Ben Thompson from Stratechery on AI ads, the end of SaaS, and the future of media

24:18It is a different internet. and there was too much sort of uncertainty and unknowns just in general about a lot of Chinese companies. I would write about them occasionally in the context of US tech companies. So I think I wrote about like WeChat and what it meant for the iPhone's relative competitive position in China, how it's different than sort of other countries. I think that sort of held up pretty well. Wrote about TikTok in the context. I mean, more about TikTok, I think, in the context, particularly this kind of meta. TikTok came up around the same time as the, was Quibi, which Quibi was the example of that.

24:51Quibi was like, it was actually right that there was room for a mobile entertainment product. It was totally wrong about the content acquisition strategy. So even if their hit rate was higher, their total volume was way too small. I follow them, but not super closely. It's just a hard market to understand. And the - But like TikTok's very relevant to the US market. So TikTok, TikTok. So I wrote the TikTok war, basically making the case that the problem with TikTok, and back then everyone was talking about user data. Who cares? Like the whole user data thing, people have this view of like the East German Stasi and like folders, like going through people's data.

25:31Like these are like vector databases with like numbers that no human can parse. Like it's really quite anodyne. It's just really the target ads. And I was very skeptical about that being a forcing function in terms of forcing that gesture or whatever it might be. The issue I had was the algorithm. And I noticed, I think it was when the Hong Kong protests happened and Daryl Morey, the then GM of the Houston Rockets, tweeted like free Hong Kong or something like that. And there's a huge meltdown of the NBA games that canceled. And I noticed that on TikTok, and this was from, I tested it from Taiwan and via VPN from the US.

26:12If you search for every single NBA team, you got NBA clips. Except for Rockets, you got nothing. Oh, that's funny. And I'm like... I got demonetized. There is a thumb on the scale here. I started talking about it then. And I did support the ban of TikTok or the forced sort of divestiture from China because it seems fairly insane to have a primarily information source controlled by your chief geopolitical adversary. Yeah, same, like there's rules over TV station ownership and it's like not really different. And so I, you know, everything's a trade off. Of course, I'm pretty well known for being a pretty stark defender of free speech and against censorship.

26:53And my issue wasn't TikTok per se. It was the reality of China is the founder of TikTok, of ByteDance is long gone because he got called to the carpet for ByteDance showing a little too much of what people liked. which is mostly like hot girls dancing and being insufficiently like showing the right things that the party wanted. It's in China's like the reality is China has the price of doing business is they get, you know, they're on somewhere on the control structure. They can tell you what to do. And this just seemed like a very foolish thing to tolerate. unfortunately the US political process or fortunately maybe the reality is the US process and system is such a mess can anyone really truly impact it over time the way that it shows up messily is we somehow do pass the law banning TikTok and it didn't get banned and now it is sold but China still controls the algorithm so I think it's a big disaster it's also like what can I say about it I said my piece.

27:58We ended up in the worst possible case, which is we violated property rights and we did all this stuff that's ridiculous and we probably bartered XYZ for ABC and we didn't get the most important thing, which was control of the algorithm. Has that not happened as part of the sale? No, Bikedin still controls the algorithm. I didn't know that. Yeah. Hmm. Good job by us. That does seem like it was the point of the spin-out. Well, the data was always the most salient political point. Yeah. And so when I wrote about it, that was my point. It's like, I don't care about the data. The issue is the algorithm.

28:29Yes, yes. And unfortunately, that did not care. Maybe I should have read about it more. But anything like all the politics stuff, there was a period. I mean, thank God for AI. There was a period. I wrote like when I wrote Aggregation Theory a couple weeks later, I wrote like something about regulation. I'm like, this is going to drive a bunch of regulatory issues and antitrust things and all these bits and pieces. When that actually happened, the late end of the last decade, of course, I was writing about it. I was watching the congressional hearings. all that sort of thing. And that is the close I came to quitting and burning out.

28:59I think burnout's not a function of how much work you're doing. It's doing work you don't enjoy. And at one point I'm like, either I quit or I stopped covering congressional hearings. So I decided to stop covering congressional hearings. I only wrote about antitrust stuff, it was super prominent, and I've been much happier ever since. And maybe that's part of the price of just not writing about that is, maybe I should have pushed on the TikTok thing more. That's interesting. I said my piece. Yeah, yeah. Is Stratechery very widely read in DC? It is. Oh. Yeah, it is. Sometimes it's gratifying. It's great when you get called and ask for your opinion, or you get certain responses or you see impact.

29:41It's less gratifying when you get yelled at and people are mad at you. But fortunately, the key thing to succeeding on the internet is something I have in spades, which is a very high level of disagreeableness. So you can be all you want. I'm not going to change my mind. Okay, but getting back to aggregation theory as it pertains to AI, like a simplistic view you could have is that the AI apps are the new aggregators. And so a huge amount of economic value will accrue to them. And that's it. You could also say that that's too simplistic in a bunch of ways, because one of like we're saying the, you know, booking.com, you expect it to return you hotels that you should book, but you expect a little less of a commercial incentive from the AI apps.

30:26And this is like a little more of an abstract technology where it's actually not trivial to insert all of the commercial incentives in the right way. And anyway, you come up with various objections. And so do you think - Well, I think the ad model is probably the way to start, which is, I just talked about before, sort of the lean in versus lean back. Ads are very tied into human psychology. And like what you're sort of tapping into and people's response to that. And how do you make something creative? In the short term, you know, technology often makes old business models even more powerful before it kills them.

31:01Right? So you have something like, you know, suddenly you're a newspaper. I used to be limited to my geographic area. Now I can reach the whole world. Yes. Oh, wait, a few years later, everyone can reach the whole world. Yes. I mean, pure competition, I'm screwed. And that is certainly a concern about this model. If you get to a world of, say, agent of commerce, and the agents are just buying the right thing. I think this is also something that has driven a lot of tech skepticism of ads. People in tech tend to be fairly nerdy, fairly obsessed. They're doing a ton of research to find sort of the exact right thing.

31:39Yes. Why would anyone tell me what to buy when I've, you know, researched it for two hours? That's right. Yeah. But it's like ads have no effect on me. Well, what if that sort of obsessive deep dive approach is now trivially available to everyone because AI is the one actually doing it? Now, where do ads sort of function? And I think this is definitely a bit of a be careful what you wish for scenario because what this entails is, of course, more transparency, more details, more understanding sounds good. What it actually entails is sort of perfect competition, which is a very sort of brutal game that can just wipe out entire categories.

32:24That's basically what happened in newspapers in many respects. So that's number one. Number two, in a world of this sort of world, you're sort of by definition anchoring on whatever specifications or whatever can be measured, can be put down. And you had the old sort of Steve Jobs adage about feeds and speeds versus like the feel of something where the intersection of liberal arts and tech, what the fuck does that mean? And it's just like, well, what it actually means is there's things that can't be measured and that don't go on an Excel spreadsheet. and everyone you talk to acknowledges this say yes there's things that can't be measured and the way it actually plays out in practice is only the things that measured sort of matter I think this has happened to a huge problem with sports analytics is a great example of this where I think basketball is my favorite sport there's a lot that goes into basketball and winning that is somewhat hard to wrap your hands on it's not like baseball which is very measurable baseball is very measurable I do think there's aspects about clutchness and stuff that I don't know that are properly measured.

33:33But around basketball, for sure, the interaction and the way teams play together and how your effort or your involvement on offense can affect defense or sort of back and forth. And you see again and again, like to take my, you know, I like Daryl Morey. I think there's a reason his teams haven't won. They've over-optimized at the expense of some of these other issues. and if you can't measure them, they tend to get devalued. And in a world of AI-mediated everything, how many things that can't get measured fall by the wayside because we end up with it's very utilitarian sort of goods that have no soul to them.

34:16Sort of a silly sort of thing to worry about in some respects, or it sounds silly, but I'm a human and I anticipate liking and preferring the humanity of things of all sorts in the long run. But you could say this,

34:38like e-commerce aggregators like Amazon and lots of others have led to fairly anonymous manufacturers of lots of everyday goods, the kind of Amazon Basics type stuff. at a much lower price point than they were at previously at still perfectly good quality. Isn't that fine? No, this is where you throw my ad argument in my face, which is like, actually, it brings up the base level for everyone. Like your basic consumer, the access of items they have to. There's no soul in an Amazon Basics power adapter, and that's fine. Everyone thinks back to like, oh, my wash machine was so much better in the 1960s.

35:18And it's like, yes, that's true. And also far fewer people had wash machines. and so I'm now like making the opposite argument sort of against myself. I will leave and you can have a one person today. Let's switch back and forth. Yeah, exactly. You can change sides of the booth. And you mentioned Agenda Commerce where, you know, we obviously are big into that and had our announcement with OpenAI back in October. Where do you think that goes? Like how do you see Agenda Commerce playing out? I mean, the contrast between your and OpenAI's announcement and sort of Google's announcement I think is pretty interesting and speaks to what the companies are driving for.

35:53OpenAI wants to be the place you do everything. They want to be like the aggregator. I think a critic would say people compare them to Netscape. I think the better analogy, if you're an OpenAI skeptic, would be AOL, where they want to be sort of like the interface for everything that you might do. And it goes through their channels. and Google, just as they were relative to AOL, is like, actually, we want to equip everyone, knowing that if everyone is capable, we are the greatest beneficiaries because we still marshal sort of the front-end demand sort of in that regard. Now, how does that actually manifest in terms of commerce?

36:32The funny thing about tech is I don't think it will manifest in terms of airplane tickets, which is everyone's example. like everyone can never think of a better example than that uh but what what is the ai going to buy what is it going to get i don't know i think i would like to think people will want to have agency in their buying decisions but then again i you know we have like assistants whether it be like you know for work or whatever it might be and they make buying decisions that we're necessarily not involved in and that i think is a good predictor precursor of what people will Ideally, do I really need to know?

37:09Actually, I have very strong paper towel ideas. That was going to be my, but once that's set, can that be monitored and done? So I don't know, I think this is a very unsatisfying answer other than to say it has big implications on things like advertising and on things like, is that going to be a viable business model going forward? What margins are going to be available? Is there going to be perfect competition? Things along those lines. Okay, let me try this on you for agentic commerce, and I'm curious to have you critique it, which is sort of how I see things playing out. I think some skepticism is triggered by people pitching a very far end state with a lot of agentic autonomy.

37:52And so it's like, please book me a honeymoon in Japan and all the activities. It was like, no one actually does things that way. Whereas actually you should go from the bottoms up in some very basic building blocks where step one is just replacing filling out web forms. That's an activity that sucks. No one likes it. And so imagine you find the winter jacket you like and you copy the URL into chat GVT and just say, please buy this for me. And that's a much better experience than going clicking around a site you've never been to before. And so there's just the agents doing kind of tool use on your behalf and everyone can agree with that.

38:28Maybe it clarifies there's multiple colors, which one do you like? But it's just replacing filling out form fields. This is, by the way, one thing that I am very... A lot of people are skeptical of this, but I am very optimistic about, which is, I call it just-in-time UI. Exactly. It's a better UI. That's right. Level 1 is a better UI for doing an action you want to know. Then level 2 is better discovery and search. it is crazy that we've gotten this far in e-commerce with keyword-based search like keyword-based search works really well when you're buying a book that you know the name of it's like i want to go buy this particular title and for a winter jacket it's like i don't know i want it's like a puffer like what's it called and so instead you want to be able to say i'm looking for a jacket this kind of i'm going to this place it's going to be this cold uh you know i like these kinds of things, whatever.

39:20And so step two is just better search and the ability to search with parameters that like no existing search UI lets you specify the temperature of the place you're going to actually get, you know, a jacket of appropriate warmth. That's obviously with a jacket one of the core things. And so better search UI is kind of level two from our point of view. Right. Which I think is already sort of manifesting. Exactly. You're already saying, and like in the early usage of the kind of chat GPT buying experience, I think that's one of the It's like super cool features. And then level three, which we haven't really seen play out yet, is this idea, again, of a persistent profile of the user.

39:57That anticipates their needs. Exactly. It's like, I want to be able to just pin things I like as I go along. Or maybe, you know, if I can share my browser history, or maybe if I can just, like, you know, share a Pinterest board of just, like, these are some styles I like. Give me a good winter jacket for the cold. Based on that, here are some photos of me, you know, based on this. And so it's starting to get... Oh, I have an even better idea. Imagine if you were using ChatGPT and it's circa October 1st, and there is an ad for a great winter jacket that is perfectly suited to me because they've been understanding my interests.

40:30They understand the context of where I am. I'm not searching for winter jackets because I don't plan well. It's going to get cold, and then I'm searching for winter jackets. But what if it could anticipate that and show me an ad at the right time when I need to see it? Okay, maybe that's level four. is like the... That's what I've been wanting them to build. This is my whole bit before. Like, this is like, this is why they're so late. Yes, yes. They should be shipping that this year. You're only shipping that this year if you started your ad product two or three years ago. This is doable today.

40:57This is what meta ads are. You need to be on more, you need to watch more reels. Like, just the, I've bought more ski equipment this year that I don't need. Just because it just shows up, I'm like, I'm moving back to Wisconsin, so I'm buying stuff for the house. Yes, yes. And I get all those ski hangers. I bet those would be great. That sounds very useful. They're still in a box. I would actually put them up. Yeah, so there's a limit to kind of with just kind of banner ad type experiences to what you can do. I think the search thing is very powerful. But yeah, I'm curious what you think of kind of step one, just the very active checking out.

41:31And then, or level one, the very active checking out. Level two, better search. And then level three, defining your own embedding space of preferences. No, I completely agree with that approach. I just think you underrate the extent to which level three has already been built. Actually, one thing that Mark Zuckerberg said on a couple of earnings calls ago that I thought was very astute is we get hung up on technological definitions for like what is an agent. And he's like, actually, the largest and most successful agent in the world today is Facebook advertising, which is exactly right. Facebook advertising, people have it in their head that you go and you put in like demographics and you're targeting and stuff.

42:10No, no, it's very autopilot. Yeah, what you do is you go in and you say, acquiring a customer for this is worth$10 to me. I'll spend up to$10. And they will deliver you a customer for$10. Yes. Their margin will actually increase because they will make sure they deliver it at exactly$10 and they can do it for more. And they actually make more money. You'll get exactly what you asked for. I think the extent to how powerful this already works. They're stuck on the 50 % of my ads work, so I don't know which ones. No, on Facebook, they all work. I feel like a bunch of new, very big, successful companies will be created in AI-powered e-commerce.

42:49It just feels like a different enough product space. But you're talking about retailers, merchants, or agents? I was talking about discovery and kind of the demand side. They're also probably retailers. Yeah. I mean, I certainly think, I think that the part that I think would be new, which is a bit, which you were maybe talking about, is this real anticipatory aspect. Which is, right now, what is amazing about, to go back to meta ads, is it helps merchants who have a very specialized product find customers that they never would have found otherwise. But there's the inverse of, I need a very specialized product.

43:26How do I find what it is? Which I think you were referring to before. But to what extent can that not just be an in the moment, I need this specific. I remember I needed a server, a piece for my rack to mount like this router because I had like an extra, I didn't want to buy a whole new thing or whatever. I had this extra router. And of course, there's some guy in Australia that does 3D prints that perfectly matches this on Etsy or something. And it was great. I found this random guy. I'm sure he made a bunch of money selling me a$40 piece that cost him$2 to make. Good for him. But what if an AI should be capable of anticipating that need?

44:02So it's not, I have a need, let me go find it. It's like, I know you're going to need this and let me acquire it. And that would be very powerful.

44:15In his excellent newsletter, Stratechery, Ben often argues that whoever controls the customer relationship shapes the entire ecosystem. And in mobile apps, there's always been this interesting tension here with in-app purchases, where historically app developers had an intermediated relationship with their customer through App Store policies. Over the past year, that layer has started to open up. Mobile developers can choose what they use for in-app payments. Developers now have more freedom, but with that freedom comes new challenges. App Store payments were previously handling a whole bunch of different tasks like payments, tax, fraud, disputes, all bundled together.

44:49Stripe Managed Payments is built for this new world, handling all that operational complexity for you with Stripe as the merchant of record. And with our new app to Webflow, customers can check out in seconds an experience that feels native. It converts like in-app payments, but it runs on Stripe.

45:08The public markets indicate as of January 2026 that SaaS is canceled. Are they right? I think it's probably a mix. the I think the one of the brilliance of American business is actually this is one of my theories about why the Europeans are so gung-ho about data privacy and regulation is because they so often interact with European companies so like I was in Paris a couple years or a couple years ago and of course going on a tourist trip going to the Lou going to the Museum of Maradona or wherever it is, or not wherever it was, seeing a bunch of museums. They all have their own homegrown registration systems.

45:56And they're collecting so much data. And they're widely insecure. It's like, yeah, what's your age? What's your pet? What color? It's like, why do you need to know all this information? They're all non-standard forms. This is where you need AI to fill all this sort of thing in. And it's like, there's this theoretical idea in their head. If we capture this data, it could be useful. So they built these homegrown things in like the 2000s that are horribly insecure. And I use them. I'm like, where's the regulator? Can someone push? This is ridiculous. So I get the mindset. U.S. companies don't do that.

46:31Like U.S. companies are so good. And I think one of the big strengths of U.S. business culture is understanding. And I think about this personally. This is where I give life advice. What's the number one mistake people make when they're young in particular? They focus on their weaknesses. Like I have to ameliorate my weakness. Like, no, what you do is you double down on your strength, you get rich reward for that, and then you hire someone to take care of your weaknesses. Right? Like, I'm a big believer in the getting things done system. Like, great book, getting things done. Even if you don't use the system, the book is really good, lots of great insights.

47:03And there's this whole thing like tickler files and like all this sort of thing. It's an amazing system. I'm completely incapable of managing the system on my own. So there is a Mac app called OmniFocus that is completely built around the system that I don't have a license for, my assistant has a license for. And I text him stuff and his job is to maintain my getting things done file because I can't do it. What do I do? Actually, my wife is very, very optimized around, I write three pieces a week, I do an interview and I do three podcasts. And all my focus and energy needs to be on that. And if I do that, that will make a lot of money and I can pay to fix all my problems sort of elsewhere.

47:41And I think American business does this very well. They don't waste time and energy on stuff they're not good at. They double down on what they're good at, and they're focused on the upside, not on their cost centers. Probably a result of the very large market in the US. I think so. And just the competition, it would be in a very large common market. So you don't have your, you go back to newspapers, they have lots of homegrown stuff. If you're a publication online, if you're like me on the internet, I get paid to comment on the big tech companies. It's probably the most competitive market on earth.

48:12Right? Like lots of people have takes on the big tech companies. And so you have to be super focused. Given that, that speaks to the enduring value of just paying someone to manage these business functions from a software perspective. Now, there's a lot of SaaS applications. Not sure they're all sort of strictly necessary and worth the price. I like to think people talk about tech having a big five. Obviously, there's a big six. The six was Silicon Valley Inc., which is basically this cookie cutter. VC goes to this founder addressing this specific business case with the SaaS business model. Everyone likes to, are they going to talk about changing the world?

48:53It's actually the most predictable thing yet. That's why VC returns compressed, but because they're also very predictable in terms of like this sort of niche and going. A big problem there is they're all seat based. Like anyone seat based that has some of a sigil, there's going to be probably fewer seats. And then if the replacement is more small scale, ideally, there's lots of, you know, the Internet in general has writing or content is a good example. There used to be sort of, you want to be in the big pond, and everyone in the big pond sort of ate. If you had a job at Conde Nast at one of their magazines, like you lived life well, even if you wrote like four magazines.

49:32Today, if you want to be a writer, I give advice to people that want to be content producers all the time. I'm like, look, you don't want to be in a pond with me, right? Bill Simmons is like the first internet sports writer. And you don't want to be doing a Bill Simmons impression on the internet because he got there first. and what you want to do is you want to make your own pond. The internet enables the creation of a million different ponds. So you get to define your own pond, be the only biggest fish in that pond, that's how you succeed. To the extent AI makes that, I think this is the upside case, is AI makes that possible for more than just content, for all sorts of businesses to be lots of smaller scale, individual entrepreneurs or small teams, all of whom don't really fit in the Salesforce-driven, driven, seat based model for a lot of these companies.

50:22So there might be a big return to self-serve, or maybe they'll just roll their own because their needs aren't that large. So that's more a larger structural change. But the problem is it's fine to say businesses will be okay as they are. If you're eliminating the growth, that's the big problem. I think that's the biggest issue for all the compression. Via headcount growth? just growth in general. If these are just stable businesses with astronomical stock-based compensation, that is predicated on we're going to be very large. I can see two critiques you might have of the software space and why everything's traded down.

51:05One is where everyone's just going to use cloud code to rebuild their own version in-house, and so the software mode is less. And the second is actually just that many of these products price on a per-seat basis. And so if you're growing headcount less. Or shrinking. Exactly, yeah. On the first, like, Anthropic just installed Workday. Yeah, I know. Famously. Exactly. So I don't think, you know, we're cloud coding. Systems of record, that's the category. Yeah, people do not seem to be, you know, we see this with Trembling as well. Like, I don't think anyone's cloud coding one of those systems of records anytime soon.

51:42We use Workday. I don't know what to make of the second criticism, but again, it just feels like for a very broad and deep system of records, it's kind of hard to make the argument that the business is somehow impaired versus a year or two ago. Right, but I think that's my point, though, is people saying they're going to zero are wrong. But if the assumption is you're fine, but you're not going to be growing indefinitely, like that shift from thought of as being a growth company to being a stable. I see. That's a haircut. And again, it's combined with these whole compensation structures. Yeah, you're now valued on EPS rather than revenue or something.

52:21Yeah. Can we talk about your business and trajectory? Sure. So you were very early to the sovereign writer concept. I think you were one of the first premium newsletters. I think so. Yeah. So there's two predecessors to talk about. One is just on Wall Street in general. There's a long history of faxed out newsletters and things like grants. LS Research and all that stuff, yeah. The difference there is those were very expensive and a very small addressable market. So the difference for Chichakery is it's much cheaper and the market's much larger. The other person that deserves a call out, which I think was the first person to do it before me, otherwise I think I was the first, was Andrew Sullivan, who did...

53:12I hadn't realized he had a paid news, either. He did for like a year. The problem is he did it all wrong. You're doing it wrong. he was like he would churn out like 50 posts a day right just about a gazillion different things he totally burned out and like all all the sort of stuff but that was happened to be a great fit for the advertising model back in the day because you would always go back there and just always be new stuff and I'm sure he had a gazillion I'm sure he drove a gazillion impressions for the Atlantic especially when he was with them he went independent he was pretty successful I think he did like around a million dollars or something like that but it was this very leaky paywall it was like after like 35 posts then you'll hit like a paywall and there's a bit where you're like you're punishing your worst users it's very easy to get around um and so but he was actually very inspirational in how i thought about the model in that he was hailed as a failure because he like burnt out and quit but like he made a million dollars right like that's pretty good uh i wanted from the beginning just think about the psychology of this when i started trajectory i had a gazillion ideas of things to write about and i limited myself to writing a max of two times a week.

54:19And the reason is I had this subscription model in mind. And when I added the model, I didn't want it to be, I'm taking stuff away and now you have to pay. I'm like, you like this so much, if you pay, you can get more. And so I always wanted to be, you're paying to get more sort of aspect. And I think that probably mattered more at the beginning, especially because the model was new. You know, I had my metric I looked at was people who visited Shachakri on days I didn't post because they were people that were going there hoping I had posted that day and they were leaving disappointed. And so in this case, usually previously a paywall would disappoint people if they hit it.

54:58In this case, the paywall would leave their disappointment because they could now get what they wanted. And so I'm like, if I can capture X percentage of these visitors, it'll be very good. One day goal, one week goal, one month goal. Failed to reach all of them. What happened was, I actually thought it was not going to work. I was going to have to go back to teaching English or something like that. But it sort of grew and grew and grew. And at six months, I actually hit my one year goal, which was 1 ,000 subscribers, 1 ,000 true fans. You know, it was$100 ,000 run rate. And I posted a little...

55:31Sorry, it took you how long to get to 1 ,000 subscribers? Six months. Okay. And I posted a little note saying, hey, you know, model works. You know, my goal is a thousand for a year. I've already reached it. And this is the only step change in subscribers I've ever had. In the next 24 hours, I got 250 new subscribers, 25 % increase. What they were was I had identified those people who wanted to be subscribers. They just didn't trust that I was going to work. I was going to go out of business and take their money. And so once they realized I wasn't going anywhere, then they all signed up. And those people signed up.

56:05So I actually had my metrics were right, but I didn't properly calculate the uncertainty in people's fear of losing their money. So I'm very grateful that now people just sign up for stuff all the time, right? Of course, I'll probably go to my grave being most well-known for trajectory, but I am equally proud of the model and that lots of people make a living doing this. How far do you think this model can go? Like, again, the defining characteristic to me seems like the unbundling, like, you know, maybe 30 years ago, you would have been writing for a publication, whereas now it's unbundling. It's the direct relationship with your subscribers.

56:45It's direct monetization and generally paid. I mean, there might be some out-supported components as well paid. Obviously, kind of Substack has proven that this is a very broad applicability. but how far do you think this goes versus traditional media bundling there i think there's a couple interesting angles to this uh number one i think people including people in tech serially underrate how large the internet is you know like the biggest pushback i got when i announced like this check your paid product was from vcs i won't say who it's like love you ben just doesn't not gonna work on the internet um the uh so and by being about ponds before I don't know that we've scratched the limit of how many ponds can be sort of built in the world and you can sort of occupy it.

57:30And the other part of this, the critical piece of this, and AI is actually an important factor here, is the key to the model is your costs. So you need, just as technology enables you to reach everyone, you need to leverage technology to keep your costs very, very low. And so for the first several years, for sure, it was just me. So as long as I could feed my family, I was fine. And this is the problem for the traditional media companies. Their cost structures were not internet cost structures. They were predicated on much higher revenue. And it's interesting to think about and talk about this because a lot of this is not really applicable.

58:12It's like before, I write about ads a lot and I'm not an ad business. In this case, I write about VC, high scalable companies, but my actual business is very sort of boutique and small. Artisan, yeah. And artisan in that regard. And this is a super important point is managing your costs. If you manage your costs appropriately, then the possibilities. But that also means there are some things that don't work with this model. Like your traditional classic investigative journalism, six-month sort of piece. Yeah. It's not well supported by this. What did support that was the bundle. Having lots of different writers in one publication all together.

58:53And the thing I worry about, I wonder about, is bundles are good for everyone involved. And no one wants to be a part of it. So TV is the classic example. Why did we have a TV bundle? because you had like, so I think it started in Pennsylvania. So you have like a television station in Philadelphia and you have the Allegheny Mountains and you have a bunch of towns there that want to get the signal from Philadelphia, but they can't get a good signal. So they band together, they put up a big tower to get the signal. They run actual cable from that tower to all their houses. And all of cable television started in small town, rural America to get TV from the big cities.

59:34And Ted Turner comes along and is like, I could just broadcast directly to these towers. This would be amazing. and you get the model and suddenly every, but you had a geographic forcing function and you ended up with all these companies with the best business model in the world. Everyone paid them whether they watched you or not and they made a ton of money. And what happened the moment they could do something different? I could also go directly. I could stream directly. And there's just something about business and like, because it's almost like you have to be forced into the game, the optimal game from like a game theory perspective.

1:00:08And the moment you can desert, everyone always deserts, even if it's the best thing. Yes. And so I wonder, so I do wonder, can bundles have to be reprated? So how does this apply, yeah, to your world? Because in theory, there should be bundles. Substack should be a bundle. Like you should be on one fee and get everything. But they, you know, they started, I think a mistake Substack made, and I'm a huge Substack fan, just to be clear. I've made this creep before and make it mad about it. But is they characterized themselves as being totally writer friendly. and I think that was a mistake because it's impossible for them to be ultimately writer friendly because the most writer friendly setup is running open source software like on your own server.

1:00:43Like no one could do anything to you. And by definition... I thought you were going to say like the most writer friendly thing is to have like a humming consumer business. It would be. But the problem is so all their initial terms made the bundles impossible. And all the individual publishers owning their own subscribers, having their own Stripe account and all these sorts of bits and pieces. But hang on, isn't there like a... I feel like there's a well-trodden path in tech here where OpenTable started as like entirely, it started as on-prem, purely software for restaurants. And then they added the customer discovery layer on top of it.

1:01:14Shopify started as a solution just for merchants. And then they added the ShopPay kind of network effect layer for consumers on top of this. Yeah, but what actually, even with those businesses though, like the ShopPay bit is nice. It's not the driver of the business. It's a pretty cool part of the business these days. I like it, but at the end of the day, the vast majority of shop interactions are, I see an ad on Instagram, and I go there, and I get the shop button, which is incredible. No, but then it makes the Shopify offering to merchants so much more compelling, because you get the shop pay in the edge, Mark.

1:01:47I'm skeptical that's the driver of the business. I think it's nice to have. But can't Substack just add a Substack Prime bundle on top of it, and writers can choose to opt in? The problem is the merchants who will make make that bundle valuable have no incentive to join the bundle because they could make more just monetizing users directly. So imagine I'm on Substack. How much more revenue does Substack have to give me for me to trade$15 a month for my subscribers for a smaller amount from whoever's part of this? And so the problem is they have to really pay me off to be a part of it. Meanwhile, everyone who doesn't have any subscribers, of course, they love to be in the bundle.

1:02:30So this is why the Geographic Force... It feels solvable to me. I think it's solvable at the beginning. No. Sorry, it feels solvable now. I think a counterexample is something like Spotify. Spotify is arguably the best bundle on the internet. But the reason why they were able to assemble the bundle is because they only needed to negotiate with like four entities. And so it's interesting because on one hand, that limits Spotify's upside because those entities are able to negotiate such a large share of Spotify's revenue. On the other hand, that's also why Spotify was possible because they only needed to negotiate with four.

1:03:09Yeah, yeah, yeah. And if you're trying to, like, get every artist on Earth, Yeah. Well, of course, I got to get Taylor Swift. Okay, good luck with that. Oh, all the small fry will sign up. Yeah, yeah, yeah. But the music's unique in particular because music, the moment a song comes out, it's not part of the back catalog. And actually, people only ever listen to back catalogs. Yeah, yeah, yeah. So it's a pretty unique industry in that regard. But that is a bundle that formed. But I think it's because there's only four players. Okay. How do you use AI in writing strategy these days? I think it probably replaces what I used to do a lot of on it's much more efficient Googling.

1:03:46Like, so I really, the most gratifying articles I write is when I write about a topic that I usually don't. And then someone from that industry is like, wow, I did. That was good. Because you're always worried about. You have this imposter syndrome. Yeah. Well, I mean, fortunately, I don't really have an imposter syndrome. But like if you. That's why it all works. What's the mechanism where you're reading something about your area expertise. Gell-Man amnesia. Yeah, that's right. It's like, this is totally wrong. And then you trust everything else. I don't want to trigger Gullman's amnesia amongst anyone so people ask me I hate the book question, what books do you read?

1:04:26I read a lot of books but they're very targeted I'm a very, very fast reader so sometimes I'll write an article I know there's a pertinent book and I will just read the whole book in the morning

1:04:39but in general I really want to make sure I fully understand a space, I'm sure it's new that I'm writing about This is partly though why I have a big competitive advantage. I've been thinking about tech since I was in junior high school, and I've been writing about tech for 13 years. I've already done so much preparatory work that anyone starting from scratch, it's hard. I want to dive into it. I'm one of the world's greatest Googlers. I'd like to think I know every parameter and how to find. I think I can say pretty authoritatively, Google has gotten worse. I don't think it's Google's fault. I just think it's harder.

1:05:14One of the things Google's fault is they got so biased towards recency. And so you have to be super diligent. But AI is incredible for this. Just sort of getting background, making sure you understand an issue, the ins and outs of it, how things work. You can query stuff, dive deeper. So that is by far my number one use case. I do, not always, but I will sometimes ask it to, and this is where I chat GPT. I type in BBEdit as an integration. This is also why I'm very annoyed by and am very sensitive to the cloying nature. Oh, this is really great. No, that's not what I'm asking for. I can watch you go in and find stuff.

1:05:53So I do not use it to actually generate any exact content. Okay, so targeted research and then critique. Yes. Yeah. Those would be the two biggest use cases. You've written a lot about the TSMC break. this idea that the limiting factor on all AI expansion is basically the rate of TSMC capacity expansion because almost all AI chips are fabbed at TSMC. It seems like as you look at the AI space and everything interesting going on, so, you know, for mostly chip constrained right now, which would not have to be the case, you could be power constrained and stuff. But if you're chip constrained, there's a population of people who want to expand very quickly, the AI labs, NVIDIA, people like that.

1:06:50And then, yeah, famously, which TSMC, which is more conservative in how it expands. Why is that? Why does the market signal not cause them to build out fab capacity faster? Because the risks for fabs are basically larger than for anyone else. you're spending billions and billions of dollars on a fab that if it's not fully utilized, if you end up with too much capacity, number one, all your costs are locked in. Like basically 99.9 % of the cost for a fab is depreciation, which you're paying the depreciation, like you're paid in cash flow obviously, but it's on your accounting statement no matter what.

1:07:30So the fabs can be extremely profitable. TSMC's margins are higher than ever. but they can very quickly tip over into having a huge problem. And then once it's already built, these fabs can run for a long time. So that excess capacity depresses prices for years. I mean, we see this in memory all the time. Memory famously goes through these cycles. Like what's going to happen, believe it or not, we are going to have too much memory capacity in a few years because we have such a shortage right now. like Micron just announced like they're a huge new fab in Singapore, right? And everyone's going to do that.

1:08:09But why does this happen in memory? There's three competitors in memory. If Micron doesn't do it, SK Hynix will. If SK Hynix doesn't do it, Samsung will. And so you have a dynamic where, a healthy dynamic, which is the fabs know better, but they can't help themselves. And so they take on the risk and they build these fabs. The problem we have with logic is that TSMC doesn't have that pressure. And so they're actually behaving rationally. TSMC is giving up potential long-term revenue. But the downside for a fab in particular is so large that they don't want to realize that downside. Can they not pass the risk on to the customer where it's like, you are going to pay for the entire fab?

1:08:56That's probably what they need to get to. And so Apple famously did a lot of this sort of prepaid and particularly when TSMC was sort of expanding hugely in the 2010s. And they maybe need to get even more explicit about that. But I think the better solution and the cheaper solution for the hyperscalers in the long run would be to do what is necessary for TSMC to get better. Then you get it for free. You don't need to prepay it. So there's this risk that's out there, this risk of overbuilding. Right now, TSMC is shifting all that risk to the hyperscalers, to NVIDIA, to Apple. And the reason why they get away with it is because the risk is foregone revenue.

1:09:43It's money you don't make. And worse than that, it's money you don't make four or five years down the road. And what does every company say on their earnings call right now? We could have made more, but we don't have enough supply. And if you think it's bad, why is it bad right now? ChatGPT comes out. Every hyperscaler starts investing like crazy. What does TSMC do? They actually decreased their CapEx year over year, two years in a row. There was no market response from TSMC to the ChatGPT moment. Now they increased to 41 last year. They're going up to like 60 this year. But even that increase to 60 is a less percentage increase than last year.

1:10:20I think we're looking at a massive shortness in chips in 2029 or so. And particularly as the other thing, the compute density of AI is so much larger, right? If you have an agent out doing stuff, it's doing so many more computations in a limited amount of time than me and my Googling is even humanly possible to do. And all these lookups. So we have a CPU shortage too. And Intel shut down some of their CPU plans, right? So the whole semiconductor, I just think it's a big problem. And we're shifting to, for a long time, how can we get an alternative to TSMC for geopolitical reasons? And the truth is, it's kind of like the bundling thing.

1:11:06It's really hard to get companies to buy insurance, particularly when the insurance is, number one, you have everyone else wants someone else to do it. right? Who's going to be the one to go and make the sacrifice. But also it might not happen. China might not attack Taiwan. And also as long as it doesn't happen, it's super suboptimal to go somewhere else because TSMC is better. And their customers, it's not just their fab is better. Their customer service is better. And they have all the IP blocks you need. And they've done this before and you have existing relationship and they'll punish you because they have limited, they have control because they're not going to fulfill all their orders right now because there's so much demand.

1:11:45And so they can pick and choose sort of who, and so people are scared. They don't want to go anywhere else. And the, so how are we going to solve this problem? And I think I actually wrote on the front page of Stechery about this this week, which is basically the same thing I wrote in an update, but this was a, like, this someone needs to, yeah, someone needs to, the hyperscalers in particular need to appreciate, I think, a massive crunch is coming, and And it's now on them to get Intel up to speed, to get Samsung up to speed, to get a credible alternative. Yes, in theory, you could pay TSMC. For geopolitical reasons or for shortages?

1:12:22No, we'll get the geopolitical reasons for free. Okay. I think there's massive economic reasons to do so, which is all the revenue you're going to be foregoing in 2029 if you don't do it now, and then we'll happily get geopolitical insurance for free. But if TSMC are the best, rather than stand up Intel, which seems hard, isn't the answer Or it's just, again, prepay for an extra fab build out for... But this is like, how do we feel in tech about ongoing operational costs as opposed to putting in some money up front and fixing the problem permanently? The market structure is a problem. You're dealing with a monopolist.

1:12:54And not like a mean monopolist per se. Yeah, exactly. They're very nice, right? And they actually have not raised prices nearly as much as they should have. Right. But the reality is there's this market structure problem that is going to impact the hyperscalers, and it behooves them, I think, to fix the structure. Otherwise, the costs of ensuring or overcoming that are just going to be larger and larger. This seems like the topic you have felt strongest about in the past year or two. I felt pretty strong with Apple Vision Pro. Okay, fair. What was your take with Apple Vision Pro? They finally showed an NBA game, and they kept changing cameras.

1:13:32They're applying 2D television production techniques to an immersive technology. Just let me say courtside. The TSMC break seems like a bigger deal. Oh, probably. I have some rapid-fire questions, or I'm not going to say rapid-fire necessarily, but a collection of disconnected questions for you. I'll connect them. That's what I do. Great. How should schools do homework now that AI exists? I think they should incorporate it and they should probably do in-person exams.

1:14:10It's silly to try to crush it out. I'm very opposed to these AI detectors which don't work. Probably I'm particularly sensitive to it because obviously a lot of my pros is in these models. I wasn't an MDAS user, but I'm the world's biggest semicolon user. I was a big M-Dash user all along. Unfortunately, the models don't seem to have really incorporated the semicolon. So maybe I haven't been that influential. But yeah, you want kids to use it. Because whoever can use AI most effectively in their jobs going forward is going to have a big advantage. So there's probably some return to more in-class being more important.

1:14:50I think this is my view on content generally. I think there's a world in which not all content, but some content is more valuable than ever. Because AI is a perfectly individualized experience. What you read is not necessarily what I read. So stuff that we both read is actually compelling. And I'm very interested in figuring out how to leverage that to be sort of beneficial to people in the long run. And what can you get from school that you can't get elsewhere? Right? Like I can read the notes, I can read X, Y, Z, but there's being in class, having a discussion about it, like actually interacting, being pushed on these sorts of things.

1:15:30All this is a sort of a beautiful theoretical depiction of what school might be that is probably very far removed from the reality. But identifying things that are common experiences are going to be more and more valuable. Common content, common classroom time, live events, like shared experiences, because anything that's individualized is just going to be completely swallowed. Yes. Do sports teams become more valuable in an AI abundance future? Of course, everything live becomes more valuable. Yeah. That's something I'm thinking a lot about as far as my business, right? Like there's some aspects of tens of thousands of people reading the same thing every day.

1:16:10Yes. That is actually really powerful. There's something interesting there, the possibility of doing live events where people can come together. I think a lot about community. I think no one's ever really solved community-wrong content, like a message board or comments. You actually have very bad dynamics. There's a few people that dominate it. Totally, yeah. But what is great is if we're in a group chat and you share an interesting article and you have a discussion about that. Yes. So there's a lot of stuff around that that I think is really interesting and that I'm thinking a lot about. What do you think of what's going on in crypto these days?

1:16:41What's crypto? No. I've always been a crypto defender. Like, just because digital scarcity is fundamentally interesting, it's probably even more interesting to this point in a world of infinite content which you thought we had infinite content before now we have infinite content on steroids not just 6 billion humans typing away but agents generating stuff sort of constantly and in that world I think crypto as an identifier of authenticity is going to be more and more important at the end of the day I want the original I don't want a reproduction And I'm optimistic about humans' ability to create value where it seemed impossible to ever exist.

1:17:27I'm literally a professional podcaster and content creator and get paid a lot of money to do it. Imagine explaining that to someone on the farm worried about the automation. Speaking of that, you mentioned this, a majority of stratechery consumption is now in the audio form rather than the written form. As far as I can tell, I don't do like, but the more than, well, more than how my subscribers are subscribed to podcasts. I consume it in the audio form. Yeah. It's quite interesting. I added the pod, this is actually where I started building my own software. I was begging everyone to support paid podcasts.

1:18:01There was dedicated paid podcasts and there was like writing ones and no one would do it. So of course I had to just hire engineers and build it myself. At which point it obviously was the right thing to do. Not everyone does it. Whatever. That's my fate in life, I guess. but the, yeah, people love it. Like, the interesting thing is, I'm not sure it's been good for my business. Why? Oh, because people don't share. The good news is, is I think it drives retention. Yeah. Because people would build up emails because it feels like a lot of work and they'll say, I haven't read this in ages, I guess I'll subscribe.

1:18:31Whereas, they just consume it seven minutes or eight minutes. The problem is they don't share. Audio content is not shared. Totally. I listen to it in the car on the way home from work and that's great and then I never think about it ever again. Exactly. But it's great for me because I can say the same thing the next day. You're like, oh, that was a great, very insightful comment. You didn't even know I said it yesterday. Yeah. If we reason about what sectors are going to be important down the road, for the AI build out, energy is going to be a big deal and the ability to actually power the data centers that are coming online, that may be a bigger constraint going forward than even chips.

1:19:11robotics are clearly going to be a big thing. It seems like China is doing better on energy and better on robotics and is catching up on chips, doing okay on the AI models. But does that mean China's potentially very well positioned for the coming wave of tech trends? I mean, I think any country that is capable of actually building things is well positioned. But then again, the counter argument, if I could sort of put a silver lining on it, is the challenge, the trick going forward and to sort of defy the doomers, as it were, is actually creating new sorts of value, new sources of value in a way that humans are uniquely capable of.

1:19:55And that is, by definition, a sort of an innovation story. It's a freeing up resources from things that can be done by machines to more productive. It's having a consumer market that pulls out that sort of innovation that makes it possible to write a newsletter or a podcast and actually pay for it. And so there is a scenario where China is well positioned to win the total commodification of everything. which doesn't have much margin. And the actual value creation and what makes humans humans and generates the value that I think people in AI are skeptical can be created, despite the fact 90 % of us use working agriculture and like 1 % do.

1:20:44For some reason, that's not going to repeat. If you want to be optimistic, that's the sort of thing that America has always done well. what's your stripe feedback for us oh where to start uh uh i mean i am obviously it's hard for to write about stripe because i'm not biased because i was very early i think you you introduced the billing api in 2011 which is a direct spur for wanting to strike or you're thinking this is a business model that's possible so very very big thumbs up on that the oh you didn't warn me about this i should have thought about this uh actually you do have you have one huge issue that I was just dealing with.

1:21:22Oh, yeah, ACH. Your ACH implementation is... Someone can go in, and if I try to add on to an ACH plan, so let's say I have a team, because that's where you use ACH, like large companies, and they want to add someone on. If that add-on fails, the entire plan gets canceled. So we have to build a bunch of logic to handle that independently. Okay. So that's a very detailed, specific problem that we're facing. Buggy ACH subscription interactions. Okay, that's a good one. There's definitely more. I'd have to go back and think about it. But I mean, I do think the, you know, we didn't talk about stable coins in this sort of area.

1:21:58I've always been a big skeptic of like microtransactions because the problem, it goes to the investigative reporting thing. You can't build something sustainable if you're only monetizing the back end. And the only way to do that is to have a very large market. This is what YouTube is. YouTube is a bunch of speculative video makers hoping that they'll get enough views that the ads will pay for it. And they're such a large scale and they monetize their ads so effectively that it works. There's no market like this for written content or like podcast content. And you can't – people are like, oh, let me pay for one article.

1:22:30I'm like, no. What you're paying for when you pay for me is you're paying for my ongoing production. I'm making a promise to you. I'm going to write something every day and you're paying for that promise. You're not paying for the actual content. The content is a byproduct of that. The question for AI and microtransaction is you have all these labs paying people all over the world to generate data. And if you're like a radiologist, you get paid$300 an hour. I just have an article about it. And all these sliding scales. And they're all duplicating work. Because everyone feels this inside and get differentiation.

1:23:04What we clearly need is some sort of market mechanism for data generation that in the long run will replace what we're getting from journalistic enterprises, which are even more doomed than ever before. So how do you generate – like we're paying directly for content and then AIs can get it and can – you can build a large market like YouTube that people will speculatively do it, trusting that they'll get paid because the market is large enough. That's what needs to happen. Like a lot of things, there's this massive valley of how we get from here to there. But we'll see. I know Cloudflare is trying to push on that.

1:23:44So we'll see what happens. Yeah. Last question. How would you rate the execution of the major tech companies? Like the big five? Yeah, sure.

1:23:54Apple, traditionally very strong. Their manufacturing obviously remains amazing. Like the iPhone Air that just went off and make sure I turned this news off. smartphone ever made. Really? Oh yeah. I've never even seen one. Oh. Oh. It's thin. Is the battery life good? Good enough. Yeah. It's bad. What's that? It sounds like it's bad then. No, it's fine. I mean, I actually forgot my extra battery and it's doing okay now. And I'm back in Wisconsin after wearing jeans because it's cold and it slides right in. It's fantastic. Actually, I love it. Okay. I'm very devastated to hear they might not make it regularly.

1:24:29Obviously, Apple's software has gotten pretty rough their relationship with the i mean the apple is so interesting because the reality is when it comes to platforms you have to build the price of becoming a platform is making a great product so apple gets platforms so they make great products and they're terrible stewards of the platforms microsoft is a great platform steward but they can't make good products so they never get the permission to sort of have big platforms uh which is sort of a tragedy there but Apple it's an old company driven by managers not founders and maybe they the AI Siri got as bad as it was it's obviously really bad but at the end of the day we still need devices they're still better than anybody else so they'll probably be okay Google I've had the hardest time understanding Google in part because I think Google does a lot of stuff suboptimally.

1:25:26Almost everything, I feel like they do suboptimally. But I think that lack of, Apple can be super optimized. But I think it's their lack of optimization that actually makes them maybe the most resilient of all the tech companies. Because they never get so exactly doing what they should do and they have all this extra fluff and doing things and gazillion science projects. But because their core business model is so good and throws off so much cash, they can just sort of like be sort of very flexible. And I've come to appreciate that about them. Everything that frustrates me in analyzing them actually has this hidden benefit of resiliency and strength and adaptability.

1:26:12And they're like the amorph, what's the slime that just, well, like, and if they're coming in your direction. Like you're actually in big, it might take them a really long time to get there. But when they get there, you're doomed. So Microsoft, Microsoft is always, I've got a lot of mileage right about Microsoft. Everyone, especially in the SaaS era, all these companies are like, oh, Microsoft sucks. We're going to make the best of breed products. And guess what? Startups in Silicon Valley, they want to buy all the best of breed products and they have the ability to send them together. Joe in managing the tire shop doesn't care about that.

1:26:50He just wants this crap to work and to work together. And if it's all mediocre, but it kind of works together, that's better than best of breed. And Microsoft is just squashing these companies to grow and boom, just hit that Microsoft wall again and again. Is that going to persist in an AI world? It's probably tied to the SaaS question sort of before in some respects. Their distribution and power there, you know, remains sort of substantial. Meta's probably, in my experience, been the best execution. I mean, you just see stuff like interacting with PR or executives, like they just run such a tight ship.

1:27:23They're really on us, yeah. Yeah, that's always been very impressive to me. I think the, again, I think their ad model is underrated. The trick with them is keeping engagement. Like that's what makes the whole thing go. They've done a decent job of that. Hours spent in ChatGPT, hours not spent on Instagram are not spent, and I think that that's an underrated area. And I think they're kind of betting that, look, that's all fine and well today, but in the long run, this is an infrastructure game. We have cash flow to fund it and OpenAI doesn't. I think OpenAI might be a bigger threat to Facebook than Google, something worth considering, but Facebook is obviously clearly spending to meet it.

1:28:08Oh, Amazon. Amazon, there's a lot of fab capacity and power being spent on Tranium that one wonders could be better spent on other chips, but we'll see what happens. Aren't people happy with the Trinium chips? The degree to which Amazon optimized cloud computing, I think, is underappreciated. When you're operating in a commodity market, so there's two ways to succeed, right? You could have a differentiated product where you can charge a high margin, or you can have a lower cost structure in a commodity market, where the price floor is the market price, but your cost structure is lower than your competitors, so that's where you make your margin.

1:28:48That was how Amazon dominated the cloud. Their cloud was way more optimized than anyone else's. The whole Nitro architecture, just the way they architect everything, doing a lot of their own chips, shifting to Graviton. I think the thing with Graviton, their ARM CPU, is who's the number one customer for Graviton? Amazon itself. And so they can move all their loads to that, optimize it, build all the software libraries, and then start offering it on a cost-cut basis to others. That's the playbook of the try to run the Tranium, where the number one customer of Tranium in the long run is Amazon, but then they develop all the capabilities around it for other people, for it to be attractive to other people at lower prices, and they have that structurally smaller cost structure.

1:29:33The problem is that works when you sort of level it off in performance, right? Amazon executed this model between 2005 and 2025. Of course, processors got faster in that time, but it wasn't like the 80s or 90s when every leap was massive. Does that work in a relatively new market when there's massive leaps to be made generation on generation? And they have NVIDIA servers. Do they have as many as they could because they're on this strategy? Probably not. Ben, thank you. Thank you.

1:30:13Thank you.