OpenAI Raises $40 billion, Is AI a Letdown?, Musk Sells X to xAI

29:38Yeah, I would certainly not sit down with an AI therapist. Not yet, at least. Sit down or text with? I wouldn't text with it either. You let these things into your inner self and then they can manipulate you. I just don't feel okay with a computer program doing that. But I do think going back to the Evan Ratliff episode, it was really funny when the AI therapist is telling his AI bot to breathe into a balloon and fill the balloon with all of his anxiety and worry and then let the balloon float away. And the AI bot is like, I am breathing into the balloon now. The therapist is like, good, good.

30:16I don't know. Is scrolling through your Instagram feed really that different about letting a technical system know all of your innermost desires and then present you with algorithmically generated or curated content to answer those needs and desires? Not to get too philosophical here, but. Yes, I think it is. I mean, I really think that you're talking. Instagram is only a subtle manipulation, though it isn't manipulation. I think that when you're speaking with an AI therapist, maybe I should try it before I knock it because I have spoken with the replica AI companion. And that certainly opened my eyes once I started talking to that.

31:02How'd that go? How did that go? Yeah. It was a little too real for me, man. Are you in love? A little too real. I didn't fall in love, but I could definitely see how people do. Yeah. So I do think that, yeah, these things can get real. And what happens if you develop a deep relationship with this AI therapist, the company updates the software, and the next thing you know, it forgets everything about you? It would be a pretty traumatic incident. I can just imagine the scroll bar loading. It's like, sorry, we have lost your data. Please start again. Could you imagine? It's happened before. It's happened with Replica.

31:40Okay, one last story about AI, then we'll move on to our next segment. OpenAI is planning to release an open-weight language model in the coming months. This is from Sam Altman. We are excited to release a powerful new open-weight language model. With reasoning in the next coming months, we want to talk to developers about how to make it maximally useful. It's the first open-weight language model release since GPT-2. We've been thinking about this for a long time, but other priorities took precedence. Now, it feels important to do. I have so many questions, But I want to hear what you think about this, Roger.

32:14Well, again, I'd love that. I mean, you just raised$40 billion, so you can at least make it again, hopefully a year or two without needing to raise again. So you can start to say, maybe we will totally open source our models and at least provide the weightings. I think this is one of those odd, interesting things where OpenAI, to me, still lives as kind of a research house versus like a fully operational capitalist business. To me, there's still this. They want to be a leader among the research community. They want to be a leader among AI thinkers. and obviously DeepSeek created the entire conversation around the need to or the potential around open weight models.

33:06But I will also agree. I'm probably equally confused as to why now. I'm just trying to help them. They agree. It's the product and it's not the model. It's all about model being commoditized and now it's just product that matters. but we're going to invest$10 billion in our next model. That's weird. That is weird. I mean, you're right. It's hard to basically square that circle. Yeah, I think there's a lot of circles that are not squared in the overall open AI structure and story, but they make good products. They got good models. Here's my conspiracy. Okay. Okay. There we go. Elon Musk is trying to stop OpenAI from going for profit, saying that the company abandoned its original open source methods.

34:01And what happens? OpenAI raises$10 to$40 billion, we still don't know yet, predicated on it transitioning to a for profit. What's going to make that for profit transition easier? An open source model. I like it. That's it. I genuinely cannot think of another. I tried a second ago. I didn't even feel convinced myself as I was trying to explain my theory. I like that one a lot better. And actually, that's going at Elon in that way. That's fun. That's fun. Oh, yeah. I mean, you can just see it now. Your honor, we are open AI. Just look at this. Look at all the participation we got from thousands of developers as we requested feedback.

34:46Clearly, we are serving the market in the way our initial charter intended. We motion for this case to be dismissed. Case closed, Masa. Your check will be wired immediately. There we go. All right. Let's take a quick break. When we come back, we're going to talk about a couple of, I would say, anti-AI op-eds, including this one from the New York Times, the tech fantasy that powers AI is running on fumes, and another from CNN saying the problem with Apple intelligence isn't Apple, it's AI itself. Do these authors have any merit in their attacks? We will dig into it right after this. Did you know your credit card points and miles can lose value to inflation?

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36:34you're used to hearing my voice on the world bringing you interviews from around the globe and you hear me reporting environment and climate news i'm carolyn beeler and i'm marco werman we're now with you hosting the world together more global journalism with a fresh new sound listen to the world on your local public radio station and wherever you find your podcasts

37:02And we're back here on Big Technology Podcast Friday edition, running on a Wednesday as we break down the news in anticipation of an interview dropping Friday. Of course, Ronda and I will be back not this Friday, but a week from Friday. So let's talk about AI being somewhat mid. There is a New York Times op-ed called The Tech Fantasy That Powers AI is running on Fumes. It's by Tressie McMillan-Kottom. She says, behold, the decade of mid-tech. This is what I want to say every time someone asks me, what about AI? With the breathless anticipation of a boy who thinks this summer he... Oh, my God. Do I have to read this?

37:44I think you do. I think you do. This is what I want to say every time someone asks me, what about AI? With the breathless anticipation of a boy who thinks this is the summer he finally gets to touch a boob. I'm far from a Luddite. It is precisely because I use this technology that I know mid when I see it. She goes on to argue that artificial intelligence is no revolution. It is middling tech. It is something that is promised to do magical things. But when you put it into production, it doesn't. Think about checkout, she says. Checkout automation was supposed to change the experience at the supermarket.

38:25She calls it pretty mid. Cashiers are still better at managing the point of sale. She says, think about facial recognition. That's supposed to get you through security faster. And the TSA's adoption, however, hasn't particularly revolutionized the airport experience or made security screening lines shorter. Artificial intelligence is supposed to be more radical than automation. Tech billionaires promise us that workers who can't or won't use AI will be left behind. politicians promise to make policy that unleashes the power of AI to do something, though many of them aren't sure exactly what. I wanted to hate this op-ed, but as I read it, I started to think, you know what?

39:08We still haven't seen the killer use cases for AI. Yes, you can use ChatGPT to help you sort through a document a little bit more, but has it lived up to the boast of it, of the technology being that revolutionary and, you know, really empowering the people that use it beyond those that don't. I don't know. I couldn't fully hate this story. This article, this story took me on an emotional journey as well. Because I think same thing, I wanted to hate it. But also, it raises the point, I feel it's still selling the promise too short, but it's not lying about the present. And this is where, and I've been ranting about this for a long time, AI companies have a branding problem.

39:58And we see this the way the Super Bowl ads and the way Gemini was presented and the way ChatGPT tried to whatever present, whatever they were trying to do with that ad. Overall, everything, the promise of automating entire industries or these big boastful things or people on X doing threads about 10 crazy use cases I just discovered with the new Claude update. Like that is what everyone is building the promise around and what they're raising money around. So they have to do that. And that's not where the technology is right now. It's not. If you are very good at using it, You can make it do a lot of those things.

40:43And there's more and more, again, products being built on top of these models to allow more and more people to do these things. But because the industry is promising that that's the present as opposed to the even near future, it's going to leave a lot of people feeling like this. Again, my mom going back to me at the Super Bowl, turning to me and being like, so what can I do with this AI? and not being able to give her a clear, simple explanation. And these products not delivering that for her. And we're going to talk about Apple intelligence, our favorite topic, but certainly that as well, not actually delivering on what they show in the ad.

41:22So I think this is something the industry, and I think this year there's going to be a reckoning with it, that when you are promising too much, at a certain point, consumer fatigue is going to hit in. It's going to hit. And people, you might see those user numbers start dropping and then you can actually hopefully get to the actual work. But I think the industry is moving in the wrong direction on that side. And this article captured it. I'm totally on board with you. And it's funny because it's the exact emotional journey that I had where I was like, you're wrong. There's so much useful stuff you can do with AI.

41:57And there were passages in there that felt beyond over the top for me. Here's one. The tech fantasy is running on fumes. We all know it's not going to work. But the fantasy compels risk-averse universities and excites financial speculators because it promises the power to control what learning does without paying the cost for how real learning happens. Just this idea of that, okay, we all know it's not going to work just struck me as being totally removed from the details. But then she also talks a little bit about why she is so negative on the technology. And again, it's the delta between the promise and the reality.

42:32This is what she writes. Every day an internet ad shows me a way that AI can predict my lecture, transcribe my lecture while a student presumably does something other than listen, annotate the lecture, anticipate essay prompts, research questions, test questions, and then finally write an assigned paper. How can professors outteach an exponentially generative prediction machine? How can we inculcate academic values like risk-taking, deep reading, and honesty when it's this cheap and easy? to bypass them. So she's an academic. But I think this point is valid in that the industry has promised to do all this.

43:07I mean, think about how often we are talking about industry promises of AGI. And I think I'm pretty proud of the fact that on this show, we haven't sort of gone with the marketing hype and sort of tried to take a nuanced and cool headed approach to what we're hearing from the industry. And there's a reason for that. We think that it's important for listeners to get the truth here. And by extension, Ranjan, you've been talking for a long time about this branding issue, that the promises from the industry that you're going to have, you know, these brilliant AIs that are going to be walking around with you, feel like they should be here already.

43:45And I think the industry oversells what there is today. It's not there. It's going to take years sort of undersells what we already have, right? There's both this overselling and underselling happen in terms of the actual capabilities. And then it's no surprise that you're left with somebody who is not a techie, but deals with the technology and kind of looks at you and says, you know what? Shut up. Right? Yeah, I think that's exactly it. That, I mean, when you, And in that gap between expectation and reality, like even the ChatGPT generating images for brands, like I worked on something and with the chief marketing officer of a fashion brand and I'm like, okay, here is the product on a completely artificially generated model, which this is like a year ago and it's blowing my mind that I've been able to do this.

44:45And the first comment is the print on the fabric is not exactly the same. And it's a very intricate, detailed print. And it's like, wait, do you not understand just what just happened? I just created a person and put this product on them. And the first reaction was a bit of disappointment because the expectation was it was going to be perfect. And I'm sure this is happening across the entire industry, especially when you get into the more enterprise and professional use cases. And I do think this is the exact branding problem, in addition to the fact that she even throws in that Doge has been an infomercial for AI, that the use cases and where it's living and who's promoting it is causing some problems, too, on the branding side.

45:39Right. Now let's go to this CNN story. CNN says Apple's AI isn't a letdown. AI is the letdown. And I think continuing on this Apple beatdown that's been going on in the press for the past couple of weeks, it says the real reason companies are doing this is because Wall Street wants them to. Investors have been salivating for an Apple super cycle, a tech upgrade so enticing that consumers will rush to get their hands on the new model. Fact check. True. In a rush to please shareholders, Apple has made a rare stumble. The company is owning its error and now delaying the Apple intelligence features.

46:15to the coming years. And this goes to a little bit, this is actually a very incisive point that this author makes here. In June, they write, Apple floated a compelling scenario in the newfangled Siri. Imagine yourself frazzled and running late for work simply saying into your phone, hey Siri, what time does my mom's flight land? And is it at JFK or LaGuardia? In theory, Siri can scan your emails and texts with your mom to give you an answer that saves you several annoying steps of opening your email to find the flight number, copying it, then pasting it into Google to find the flight status. If it's 100 % accurate, it's a fantastic time server.

46:53If it's anything less than 100 % accurate, it's useless. Because even if there's a 2 % chance it's wrong, there's a 2 % chance you're stranding your mom at the airport, and your mom will be rightly very disappointed. Our moms deserve better. Our moms deserve better, I agree. The thing that Here's to the moms. Here's to the moms and picking them up at the airport 100 % of the time. The thing that kills me about this is, honestly, that query should be answerable at 100 % success rate. I'm sorry, Apple. You guys should figure that out. That is a straightforward thing. But this is, again, going back to the problem that I did.

47:34Well, actually, I will disagree that Apple's AI is a letdown. And I know regular listeners know that's how I feel. But that is a problem that actually most AI systems and chatbots that have, if you upload a bunch of emails and you ask that exact question into Claude, it will get that answer right. So I think Apple, the biggest letdown, and again, going back to the gap between promise and reality, is they essentially promised everything all at once to everyone. Rather than being like, okay, let's solve the, go to your inbox and answer all of your travel questions. Travel planning. Make travel planning like a little feature.

48:16Make it a little app. Make it like a pop-up Apple tips for Apple intelligence. but instead the idea was all questions could be answered right away and that's of course it's going to be a letdown but again i think ai should be able to today solve a lot of this stuff yeah i wanted to read that out there a because it sort of harks back to our attempt to use siri yes and failing miserably and i think you kind of seized on my follow-up point here which is ai can and should get that right. There's no excuse not to get that right. And it is going to start delivering. And that's why, like when we talked earlier in the show about how AI is finally hitting its stride, this type of stuff is going to push it even further.

49:05I'll give you one example. I was in my Gmail inbox and just used the Gemini. I'm always reticent to use these things because they usually don't work. But I said, OK, I have a pretty complex task and it will be worth wasting the 30 seconds on a Gemini query to see if it can work. And that was, I wanted it to pull out all the paid subscribers of big technology. I wanted to pull out their emails and separate them by commas so I can invite them into our Discord. And I typed that into Gemini and lo and behold, Gemini produced the list, perfectly accurate from a number of emails going back a month. And I was just able to copy and paste that into the BCC field and invite the subscribers into the Discord.

49:46That's incredible. I mean, it is effectively applying a conversational probabilistic technology into a deterministic scenario and it proving that it can execute. And once it starts getting that stuff right and doing it for a broad degree of use cases, whether that's Google or Apple or Amazon or Microsoft or all of them, that's when you're going to see the movement. But I think that in that exact example, in that exact example is kind of reference, like it's a good reference point to one of the points in the article. She's kind of going at Kevin Roos at the Times and she's like, he had said. It sounds like she listened to a Hard Fork episode and was like, what?

50:30Yeah, and was pissed off. She both goes in on Kevin and Casey. Okay, continue. Because Kevin said there are people who use AI systems and know that they're not perfect. and that those are the regular users that there's a right way and a wrong way to query a chatbot. And then the authors, this is where we, the people, are apparently failing at AI because in addition to being humans with jobs and social lives and laundry to fold and art to make and kids to raise, we should also learn how to tiptoe around the limitations of large language models that may or may not return accurate information to us.

51:04I like the line. It's a good line. It's good writing at the end. But I also, to me, this is where Apple, it's a letdown on their part, because they promise to a human with a job and social lives and laundry to fold that they'll get all these right. The example you gave is a perfect example of, if you kind of know what's possible and how to ask, it's going to get it right. And it's incredible. But this gap between knowing how to use it, like that's where either there needs to be more user education or the product needs to get better because the models are good enough to answer all these kinds of queries.

51:44Yeah. I don't know. I mean, no one is expecting you to use the LLMs to make your life better. Just to me seems like, all right, tech companies built these tools, like go and use it if you want or don't use it if you don't want. Sort of I don't know why I'm in a sense of that comment. But these investors are certainly needing that to happen. They need that. But you don't have to as a consumer, you have agency and 20 million people feel it worthwhile to pay for ChatGPT. So clearly this is working for some people. I would argue your agency with Apple intelligence is a bit limited when it's shoved into every part of the iPhone and product.

52:29And accidentally I call Siri even on my MacBook right now. Yeah. I think they're questioning free will in terms of interacting. Turn that shit off. I don't know. Just turn it right off. Do you think, do you know how to? I haven't tried. I know it's possible. I haven't tried either, but I might go and do it and we should talk about it next week because I have a feeling it's probably going to be a pain in the ass. All right. Next week, folks, you tune in. Ranjan and I will both try to turn off Apple Intelligence Live on the air and we'll see if we can do it. All right. Very quickly on this line, Amazon's Alexa Plus is out.

53:06And this is from The Washington Post. It's missing some features. The new enabled assistant Alexa Plus is launching on Monday. So that's Monday of this week. But not all the features the company showcased are ready. Some of the new features that aren't going to be coming out include ordering takeout on Grubhub based on a conversation about what you're craving. Or using Alexa Plus to visually identify family members and remind them to do specific chores like walking the dog. I guess that's if you have the security camera in the house. Other stuff like brainstorming a gift idea or generating a story to entertain your kids also won't be released until later.

53:48So I don't know. We saw the live demo at the release event, but I think this is just another case of Amazon or of a company making a big promise about an AI assistant. Now, at least they shipped it. I guess they shipped something. I try to get it to work on my devices. I think I have to disable multi-language and I can start using them. And so we can report back on that next week. But I don't know. Should we be excited that they launched or also just be like, all right, here we go again. They are missing features, of course. This is where I am genuinely excited about this. As we talked about a few weeks ago, I might get rid of all my HomePods and move back to Alexa.

54:32But to me, what was very interesting about that announcement is brainstorming a gift idea is a pretty straightforward generative AI question. Generating a story to entertain your kids. I do that all the time with ChatGPT voice. And it's amazing. I'll literally be like, tell me a story about this really specific subject involving my kid, like this really specific scenario. And he loves it. So it can do that job. So why, like using facial recognition to identify family members and remind them to do specific chores, that's a tougher problem. That's a tougher problem to solve. And ordering on Grubhub and not getting that wrong and like at 100 % accuracy, otherwise people would be really pissed.

55:20I get that stuff taking time, but why advertise that stuff if it's not close to ready? That's just like, guys, bring back consumer trust in this. make people happy make them excited you know what open ai is actually doing that pretty well like in terms of they are doing it the best of everyone which explains why they have the product that's working yep no that's why they're at 500 million that's why people trust it even more because you go there you actually do you know what i'm going to admit right now i was unable to jiblify an image i did i kept hitting a content policy thing when i tried to put a picture of me or my wife up there and like try to jiblify it were you able to do people i have been able to yeah what is what i'm paying you open ai i'm paying you let me jiblify myself i don't know yeah what i would do is just um i would just go to the web version have you been using the app the web version is seemingly more permissive.

56:22No, web version. I actually got a little obsessed with this because on Sunday I landed back in New York and all I saw was this all over different social media platforms. And I'm like, okay, how can I not do this right now? I'm going to write a whole New York Times op-ed on how AI is letting me down because ChatGPT is not letting me gibbify myself. It's mid, it's mid. Okay, let's just end this segment. I think we have consensus here, which is that we both believe that AI is not going to just fizzle out and it's not a fake revolution, so to speak. But we also think that the overpromising is going to have some serious consequences.

57:04And we're already starting to see some signs of that backlash. Agreed on that. All right. A couple of minutes left. Let's just talk about the XAI acquisition. So XAI bought or the X acquisition. Too many X's. XAI bought X. So Elon Musk's AI company bought X. It's kind of a weird deal. So there was one set of advisors working for both sides. It put XAI's valuation at$80 billion, even though there was no new money in. And that increased its valuation from$80 billion to$50 billion. So that$33 billion that X got is actually probably smaller if you just use the last fundraising amount. We have a professor from UCLA that says it's funny money.

57:53He's telling the Wall Street Journal, it's funny money. It's like using Monopoly money to buy Pokemon cards. And as someone who has done that in the past, let me tell you, don't knock it till you rock it, Professor Andrew Verstein. And it is interesting that basically we're seeing AI, which is the next platform, swallow social media. which is the last platform and this is what Axios says. AI eats social media as XAI swallows X. All your X data was going to be used to train these models anyway and now it definitely is and there's no getting away from it. So that's the headline on the deal. Ranjan, I'm curious what you think about it and if there's anything you think the common narrative might be missing about what this deal means.

58:39I think it's like using Monopoly money to buy Pokemon cards if that's the common narrative is the right one. Again, kudos to Elon Musk and the advisors who worked on both sides of the deal, because you never see something like that, to raise the valuation of XAI from 50 to 80, and then simply add in the$33 billion price tag. And maybe that's what you're attributing the rise in valuation to be. The simple add-on of the$30 billion or so for X is quite incredible. To then be able to just make up whatever valuation you want for X is incredible. Because remember, he bought it for$47 billion, I believe it was.

59:30They valued it at 45-ish, and they said$33 billion with the valuation minus debt. Basically, he's able to just say, oh, yeah, it hasn't lost any value, even though we've all seen endless reports, and you can even see it in the advertising when you load your XFeed, just how ridiculous it is that they're not making money. They're losing money. It's not going in the right direction. and he just was able to say, oh yeah, it's worth what it was when I bought it. That's okay. And now it's part of XAI, my other company that has an obscene valuation. It's the same investors on both sides. It's the same bankers and lawyers on both sides.

1:00:12I mean, this one, Masa is jealous of this one. Yeah. I mean, he thought his 40 billion and we're forecasting revenues about the investor actually paying money to the portfolio company, this puts that to shame. Well, the interesting thing is that now XAI, XAI's revenue is going to be coming from X, which is interesting. Like X will be the revenue arm of XAI in some ways, because you're going to pay for Grok through Twitter or old Twitter. You're going to have ads still coming into X. So that adds an interesting wrinkle to it. But let's just end, let's end on this. this is the close well it's not fully the closing chapter because we don't know what's going to happen to xai but this let's say the intermediate closing chapter which makes no sense but you know what i'm saying on the x saga was that a good buy for elon musk strictly from a business standpoint i think it was a great buy for elon musk from a business standpoint because he still owns it no cash changed hands and he got to just label a valuation that he wanted to on a property that is not worth that.

1:01:26So that kind of financial engineering, I think we should all be fascinated, proud, and terrified of. Well, I think that says it all. Ranjan, it's so great to have you back. Welcome back to the show. It's good to be back. See you next week. on Friday. Thanks everybody for listening. Special episode coming up this Friday so stay tuned for that and then Ron and I will be back a week from Friday to break down the week's news as usual. We're back baby, back in action, breaking down AI news like it's been no time at all. Alright, thanks for listening and we'll see you next time on Big Technology Podcast.