like a pure ROI standpoint could make sense. Again, as ridiculous as it sounds. And I know there's a lot of comparisons that AI labs are starting to look like sports teams. But in reality, those are the decisions that if an individual can have that great of an impact on your overall business, it makes perfect sense.

6:53again is that the way this is going to play out where we'll get into what this means for like training and where the the next phase of growth will be but it's not absurd given the size of the opportunity it's absurd if like if we believe that one to ten people can actually be make or break things for them yeah i mean remember meta is a company that's lost what 15 billion a year I might be exaggerating a little bit, but I think this is directionally accurate, on the metaverse. So if you think about it, if you want to build a super team of, let's say, I don't know, 10, 20 AI researchers, and you want to give them$100 million a year, so now you're spending$2 billion to advance the state-of-the-art in AI for two years?

7:40I mean, per year? That seems fairly reasonable compared to these other bets. I think that appetite for risk, again, as we said, losing that much money on the metaverse, on reality labs, and whatever it was exactly. Again, Mark Zuckerberg is not afraid to take risks. Every company and everyone has identified whoever kind of wins the AI battle will win the next major phase of growth in overall markets. It's, again, it's up for debate. Is it truly going to happen at the research and model layer? Or will it happen in other parts of the overall AI stack? But I think he's serious, whatever it is. I mean, the move for Alexander Wang and what was it?

8:2415 billion? It's like 15 years. Yeah, 15 billion, which was an acquihirzition, trademarked Alex Kantrowitz. They've shown they're not playing around right now. So all of these acquisitions, I mean, or direct hirings at insane levels, they're doing right now. And they're showing that they're not going to fall back any further. This is from Mark Pincus, the founder of Zynga. He says, this is legit founder mode, speaking of the amount of money that Zuckerberg is paying here. Buying the talent from OpenAI is cheaper than the company. Only a founder would or could do this, and only if they control their board.

9:05I think that's a great point. Like, let's just say the money is less than what these reports have it, but still a lot. You don't see any other companies doing this. I mean, you think about it with XAI, Elon is the richest man in the world. He's not doing this. I think this is a pretty solid and bold play from Zuckerberg. Yeah, I just went to Meta AI just to ask this. And I actually love that Meta AI says Meta Reality Labs division has been hemorrhaging money with significant losses, but it's lost$42 billion since 2020,$17.7 billion last year. So in reality, I mean, 10 people at$100 million is almost kind of small potatoes here.

9:51Yeah, it's child's play. I mean, the thing is what it does culturally. But here's the question. Is it worth the risk? So you mentioned that some AI engineers are being paid like athletes. And there is a great piece by Dave Kahn, who's a partner at Sequoia, why AI labs are starting to look like sports teams. And I think we should just spend a couple minutes or even a little bit longer hovering on this piece because I think it really details what is going on so well and explains why the investments in talent are what we're starting to see right now. So to start off he says there's been three major improvements in AI over the last year First coding and AI has really taken off a year ago.

10:31The demos for these products were mind-blowing And today the coding AI space is generating something like a three billion dollar run rate in revenue Okay, so that's one so this is working in coding The second change is that reasoning has found product market fit and the AI ecosystem has gotten excited about a second scaling law around inference time compute and And third, there seems to be a smile curve around ChatGPT usage, where this new behavior is getting ingrained in day-to-day life. I think smile curve basically means you start using it, and then you casually use the product, so your usage goes a bit down.

11:07And then as you start to find more utility, your usage goes up, so your curve looks like a smile. Is that how you read it? Yeah, that's how it looks and how I'm reading it, and it's correct. I think I agree. This was a really smart piece, again, on where the market is today and where it's going and how this can possibly explain it. Again, I did love that he recognizes, though I think Dave Kahn is both team model and team product. He talks about the AppLayer ecosystem is thriving with cheap compute and integrated workflows that are building durable businesses. So basically, consumers are starting to get it.

11:49You know, like coding has found very clear revenue generation. Reasoning, as he said, found product market fit. So what's next? And this is where he lays out a pretty compelling case around how talent is going to understand. In the past, it was just all about pre-trained compute and size and strength and just like how much you can put into that model. But we've talked about this a lot on the podcast, like the actual training techniques, becoming smarter, even it was Sergey Brin, I think, who said in his interview with you that it's going to be algorithmic progress, not compute. Exactly. Yeah. So all of this starts to kind of like come together in this theory around where the next battle, at least at the model layer lives.

12:37And if that is the case, maybe you can start to build out the idea that 10 smart people can make or break your business versus buying however many NVIDIA chips and purely spending money on the compute. Yeah, and I think it's worth reading exactly the way he puts it in his piece. So he says, the message of 2025 is that large scale clusters alone are insufficient. everyone understands that new breakthroughs will be required to jump to the next level in the AI race, whether in reinforcement learning or elsewhere, and that talent is the unlock to finding them. I'm just going to pause here and say, yes, this is what we've been hearing from everyone.

13:20In that conversation with Sergey, where he said that the algorithms are going to be the thing that takes AI to the next level and not necessarily compute, Demis Sabis also said there's going to be another couple of breakthroughs that the AI industry is going to need in order to keep advancing toward AGI or whatever you want to call it, more powerful artificial intelligence. So it is these algorithmic improvements too that will get the industry moving forward. And what do you need to get there? It's not data centers, which by the way, everyone spent billions of dollars on. It's the talent to be able to make those breakthroughs themselves.

13:55So this is what he says, with their obsessive focus on talent, the AI labs are increasingly looking like sports teams. They are each backed by a mega-rich tech company or individual. Star players can command pay packages in the tens of millions, hundreds of millions, or for the most outlier talent, seemingly even billions of dollars. Unlike sports teams where players have long-term contracts, AI employment agreements are short-term and liquid, which means anyone can be poached at any time. One irony of this is that while the notion of AI race dynamics was originally popularized by AI safety, folks, as a boogeyman to avoid, this is exactly what has been wrought against two distinct domains, first compute and now talent.

14:41So basically, it makes sense that if this is going to be the next big leap, you're going to pay the talent to get you there. And, And no matter how much talk you have around safety, we're seeing the industry accelerate around talent and around compute. Have we both just convinced ourselves that 100 million is reasonable for these engineers? Because I think I am starting to be convinced of it. I mean, absolutely. Even when we spoke about it the first time, right? Once Zuckerberg brought Alexander Wing, what did I say on the show? There's going to be more. And this is a sound strategy. because you have everybody talking about how pre-training is hitting diminishing returns.

15:22You have everybody talking about how data is hitting a wall. And so what do you need? You just need these algorithmic developments. Now, let me ask you this. So I would say, yeah, this is a good bet, but I'm going to ask you this. Do you think this is a sign that like, okay, I think I haven't answered this before I ask you, but that this AI moment is sort of in the last throes and sort of just grasping for anything that will allow for improvement, given that the mechanisms that brought it here are starting to tap out? I'm going to give you a strong yes on this, mainly because, again, as the leader of team product for over team model, I think this is like a reminder that the core of Silicon Valley is firmly of the belief that the model has to get better and better, and the model will solve everything and the rest of the layers.

16:23And even though like Dave Kahn's piece talked about the application layer, you're starting to see some true businesses being built on top of it. Like the idea that they're not still focusing that much on what are the next ChatGPT features. And they are, and I'm not saying they're not shipping very regularly, But it's just this reminder that like that's where every Silicon Valley leader in this circle is convinced the battle will be won. And I don't necessarily agree with that. But, yeah, in this case, to me, because once you made that decision, you have to find the next thing. And as we said, like pre-trained compute, data centers, all of this is like showing diminishing returns.

17:10So you have to move to the next thing. And it's talent, right? Look, I think this is a determination that you have to move to the next thing. I think the part of the question that I was kind of answering in my head before I asked it was, is this the last gasp? And I don't think that's the case. I do think that they're going to be able to wring improvement out of the current techniques. At least everybody that I speak with seems to believe that. But you have to look ahead to the next curve while you're on the first one or while you're on the current one. And that's, I think, what is what's happening.

17:40Yeah. And then we have a world where imagine this talent finds incredibly cheap ways to actually build these models out. And then the ultimate, I mean, like, are they saying there's a potential race to the bottom in the sense that if you truly make the inference layer that much more efficient and cheaper and the compute side of it that much more efficient and cheaper, I mean, it's going to be good for all of us because it means that all of this gets cheaper and people build more on top of it. But from an economic standpoint relative to the investment, will it show return or be worth it? I don't know.

18:18Right. And I think that we should just read the last bit of this Sequoia piece because it's really good. And by the way, this came up in the Big Technology Discord. So I just want to thank our members in that channel for actually sending us this piece because I thought it was excellent. And I just continue to learn from everybody in there. Here's the end of that piece. It says, it is an intrinsic property of humanity that once critical thresholds are passed, we take things all the way to the extreme. We cannot hold ourselves back. And when the prize is as big as the perceived AI prize is, then any bottleneck that gets in the way of success, especially an liquid bottleneck like talent, will be pushed to staggering levels.

18:57I think that's both true and also a little concerning. I mean, it certainly does not seem like a positive statement on humanity overall and our ability to constrain or control ourselves. But what's still ironic to me or funny to me about this is, you know, an illiquid bottleneck-like talent and the idea that humans are the key to, rather than like to actually advancing this, rather than at this point, shouldn't AI itself be good enough to develop the techniques that make AI better? Well, you're talking about an intelligence explosion. And I think that every lab is trying to engender an intelligence explosion.

19:40But they're not able to as of yet. But are they going to sort of consolidate release cycles? Sure, with the help of AI code. But we are nowhere close, I don't think, to what is it, recursively or self-recursive improving AI models. But I feel just given where the industry has kind of promised that we are and the type of advances that are being made, I would like to see them actually kind of apply it to their own companies and the ways of building. Yeah, and I think that's definitely happening inside of places like Anthropic for sure, which has this Claude code that was built effectively to make them better at coding Claude.

20:19So let's end this segment with a couple of bigger picture questions about meta. First is just in terms of culture. think about what happens to an organization when you import i think already it's a dozen or more now multi or desi millionaire engineers to work alongside those folks making 850 000 or a million is there going to be a cultural blow up within meta because of this or do you think they're able to figure it out i'm just going to say pour one out for the poor guy making 850k I think, no, but I think, like, yeah, there's definitely going to be whatever the end payment was. Even, like, at a micro level, like, is Jan LeCun now going to be reporting to Alexander Wang?

21:04I think he is, but I don't think he cares, honestly. I think Jan just wants to do the science. He doesn't want to manage massive teams. Teams. Okay, okay. But I think, like, at every level, even this kind of reorg within meta around, like, who is managing what. basically saying we have not been doing good enough already that it it's like a pretty big cultural like statement from zuck so i think it has to be but again i mean the argument the founder mode argument would be that if you're not winning you do need to shake things up and if there's some cultural like uh shrapnel from that that's just part of how it works right and it's like you're kind of if you are a meta ai engineer and you're making like close to a million or above a million uh i don't know if you're going to get a comparable offer especially given what's happened with llama up up to date one question what does this mean for meta's business why are they doing this is it for meta.ai that we all start using it more is it for so my meta Ray-Bans, which work, which I love, just start getting even better?

22:15What is the end goal from an actual business or revenue standpoint behind this? Well, I think that there's a belief that this technology is getting much better and people are just going to want to use it. And they're going to spend more and more of their time within AI bots or AI experiences. And then think about meta. Like your job is to command a share of time across the web or across anybody's usage on their phone or their laptop. And, you know, every time a threat like this comes up, you go ahead and you copy by or do something of that nature. So with photo sharing, they bought Instagram. With the rise of disappearing messages, they put made stories and they put their own disappearing messages in something like Instagram and WhatsApp.

23:05And then with TikTok, they built Reels. So if you're Mark Zuckerberg, you can't really afford to lose a tremendous amount of attention to other companies, especially with these AI bots that do not send traffic out that we have talked about ad nauseum on this show are, you know, the experience. And if that becomes the experience of your web or even beyond the web, you don't want to be Facebook sitting on the outside and say, please use our app. There is a desire to own the operating system. And that's just if, you know, the progress continues along the way that it has been. And we like start to use chatbots a lot.

23:41And of course, imagine just the value of creating AGI or superintelligence. It's a whole different ballpark. Well, that, okay. But that's where I would ask you, those are two separate goals, right? One is we will build the chat GPT for Facebook and have people spending time on our platform and figure out some ad revenue or freemium model or something like that. Do you think it's that? Or do you think it's still more of just to put your head down and whoever gets to ASI the fastest wins? And then that's really what's driving it. So I think the floor is that you build the key consumer product. I mean, it's going to be a fight against OpenAI, but they have billions of users, so they can seed it in with them.

24:24So like at the very least, you're like basically building the next, you know, killer app. And then if you get to super intelligence, it's all gravy, right? Or artificial mineral intelligence or whatever you want to call it. That's a bigger business than Facebook. Yeah, just hang it up. Whatever the... There are no revenue models. You just get money. You can't sit this out if you're Mark Zuckerberg. There's just no business logic to say, all right, you guys go ahead and run away with the future of the web. Yeah. No, no, agreed. 100 million. I'm curious listeners, if you've all walked away too, believing 100 million is totally rational and reasonable because in a weird way, I kind of have.

25:05Just think about the value of the information that we share on this podcast contributing to these outcomes. I would say our advertisers should be in that range at the very least. Yeah. 20 to 25 to start, and then we'll go to 50 soon. We'll go up. Exactly. Did you know your credit card points and miles can lose value to inflation? Credit card companies often reduce the redemption value of your points and miles. Now, imagine a credit card with rewards that can grow in value. With the Gemini credit card, you can earn Bitcoin or one of over 50 other cryptos instantly with no annual fee. Every swipe at the store or gas pump earns you instant rewards deposited straight to your account.

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26:24The Gemini credit card may not be used to make gambling-related purchases. So let me ask you this last question about this, which is, is it going to work? Do you think that this is going to work for Meta? That's a good one. I think it's going to significantly enable them to catch up. Whether they, like, shoot out ahead, I don't know. Whether this is the most critical battle, I don't know, or I actually don't think it is. But I do think that this is going to get them back in all the kind of like benchmarks in a significant way. I think they're going to figure some stuff out. It'll be good for them in this specific battle.

27:07What about you? So I think since we're talking in sports terms, there's a concept in sports called wins above replacement. Right. And so you sign Juan Soto, if you're the Met, to$750 million contract because Juan will net you maybe nine extra wins a season, which doesn't seem like a lot. But ultimately, it's the difference between making the playoffs or not because you can sort of do the math. And you see if you win 80 games or you win 90 games, there's actually a very big difference there. So I think what Meta's really done here is it's definitely increased its wins above replacements with a tremendous – with a number of researchers.

27:47And unlike on a baseball team, you don't only have like nine people coming to bat. Come on, guys. It's July 4th. I'm going to run with the sports metaphor. I'm in. Keep going. You can have a team of like 10 or 12 Juan Sotos and stack your lineup. And if you keep building that win above replacement in your talent pool, then you can make some real progress. Are they going to be the leader? I don't know. I think OpenAI is the leader until proven otherwise. And I've definitely doubted them publicly and then have had to eat it. I mean, I definitely regret my words on that front. But I think that it really just comes down to what does your potential look like today compared to where it looked like yesterday?

28:29And Meta's potential is much higher now than it was before these hires. And again, I think it's money well spent. All right. I'm on board as well. Okay. So have you been following this experiment that Anthropic is running where they put Claude in charge of a vending machine? Yes. I think our conversation today will reflect like most AI conversations out in the market that we just went from saying$100 million to an individual as a signing bonus could make sense and artificial super intelligence, yada, yada, yada. And then let's bring it back down to earth. Tell our listeners about the Claude shop.